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Borrowing plea

Forbes asks Treasury for top-up powers to combat Covid

Kate Forbes

Kate Forbes: temporary changes would help (pic: Terry Murden)

Finance Secretary Kate Forbes has formally requested temporary new powers to help meet “the significant economic and fiscal challenges” of coronavirus.

In a letter to the Chief Secretary to the Treasury, she details the changes being sought  by the Scottish Government and raises questions over a permanent revision of the current tax and borrowing capabilities “in the post-Covid world”.

These include the ability to switch money from the capital budget to day-to-day spending and the flexibility to borrow up to £500 million this year to support the response to the virus.

She also emphasises the need to discuss permanent new financial arrangements to help the devolved administrations better manage budgetary risk.

The letter has been sent ahead of the latest regular quadrilateral meeting involving finance ministers from the UK, Scottish, Welsh and Northern Irish governments, which is due to take place remotely on Friday.

It has been sent just three days after the advisory group on economic recovery, chaired by former banker Benny Higgins, called for more powers to meet Scotland’s economic challenge. He later admitted the government might need up to £6 billion, which it currently cannot raise.

In her letter to the Treasury minister, Ms Forbes writes: “Our fixed budget could respond more effectively with some relatively minor fiscal flexibilities. I cannot emphasise how critical these are to our ability to support recovery.”

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She stresses that this principle has achieved cross-party support in the Scottish Parliament.

While also accepting that these additional flexibilities are not about permanently revising the current Fiscal Framework, Ms Forbes makes the case for “revisions to the existing arrangements”, such as increased reserve and borrowing flexibility.

She says this would be the time to “examine whether the Scottish Parliament’s existing powers are sufficient to manage the budgetary risks we face in operating the additional powers devolved in the Scotland Act 2016 and the Fiscal Framework, and to tackle the many challenges of the post-COVID-19 world, in line with its devolved responsibilities.”

Speaking at Prime Ministers Questions yesterday, the SNP’s Westminster leader Ian Blackford challenged Prime Minister Boris Johnson to back the the Economic Advisory Group’s, call for an accelerated review of the Devolved Fiscal Framework to ensure Holyrood has the borrowing powers and access to capital needed to fuel Scotland’s coronavirus recovery.

The SNP Westminster Leader said failing to devolve these powers and ensure the necessary funds would “put Scotland’s economic recovery at risk.

“It is absolutely vital that the Scottish Parliament has the financial powers and funds necessary to fuel a strong recovery and protect Scotland’s budget.

“Scotland can make different choices for an investment-led recovery – but we can only do it with the borrowing powers and access to capital needed to stimulate our economy.”

Comment: Higgins promised an action plan but gave us a wish list

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