States Innovation Fund on hold until February

Thursday 24 November 2016

It's emerged that the States won't be lending any more money to local start-ups until they've spent another £40,000 on a review of the Innovation Fund.

Speaking yesterday to the Economic Affairs Scrutiny Panel, Senator Philip Ozouf said the Fund had lent £2.4 million out of the £5 million available to it, and they "expected" to write off up to half that figure: "There will be some successes and there will be some failures. If you keep in mind that £5 million, a write off of about £2.5 million would be about expected, that makes for good headlines, that does not mean that the Innovation Fund has been a failure."

His comments came in response to the Logfiller case - he admitted the amount of taxpayers' money lost in a failed loan from the Fund to a software company known as Logfiller could now be up to £690,000, once interest payments are included. That's increased from last week when he told the States Assembly the latest figure was £673,000. 

A few weeks ago it emerged that Logfiller had gone into liquidation. They were loaned £500,000 from the Innovation Fund in December 2014 to support the development of, “...a sophisticated computer software solution that measures user experience of application and system use." They said that if successful, the product would create “a significant number of full time jobs in the Island."

But earlier this year it appeared that the company had left the Island, and it seems that no "sophisticated computer software solution" has ever emerged.

Yesterday, Senator Ozouf defended the loss to the Economic Affairs Scrutiny Panel saying: "The States set this Fund up and at the time Deputy Mike Higgins said we were going to celebrate failure and a 50% figure was given. Some will fail and it doesn't mean the whole thing has been a failure."

The Comptroller and Auditor General is currently putting a report together on the loan and Grant Thornton have been appointed as liquidators. The department is waiting for their first report to find out what may be available to creditors.

The Island's Chief Economic Advisor Dougie Peedle said that "experts" are  are now reviewing the Innovation Fund itself, a job that he confirmed would cost £40,000 and would come from the Innovation Fund budget.

Mr Peedle said: "There is a role for government but it doesn't have to be loans. It doesn't have to be grants. We are reviewing our approach to supporting innovation, it's critical to improving productivity."

The current Chair of the Innovation Fund Board Tim Herbert is standing down early next year. Senator Ozouf said the Board has got an active role in the monitoring of loans and the current constitution of that Board is part of the review. 

Senator Ozouf said: "The Fund is currently closed to any new applications. If it did open up, we'd need to appoint a different Board.

"We expect there will be recommendations on what we can do better."

He said JIF will be asking for new applications once the findings of the review are out in February.

"We don't want to give the message that the Innovation Fund is shut. We are looking at start-ups and people with great ideas."