Chamber
Meeting of the Parliament 09 June 2011
09 Jun 2011 · S4 · Meeting of the Parliament
Item of business
Scotland Bill: Borrowing Powers and Growing the Economy
Last week, I set out to Parliament the Government’s strategic aims on the economy, and we had a valuable and constructive debate on the economic priorities for Scotland. By re-electing this Government, the people of Scotland have ensured that the issues of importance about which we campaigned and which we set out have been brought to the fore in this session. That gives us the opportunity to secure enhanced powers and greater economic freedom for this Parliament, which is at the heart of the Government’s agenda. Today’s debate, on capital borrowing powers, responds to the expectation of the public and the mandate that we have been given.
In his opening speech of the new session of Parliament, the First Minister made clear the commitment of the Scottish Government to work with all parties across the chamber openly and positively to advance Scotland’s interests. On borrowing powers, as on many other issues, we are building on solid foundations, including the work of the Scotland Bill Committee in the previous session, the Calman commission and the Holtham commission in Wales. We can have confidence that the issues around capital borrowing have been well exercised by that process of discussion and debate in recent months and years.
I will focus my remarks on the substance of the Scotland Bill proposals on capital borrowing and how this Parliament can strengthen them. First, however, I want to offer some broader reflections on the process in which we are engaged.
As members are aware, we are engaged in detailed and substantive discussions with the United Kingdom Government on strengthening the powers of the Parliament. Those are important discussions, and we encourage the UK Government to take a positive approach to our proposals. Indeed, I noticed on the Press Association wires at 1.55 this afternoon that the Deputy Prime Minister, on a visit to South Queensferry, has indicated that capital borrowing powers that were to be in place by 2013 will be available this year. We await further detail from the Deputy Prime Minister and others on what underpins that remark.
We should consider the task that we face with regard to borrowing powers. We are considering a long-term and fundamental reform of Scotland’s financial governance. Members across the chamber will have different views about what is ultimately the right economic and political framework for Scotland, but it will be the people of Scotland who will settle those questions. Our shared responsibility, today and in the coming months, is to ensure that the outcome of the Scotland Bill is a coherent and durable set of financial reforms that can substantially enhance the authority and effectiveness of this Parliament.
It is important to be clear on the purpose of capital borrowing, and we are very clear. There is an overwhelming economic logic behind capital borrowing powers. For example, they can support the construction of large strategic projects, such as the Forth replacement crossing, which will benefit future generations but will also create significant short-term financial pressure on today’s capital budgets. They can provide a medium-term economic stimulus, similar to the accelerated capital programme that we have undertaken, but without the need to cut investment while recovery is still fragile. They can also help to lever in additional private sector investment by enabling Government to act as the funder to key sectors, such as the renewable energy, enterprise, housing and regeneration sectors, and they can prevent destabilising swings in capital spending by helping to smooth investment and to manage capacity in our key public services.
In his opening speech of the new session of Parliament, the First Minister made clear the commitment of the Scottish Government to work with all parties across the chamber openly and positively to advance Scotland’s interests. On borrowing powers, as on many other issues, we are building on solid foundations, including the work of the Scotland Bill Committee in the previous session, the Calman commission and the Holtham commission in Wales. We can have confidence that the issues around capital borrowing have been well exercised by that process of discussion and debate in recent months and years.
I will focus my remarks on the substance of the Scotland Bill proposals on capital borrowing and how this Parliament can strengthen them. First, however, I want to offer some broader reflections on the process in which we are engaged.
As members are aware, we are engaged in detailed and substantive discussions with the United Kingdom Government on strengthening the powers of the Parliament. Those are important discussions, and we encourage the UK Government to take a positive approach to our proposals. Indeed, I noticed on the Press Association wires at 1.55 this afternoon that the Deputy Prime Minister, on a visit to South Queensferry, has indicated that capital borrowing powers that were to be in place by 2013 will be available this year. We await further detail from the Deputy Prime Minister and others on what underpins that remark.
We should consider the task that we face with regard to borrowing powers. We are considering a long-term and fundamental reform of Scotland’s financial governance. Members across the chamber will have different views about what is ultimately the right economic and political framework for Scotland, but it will be the people of Scotland who will settle those questions. Our shared responsibility, today and in the coming months, is to ensure that the outcome of the Scotland Bill is a coherent and durable set of financial reforms that can substantially enhance the authority and effectiveness of this Parliament.
