Tuesday, 24 February 2009


For Immediate Release – Tuesday 24th February 2009



Commenting on Labour finance spokesperson Andy Kerr’s interview on Newsnight Scotland last night where he said he was in favour of borrowing powers for the Scottish Parliament SNP MSP Rob Gibson – a member of the Scottish Parliament's Economy, Energy & Tourism Committee – said Mr Kerr’s concession showed that the case for borrowing powers was now overwhelming.

Mr Gibson said:

"With Labour now joining the campaign for more borrowing powers for the Scottish Government the case is now overwhelming and there is little reason for further delay in extending this responsibility to Scotland in these troubled economic times.

"There is a compelling case for greater fiscal autonomy for the Scottish Parliament and opposition to borrowing powers has little to no grounds to stand on. With John Swinney's announcement on fiscal autonomy today it will be interesting to see positive engagement from Labour on that wider issue.

"As we face Labour's recession and Brown's billion pound spending cuts having the responsibility to manage our own budget is vital in ensuring we are able to respond swiftly and effectively to changes in economic circumstances.

"The Scottish Government must have the powers to take the right decisions to reflate the economy according to our own distinct circumstances.

"The examples of Northern Ireland and local councils having the power to borrow shows that the case against borrowing powers is fundamentally weak. In addition the UK Government's refusal to work with the Scottish Government on planning long term finances for projects like the Forth Bridge exposes the ludicrous situation Scotland finds itself in.

"Scotland needs additional borrowing power to allow greater flexibility for the Scottish Government in these difficult economic times."



1. The exchange from Newsnight Scotland last night is as follows:

GLENN CAMPBELL: You’re personally in favour of giving the Scottish Parliament powers to borrow money.


2. Examples of support for borrowing powers for the Scottish Parliament – including Iain Gray not ruling them out, and the borrowing powers of the Northern Ireland assembly

The list includes:

Society of Local Authority Chief Executives and Senior Managers
Chartered Institute of Public Finance and Accountancy
Council of Economic Advisers
Royal Society of Edinburgh
Reform Scotland
Scottish Council Foundation
Tavish Scott MSP
Henry McLeish
Church of Scotland
Scottish Episcopal Church
West Dunbartonshire Council


Iain Gray on Good Morning Scotland: 08/01/2009

GARY ROBERTSON: Well to that end should the Scottish Government be allowed to borrow money?

IAIN GRAY: Well I think that's an interesting question and the Calman Commission which Wendy Alexander my predecessor set up is looking exactly at that question.


The details from the Act - the Budget (No. 2) Act (Northern Ireland) 2002


"Power of the Department of Finance and Personnel to borrow

2.—(1) Subject to subsection (2), the Department of Finance and Personnel may borrow on the credit of the sum specified in section 1 any sum or sums not exceeding in the whole £2,481,039,000."



Reform Scotland report on Scottish fiscal powers

November 2008

"The lack of fiscal powers limits the Scottish Government's ability to respond to changing circumstances such as those caused by the "credit crunch". With no borrowing powers and the total budget for Holyrood determined at Westminster, there is little that can be done by the Scottish Government to provide a stimulus to the economy such as cutting taxes or increasing public sector spending or bringing forward public sector investment." (page 19)



The First Annual Report of the Council of Economic Advisers

"34. The Council recommends that the Scottish Government: ... explores the possibility of new means of borrowing, outside the Private Finance Initiative, to help finance public sector infrastructure." (Page 12)

"8.19 The Council believes that any revisions to the financial arrangements between the UK and Scottish Governments should give Scottish Ministers more flexibility." (Page 52)





12 September 2008

Borrowing Powers

"STUC believes that it is not consistent that the powers to borrow should be available to local government in Scotland, but not the Scottish Government. Prudential borrowing would enable the Scottish Government to borrow at levels sustained by revenue income and using rules negotiated with the UK Treasury. Prudential borrowing powers would enable the Scottish Government to promote traditional borrowing mechanisms as an alternative to PPP/PFI."

