New powers ‘critical’, says Forbes

The Scottish Government has formally requested new financial powers from the Treasury, saying they are “critical” to securing a recovery from the coronavirus crisis.

Finance Secretary Kate Forbes has written to Stephen Barclay, Chief Secretary of the Treasury, seeking temporary changes to funding arrangements.

These include the ability to borrow up to £500 million this year to deal with Covid-19 and flexibility to switch unused capital budget to other spending.

Ms Forbes said the crisis makes the need for a “robust” review of funding arrangements clear.

The letter was sent ahead of a meeting of finance ministers from administrations in Wales, Northern Ireland, Scotland and the UK government tomorrow.

Ms Forbes said: “To be clear, this request is not about permanently revising the existing framework.

“Rather, it is about enabling relatively minor flexibilities given the extraordinary pressures that the devolved governments are currently under, to ensure that our fiscal powers are commensurate with the risks we face.”

She added: “I cannot overemphasise how critical these are to our ability to support recovery.”

The letter makes three key requests, including the ability to reallocate capital underspend on day-to-day spending.

It also asks for the ability to borrow up to £500m, with repayment periods extended to a maximum of 10 years from five years.

There should also be more flexibility on drawing down reserve money, it says, with the limit increased to £220m.

Due to increased spending to tackle Covid-19, the Scottish Government’s overall budget for the 202021 financial year currently stands at more than £52 billion, up from an earlier estimate of £49.25bn.