By David Scott
22 December 2010
Giving evidence to the Scotland Bill committee on December 21, Swinney said there was a ‘welcome element’ in the borrowing powers planned for Scotland as they provided an opportunity to undertake long-term borrowing activity to support capital expenditure.
‘But there are constraints within that and I think the annual limit of £230m of capital borrowing within any financial year is a significant constraint,’ he added.
Swinney said there did not seem to be a facility that would, for example, enable the Scottish government to borrow zero in one year and £460m the next year.
‘It is a £230m quota throughout…I think the inflexibility of an annual limit of £230m is a technical point that could be further explored by the committee and revised,’ he stressed.
A further limitation highlighted by the finance minister was that the new borrowing powers were not due to come into operation until 2015. He did not see any reason why the powers could not become available at an earlier date.
The borrowing powers in the Scotland Bill, which was published by the UK coalition government on November 30, will also enable the Scottish parliament to borrow to cover volatility in revenue income.
Swinney claimed there were some ‘real constraints and real limitations’ regarding this power as there was an annual limit of £200m, with a cumulative total of £500m.
He said this was put into context by information provided to the committee by the UK government which showed that in 2008-09 the reduction in tax receipts would have been £243m higher than the threshold for borrowing purposes. In 2009-2010 the equivalent figure was £748m; in 2010-11, £559m and 2011-12, £229m.
‘That’s the nature of the problem that we’re wrestling with in this bill and there has to be a full range of different responsibilities to enable us to manage that risk,’ Swinney said.
The bill, which implements most of the recommendations of a commission set up under the chairmanship of Sir Kenneth Colman, will give Scotland control over its own rate of income tax.
The UK government would reduce the income tax in Scotland by 10p in the pound and the Scottish government would have the flexibility to decide whether to make up the difference or set a higher or lower rate.
22 December 2010
New borrowing powers proposed for the Scottish parliament are ‘inflexible’ and should be relaxed, finance minister John Swinney has told MSPs.
Giving evidence to the Scotland Bill committee on December 21, Swinney said there was a ‘welcome element’ in the borrowing powers planned for Scotland as they provided an opportunity to undertake long-term borrowing activity to support capital expenditure.
‘But there are constraints within that and I think the annual limit of £230m of capital borrowing within any financial year is a significant constraint,’ he added.
Swinney said there did not seem to be a facility that would, for example, enable the Scottish government to borrow zero in one year and £460m the next year.
‘It is a £230m quota throughout…I think the inflexibility of an annual limit of £230m is a technical point that could be further explored by the committee and revised,’ he stressed.
A further limitation highlighted by the finance minister was that the new borrowing powers were not due to come into operation until 2015. He did not see any reason why the powers could not become available at an earlier date.
The borrowing powers in the Scotland Bill, which was published by the UK coalition government on November 30, will also enable the Scottish parliament to borrow to cover volatility in revenue income.
Swinney claimed there were some ‘real constraints and real limitations’ regarding this power as there was an annual limit of £200m, with a cumulative total of £500m.
He said this was put into context by information provided to the committee by the UK government which showed that in 2008-09 the reduction in tax receipts would have been £243m higher than the threshold for borrowing purposes. In 2009-2010 the equivalent figure was £748m; in 2010-11, £559m and 2011-12, £229m.
‘That’s the nature of the problem that we’re wrestling with in this bill and there has to be a full range of different responsibilities to enable us to manage that risk,’ Swinney said.
The bill, which implements most of the recommendations of a commission set up under the chairmanship of Sir Kenneth Colman, will give Scotland control over its own rate of income tax.
The UK government would reduce the income tax in Scotland by 10p in the pound and the Scottish government would have the flexibility to decide whether to make up the difference or set a higher or lower rate.
