Scotland to get borrowing powers

The Scottish government could be given greater powers to borrow for capital investment under plans published by the commission on increasing devolution in the country.

Lord Smith’s report has called for Scotland to receive greater tax raising and setting powers, but added tat to balance this and ensure budgetary stability, the country should be given the ability to undertake a prudential borrowing regime.

“Scotland’s fiscal framework should provide sufficient, additional borrowing powers to ensure budgetary stability and provide safeguards to smooth Scottish public spending in the event of economic shocks, consistent with a sustainable overall UK fiscal framework,” the report said.

“The Scottish government should also have sufficient borrowing powers to support capital investment, consistent with a sustainable overall UK fiscal framework. The Scottish and UK governments should consider the merits of undertaking such capital borrowing via a prudential borrowing regime consistent with a sustainable overall UK framework.”

Such a move could reduce the Scottish government’s reliance on the non-profit distributing (NPD) model, by allowing it to raise cash for capital projects directly, rather than funding them through revenues.

The Smith Commission was established by Prime Minister David Cameron in the wake of September’s Scottish independence referendum, and has developed its recommendations in consultation with the Scottish Parliament's five parties: the Scottish National Party, Labour, Conservatives, Liberal Democrats and Greens.