£6m a DAY interest? The No wonder Nicola & Co want to hike taxes
IT costs taxpayers £6.5 million every day just to cover the interest on Scotland’s debt.
The Scottish Government and councils owe £46 billion after splashing out on major capital projects, figures show.
They come days after Nicola Sturgeon’s SNP and the Greens agreed a Budget deal that will see council tax rise and income tax soar above English levels.
The Government is a record £1.45 billion in the red, according to analysis by the independent Scottish Parliament Information Centre (SPICe).
But that figure is dwarfed by repayments due on money borrowed to complete major infrastructure projects such as schools, roads and hospitals. The SNP set up the Scottish Futures Trust (SFT) to fund such developments, via a model called Non-Profit Distributing (NPD) – seen as a successor to Labour’s PFI and PPI.
A massive £28.3 billion – more than twice Scotland’s annual health budget – is due to be repaid on PFI and NPD projects between now and 2048.
SFT spokesman Peter Reekie told the public audit committee it is racking up interest at up to 5.92 per cent per year– higher than the rate on many loans from high street banks.
Meanwhile, councils have amassed £16.4 billion of debt.
The Government said it expected to have to pay £17 million interest on its £1.45 billion debt in 2019-20.
But more will be paid on commit- ments under NPD and PFI. At an annual rate of 5.92 per cent, the Government could expect to pay £1.675 billion interest a year. At an average rate of 4.12 per cent, councils would also have to pay £676 million interest a year on their debt.
That amounts to £2.368 billion a year – or £6.5 million a day.
John O’Connell, chief executive of the TaxPayers’ Alliance, said: ‘Hardworking taxpayers will be angry to learn millions of pounds of their money is spent repaying debts rather than funding schools and hospitals.
‘Borrowing to invest is not the silver bullet many bureaucrats believe it to be and will simply leave future to pick up the bill. National and local governments should focus on rooting out wasteful spending – and in turn this money can be spent on essential frontline services.’
The SPICe research was obtained by Labour MSP Jackie Baillie.
She said: ‘While spending on infrastructure is important for our economy, the SNP Government seems determined to max out the nation’s credit card, leaving it for future generations to bear the cost.
‘It is increasingly clear that the SNP’s flagship NPD programme does not represent value for money.
‘When public money is so tight, every penny must be made to work that bit harder. It is now essential the SNP carries out an urgent review of how it raises and spends our capital funding for infrastructure projects.’
Both the Government and council umbrella body Cosla insisted their borrowing provided value for money.
A Scottish Government spokesman said: ‘All international studies show boosting infrastructure investment is expected to have a positive impact on Scotland’s long-term economic growth. That is why our annual investment in our hospitals, schools, houses, transport and low-carbon technology will be around £1.56 billion higher by 2025-26 than 2019-20.
‘We will use a variety of approaches to achieve this, including the use of capital borrowing.’
A Cosla spokesman said: ‘Scottish councils’ debt is a direct result of capital investment in essential services for their communities.
‘Councils apply principles of prudence in managing their borrowing, which ensures that their debt is kept at affordable levels.’
‘SNP determined to max out nation’s credit card’