It is important to be clear on the purpose of capital borrowing, and we are very clear. There is an overwhelming economic logic behind capital borrowing powers. For example, they can support the construction of large strategic projects, such as the Forth replacement crossing, which will benefit future generations but will also create significant short-term financial pressure on today’s capital budgets. They can provide a medium-term economic stimulus, similar to the accelerated capital programme that we have undertaken, but without the need to cut investment while recovery is still fragile. They can also help to lever in additional private sector investment by enabling Government to act as the funder to key sectors, such as the renewable energy, enterprise, housing and regeneration sectors, and they can prevent destabilising swings in capital spending by helping to smooth investment and to manage capacity in our key public services.
In the same item of business
The Presiding Officer (Tricia Marwick)
NPA
The next item of business is a debate on motion S4M-00235, in the name of John Swinney, on borrowing powers and growing the Scottish economy.14:30
The Cabinet Secretary for Finance, Employment and Sustainable Growth (John Swinney)
SNP
Last week, I set out to Parliament the Government’s strategic aims on the economy, and we had a valuable and constructive debate on the economic priorities f...
Willie Rennie (Mid Scotland and Fife) (LD)
LD
The Cabinet Secretary for Finance, Employment and Sustainable Growth quite rightly says that investment in transport infrastructure is important. He says tha...
John Swinney
SNP
Our election manifesto set out the argument that the savings to the public purse that the excellent and well-run procurement project generated, which were sa...
Gavin Brown (Lothian) (Con)
Con
Not yet.
John Swinney
SNP
Mr Brown says, “Not yet,” but a fixed-price contract applies.
David McLetchie (Lothian) (Con)
Con
We have heard that one before.
John Swinney
SNP
I say to Mr McLetchie that a fixed-price contract is a fixed-price contract. We have such a contract for the M74 project, which will be completed early, and ...
Richard Baker (North East Scotland) (Lab)
Lab
We believe that the question that requires to be answered when we debate whether the Parliament should have new powers is this: will the devolution of the po...
John Mason (Glasgow Shettleston) (SNP)
SNP
Is the member arguing that, in the long run, a private finance initiative approach makes better sense than the Scottish Futures Trust?
Richard Baker
Lab
It certainly made no sense to delay those projects at that time. I make it clear that I am happy that we can instead endorse a strategy on borrowing powers f...
Patrick Harvie (Glasgow) (Green)
Green
I understand entirely the member’s point that the amount of borrowing should not exceed the amount that can be serviced through devolved taxation. However, I...
Richard Baker
Lab
We are discussing what can be achieved in the current negotiations and through proposed legislation that is in process. From that point of view, I am trying ...
David McLetchie (Lothian) (Con)
Con
As a member of the Scotland Bill Committee in the previous session, it gives me great pleasure to open the debate on behalf of the Scottish Conservatives. Th...
John Swinney
SNP
Is Mr McLetchie developing an argument for the limitations in the Scotland Bill to be a firm cap, as envisaged in the current proposals, or is he persuaded b...
David McLetchie
Con
I am happy that there should be a principles-based approach to the determination of the appropriate figure. Whether an absolute figure or a formula and mecha...
John Swinney
SNP
Will the member give way?
David McLetchie
Con
No, thank you—I have to make progress.Members: Oh!
John Swinney
SNP
That is a last-minute trick.
David McLetchie
Con
Presiding Officer, can I take Mr Swinney’s intervention and have some extra time?
The Deputy Presiding Officer (Elaine Smith)
Lab
If Mr Swinney is brief.
John Swinney
SNP
Mr McLetchie went on at great length about constraints and limitations on borrowing. One of the constraints on private borrowing by Scottish Water is the rig...
David McLetchie
Con
It is because Scottish Water is in the public sector, which is exactly the point that we are coming to. How disappointing—I thought that we were going to be ...
The Deputy Presiding Officer
Lab
I remind members to speak through the chair.15:02
Maureen Watt (Aberdeen South and North Kincardine) (SNP)
SNP
In the run-up to the 1997 UK election, Tony Blair once famously claimed that it would be odd if the Scottish Parliament did not enjoy the same powers as an E...
Neil Findlay (Lothian) (Lab)
Lab
Is one of the fluctuations to which the member refers the huge fluctuation in corporation tax that may follow, should the SNP get corporation tax powers? Is ...
Maureen Watt
SNP
I was referring to the fact that it will cause severe problems if we can make changes only to income tax. If we have corporation tax powers, there will be at...
Gavin Brown
Con
What kind of impact would such fluctuations have on a local income tax?
Maureen Watt
SNP
I am sure that that issue will be examined when a local income tax is considered. At least local councils have the option of borrowing for projects, which th...
Rhoda Grant (Highlands and Islands) (Lab)
Lab
I welcome the debate, and I believe that we can reach some consensus on the issue—certainly in principle. Capital borrowing powers were introduced by the Cal...