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UK concedes earlier borrowing powers to Scotland
June 9, 2011 / 4:22 PM / 7 years ago

UK concedes earlier borrowing powers to Scotland

LONDON (Reuters) - Britain said on Thursday it would allow Scotland’s government to start borrowing money this year, bowing to a demand from the Scottish National Party for greater financial autonomy from London.

Scotland's First Minister Alex Salmond speaks to members of the media after his meeting at Number 10 Downing Street in London June 8, 2011 REUTERS/Paul Hackett

Deputy Prime Minister Nick Clegg said on a visit to Edinburgh that London would let Scotland borrow money from this year to invest in infrastructure such as a new bridge over the Firth of Forth estuary.

However, the Scottish government indicated it would eventually seek to borrow at least 5 billion pounds -- more than double the figure envisaged in draft legislation before the parliament.

Scottish first minister Alex Salmond, leader of the SNP, has been pressing for immediate access to borrowing powers following his separatist party’s success in winning a majority in the Edinburgh parliament in elections in May.

Under proposals under consideration in London, Scotland would not get full borrowing powers until April 2015, although limited access to funds would be available from 2013.

That date for early access to borrowing will now move to 2011, Clegg said ahead of a meeting with Salmond.

“We are always looking to do more for the benefit of Scotland and that is why I can confirm today that we will also be coming forward with new plans that will allow the Scottish Government to have access to money this year,” Clegg told reporters.

“This is earlier than was envisaged so that money can be invested in capital projects like the construction of a new Forth bridge,” he said.

The Scottish government said it did not have full details of the proposals but would push for substantial borrowing powers.

“Our judgement is that under a range of scenarios, using prudent assumptions about future Scottish revenues and future interest rates, capital borrowing of at least 5 billion pounds is sustainable,” said Scottish Finance Secretary John Swinney.

“But it has to anchored in a firm set of rules that determine how that can be brought about,” he added.

Britain’s three main political parties, including Clegg’s Liberal Democrats, are opposed to full independence for Scotland, which Salmond’s SNP intends to ask for in a referendum.

Under draft legislation under consideration in London, Scotland would be able to borrow up to 2.2 billion pounds for capital spending, and a further 500 million pounds to cover short term budget shortfalls.

Edinburgh would have to borrow from the National Loans Fund, part of the Treasury, and would not be allowed to issue bonds.

Additional reporting by Keith Weir

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