14.6.2011
By Simon Miller
Scotland is to be able to issue its own bonds as part of financial reforms set out in the Scotland Bill.
In a joint ministerial statement, the Treasury and Scotland Office confirmed that powers will be introduced to allow the government to include bond issuance to the way Scottish ministers can borrow without the need for primary legislation.
The government is to conduct a review of the costs and benefits of bond issuance over other forms of borrowing and "will consider extending Scottish ministers’ powers where this does not undermine the overall UK fiscal position or have a negative impact on total UK borrowing”.
The reform is part of a wide range of devolved measures in the Scotland Bill in which a total of £12bn of financial powers will be transferred from the UK government.
The bill also removes the requirement for Scottish ministers to absorb the first £125m of tax forecasting variation within their budget; allows them to make discretionary payments into the Scottish Cash Reserve for the next five years, up to an overall total of £125m; and bring forward to 2011 pre-payments, a form of cash advance, to allow work on the new Forth Replacement Crossing to begin.
The changes come shortly before the Scotland Bill goes to its Report stage and Third Reading in the House of Commons on 21 June. It will also go to the House of Lords and will be subject to a further vote by the Scottish Parliament.
The Chancellor of the Exchequer George Osborne said: "I am very willing to offer these important changes. They will give the Scottish Parliament and Scottish Government much greater flexibility in the use of their new tax and borrowing powers. They are also fair to the people of the rest of the United Kingdom, who have an interest in sound public finances.”
The Secretary of State for Scotland Michael Moore commented: "We are introducing a mechanism to protect the Scottish budget from sudden shocks. We are also opening up the possibility of future Scottish bonds and bringing forward partial borrowing powers so that work on a new Forth Replacement Crossing can begin in this financial year.”
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