30 May 2008
The Scottish Government should be given the same borrowing powers as local authorities, Finance Secretary John Swinney has told a parliamentary committee.
He said the need for greater financial powers for Holyrood should be considered by the commission reviewing the Scottish Parliament's current responsibilities. The commission, set up by the opposition parties, is headed by Sir Kenneth Calman, chancellor of Glasgow University.
Swinney was giving evidence on May 27 to the Parliament's finance committee, which is conducting an inquiry into future methods of funding capital expenditure. He was being questioned specifically on the minority Scottish National Party government's plans to set up a Scottish Futures Trust to replace the Private Finance Initiative.
One of the proposals would result in councils issuing municipal bonds for the financing of capital projects such as schools, hospitals and transport. In a consultation document published last week, the Scottish Government said a grouped, public sector bond was possible because of the borrowing powers of local authorities.
Although councils have the power to borrow money, the Scottish Parliament and government do not.
Swinney told the MSPs that he hoped the Calman commission could be persuaded to propose the same powers for Holyrood.
He added: 'There are legitimate areas where it would make sense for the powers of the Parliament to be enhanced in a fashion which allows the Parliament [and] the government to be more effective, in securing greater opportunities for taxpayers within Scotland. The ability to borrow would strike me as one example of how that might take place.'
Swinney dismissed claims that Scotland's £30bn grant could be cut if councils issued municipal bonds. Whitehall sources were quoted at the weekend as suggesting that if the Scottish Government refused to make spending cuts equivalent to the amount borrowed, the Treasury had the power to subtract the money from Scotland's grant.
But Swinney stressed that this was not his understanding of the way the Treasury acted. 'The Treasury certainly has a view across the UK of the total amount of borrowing capacity that is appropriate for the public sector in the UK. But it doesn't give me a number that I have got to stay within,' he said.
The committee was told that Chief Secretary to the Treasury Yvette Cooper had turned down an invitation to attend the meeting. In a letter to MSPs she said the committee's work involved only devolved issues.
An SNP MSP, Joe FitzPatrick, criticised Treasury officials for giving off-the-record briefings against the Scottish Futures Trust and refusing to explain changes in accounting rules.
'If the Treasury are not willing to come to the Scottish Parliament and present their thinking on issues that have a huge impact on the power of the Scottish Government to develop good quality infrastructure for Scotland, they should not be interfering in the media,' he said.