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Budget pressures

Forbes warns of cuts without more borrowing powers

Kate Forbes

Kate Forbes: ‘we need greater financial flexibility’ (pic: Terry Murden)

Scottish Finance Secretary Kate Forbes has warned that the Holyrood government will be forced to impose deep cut to public services unless it gets extra borrowing powers to help it cope with the impact of the coronavirus pandemic.

Ms Forbes says the government’s access to capital borrowing of up to £3 billion, and resource borrowing of £1.75bn, is not enough to deal with current pressures on the budget.

“With a global pandemic raging, fast decisions on public spending are required and it is critical that we have borrowing powers and greater financial flexibility to respond effectively,” she wrote in The Scotsman.

“Otherwise, the only way the Scottish government will be able to fund our ongoing response would be to make deep cuts to other public services.”

The Treasury has so far provided about £4 billion for Scotland during the pandemic, amounting to about a tenth of the Scottish government’s annual budget.

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“While we have been able to re-prioritise some existing budgets, it is becoming increasingly difficult without impacting on vital public services,” Ms Forbes added.

“The devolved arrangements were not designed for a health emergency and an economic crisis of this scale.”

So far the Treasury has rejected calls for further funding and pointed to its “unprecedented” package of support for individuals and businesses hit by the pandemic.

First Minister Nicola Sturgeon said stay-at-home measures were likely to be eased further from 18 June, allowing more businesses to resume operations.

However, there is concern that no firm timetable has been given to any sector. While building companies restarted construction sites in England on 1 May, sites in Scotland remain mothballed.

It is likely that some shops will be allowed to open from the end of next week.

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