Public Audit Committee 17 December 2025
I will try to address all your points. I am happy to talk in more detail about risk management generally across the Scottish Government, where we have given more assurance than I am able to offer you regarding the transaction with GFG Alliance in respect of the Lochaber smelter. You have given various updates on the current circumstances. I think that it remains the case that there are no auditors appointed and refinancing is still being pursued; that is our latest update. We know that the Scottish Government has regular engagement with the Lochaber business and GFG, and, as ever, it will be better placed to give the committee an informed position of how the remaining circumstances are unfolding.
The consolidated accounts and our section 22 report reflect the current circumstances, which, to a degree, manage some of the financial risk exposure. The accounts set out the valuation of the provision, which is currently £130 million. We look at that very carefully during our audit work, and our assessment is that that is a reasonable balance. Many of the circumstances, which the committee is very familiar with, that are set out in the report are, to an extent, legacy. To go back to your earlier question, the arrangements in place, not only for the investment in Lochaber but for some of the other interventions, were not robust enough to enable the Scottish Government to take a rounded view of the risks and rewards of its economic interventions.
SCAD has gone a long way to addressing the lack of infrastructure and oversight, risk management and engagement with which to track and monitor those interventions. The Scottish Government will need to take a view as to whether it had adequate risk management arrangements in place when it first entered into the arrangement. There are signs of progress, but I do not doubt for a minute that this is not where the Scottish Government wanted to find itself, had it had the benefit of hindsight when it first made the intervention a number of years ago.