"STUC supports alterations to (or through) the Scotland Act to allow prudential borrowing for the Scottish Parliament. STUC believes that there is a particularly strong consensus amongst its affiliated organisations and a growing consensus in Scotland in support of the measure and it should be considered as a matter of priority by the Commission."



2 September 2008

Powers of borrowing

"UNISON Scotland believes it is vital that the Scottish Parliament has borrowing powers. Indeed it is illogical that local government in Scotland can have such powers (established by an act of the Scottish Parliament in 2003) but that the Parliament itself does not. Borrowing powers would mean that the Scottish Parliament would have much greater scope in planning and funding efficient investment in Scottish public services such as health and education without having to rely on the discredited PFI methods which have been extensively and expensively used in the past."



West Dunbartonshire Council

12 September 2008

"As with tax-varying powers, we feel that Scottish Ministers should be given more scope to raise finance by borrowing."



Royal Society of Edinburgh

12 September 2008

"58. The Scottish Parliament is unusual among devolved legislatures in its lack of an ability to borrow. This has caused problems when it has chosen not to use PFI/PPP procedures for capital expenditures. A radical solution would be to allow the Scottish Parliament to borrow freely, as happens in Canada, where the provinces are disciplined only by the bond markets. This would violate UK Treasury assumptions about counting public debt as a whole, and probably European rules as well. Less radically, the Scottish Parliament could be given borrowing powers and the ability to balance borrowing and spending over time, while putting into place procedures for limiting overall public debt, as Spain and its regions did in order to meet the Maastricht criteria.

"Another possibility is to allow revenue bonds, under which capital projects could be financed by borrowing, with the capital charges the first call on revenues. This would be suitable for roads and bridges (although the SNP Scottish Government has decided that these will be free) and some other public facilities."

"60. Consideration should be given as to whether the Scottish Parliament should also be assigned borrowing powers, limited within UK Treasury plans for overall Government borrowing."



Church of Scotland

19 September 2008

"We believe that the current limitations on the ability of Scottish Ministers to raise revenue by borrowing – a power enjoyed by local authorities – are unduly restrictive and inappropriate."



Scottish Episcopal Church

12 September 2008

There may also come a time when limitations on the ability of Scottish ministers to raise money by borrowing may appear to be unduly restrictive by a UK government especially as policies will diverge over time. It could be argued that a power enjoyed by local authorities across the country should be available to the Scottish Government.



Tavish Scott MSP (Scottish Liberal Democrats)

19 September 2008

"The Scottish Government should have borrowing powers and fiscal responsibility which fit into an agreed UK system

"The Scottish Parliament should have the power to borrow, subject to specific criteria and advice provided by the Finance Commission for the Nations and Regions within the UK system."





12 September 2008

Col 35-36

Henry McLeish: The other side of the coin is that we have no borrowing facility—borrowing is dictated by the United Kingdom Government. We are at a severe disadvantage on fiscal policy, expenditure and borrowing. The big political jump is to recognise that there are both pluses and minuses to taking control of those areas...

...We could be more sophisticated and borrow from the Irish, the Finns, Singapore and Virginia in America. The problem is that we are hidebound.



Andrew Harris (Scottish Council Foundation)

26 September 2008

Col 81-82

James Selkirk: Would it be legitimate for the Scottish Parliament to have borrowing powers?

Andrew Harris: Absolutely.



Gavin Whitefield (Society of Local Authority Chief Executives and Senior Managers)

26 September 2008

Col 115-116

James Selkirk: The borrowing powers of local government have worked well over the years. Would it be a natural progression if the Scottish Parliament were to have limited borrowing powers as well?

Gavin Whitefield: The borrowing powers that have been given to local government, and the more recent changes with the introduction of the prudential framework, have worked extremely well. They have enabled many councils to make a step change in their levels of capital investment. It follows that the Scottish Government should also have borrowing powers.

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