27 February 2009
By David Scott in Edinburgh
The Scottish Government’s case for new borrowing powers was strengthened this week when the Labour Party in Scotland agreed for the first time that the issue should be considered.
The decision to back the case came on February 24, as the Scottish National Party administration published Full fiscal autonomy in Scotland; the case for change and options for reform.
This set out five options for reform: full fiscal autonomy in an independent Scotland; so-called ‘devolution max’, giving fiscal autonomy within the UK; enhanced devolution enabling Scotland to alter the rate of certain taxes; assigned revenues (the allocation of taxes raised in Scotland); and the current arrangements, which allow the Parliament to vary income tax by up to 3p.
Finance Secretary John Swinney said an independent Scotland with full fiscal autonomy would be better able to achieve its full economic potential.
He added: ‘Under all the criteria this publication uses to judge the options, independence and full fiscal autonomy emerges as the best path for Scotland.’
However, the willingness of the SNP to consider other options as a stepping stone towards full independence and Labour’s decision on borrowing powers are seen as opening the way for cross-party agreement on the need for increased financial powers for Scotland.
Labour’s backing would make it difficult for the party at Westminster to resist the case for borrowing powers.
Scottish Labour leader Iain Gray said: ‘The powers of the Scottish Parliament are well established and function well but we recognise the importance of financial accountability.
‘While the Parliament has tax-raising powers we believe there should be consideration of borrowing powers similar to that of the prudential borrowing framework that already exists [in local government].’
Swinney said the government’s publication illustrated that an independent Scotland with full control of all financial levers ‘would both be able to do more in the short term and put our country on the path to long-term success’.
PFfeb2009
