Borrowing limits must be ‘thrown out’: MSP

A former SNP minister has demanded that the Bank of England fund a £6 billion rescue package for the Scottish economy this year.

Alex Neil said the only possible solution to the current crisis was for Holyrood to be allowed to use the central bank in the same way as the Westminster government.

In a debate on the nation’s economic recovery in the Scottish Parliament on Monday, the former health secretary insisted it was time to scrap current devolved borrowing limits and “throw the fiscal framework out the window”.

But Scottish Liberal Democrat leader Willie Rennie branded remarks about the Bank of England “ridiculous”, while Tory MSP Murdo Fraser said scrapping the framework would end protection against declining tax revenues.

Benny Higgins, chairman of the Scottish Government’s Advisory Group on Economic Recovery, pointed to a 4% economic stimulus announced by Germany on Monday.

He said such an intervention would represent about £6bn for Scotland, but that Holyrood could only borrow £450 million under the fiscal framework.

In a debate on Mr Higgins’ report, Mr Neil said that “there is only one plan that is possible” to achieve that scale of investment. He said: “And that is for the Scottish Government – as well as all the other devolved governments in the UK – to be able to borrow directly the money needed for the economic recovery, directly from the Bank of England, on exactly the same terms and conditions as the UK Government is doing.

“And now is an opportunity for the UK Government to give the powers for the Scottish Government to have the same borrowing powers – paying no interest, like the UK Government, no timescale for repayment, like the UK Government, and the power to write-off any loans from the Bank of England, like the UK Government has already done with the money it borrowed for the recession.”

The Airdrie and Shotts MSP added: “So, presiding officer, throw the fiscal framework out the window, it is no longer fit for purpose, and give us some real short-term powers that we can use to save the Scottish economy.”