More money to fund vital public services will be at the disposal
of the Scottish Government after a motion passed in the House of
Commons today that will see their borrowing powers increased in
line with inflation.
Scotland Office Minister secured the approval of a
Scotland Act Order that increases the Scottish Government's
resource borrowing limit from £1.75 billion to £1.78 billion and
the capital borrowing limit from £3 billion to £3.05 billion in
2024-25, enabling them to invest further in schools, hospitals,
roads and other key infrastructure that will help to grow the
economy and create better paid jobs and opportunity in
Scotland.
The move upholds the UK Government's commitment to the new Fiscal
Framework agreed in August 2023 between the UK and Scottish
governments which included annual uprating and gives the
Scottish Government certainty over borrowing limits for the
2024/25 financial year.
UK Government Minister for Scotland said:
We have listened to calls from the Scottish Government for
greater certainty and flexibility to help them manage their
budget. This is a great example of devolution in action and how
we can deliver for people of Scotland when our two governments
work together.
The wider Fiscal Framework deal - worth billions of pounds to
Scotland over the coming years - builds
upon work to support economic growth and provide more high-skill
jobs, investment and future opportunities for local people, such
as through Investment Zones and Freeports in Scotland.
The UK Government has made great strides in growing the economy
and by halving inflation sooner than forecast. With our direct
investment in Scotland now standing at more than £3billion, we
are creating opportunities right across the UK.
In addition to the changes made to the cumulative borrowing
limits through today's Order, the Fiscal Framework agreement also
saw the permanent doubling of the resource borrowing annual limit
from £300 million to £600 million. Limits on how much can be
withdrawn from the Scotland Reserve to spend in future years was
also removed. This boosts spending through borrowing by £90
million in 2024/25. All future limits will increase in line with
inflation.
The new arrangements compare with the
previous Fiscal Framework, where the Scottish
Government's capital borrowing limit was £450 million per year
within a £3 billion cap, as well as receiving a Barnett-based
share of UK Government borrowing. Going forward these amounts now
rise with inflation instead, which supports additional investment
across Scotland and lays the foundations for economic
growth.
The funding arrangements for tax continue, with the Scottish
Government continuing to keep every penny of devolved Scottish
taxes while also receiving an additional contribution from the
rest of the UK.
Background:
-
Scotland act orders in the UK Parliament fully support
devolution by facilitating amendments to be made to UK
legislation affecting Scotland, to enable Scottish
legislation to have full effect, or additional powers to be
transferred to Scottish Government ministers.
-
On average, seven Scotland Act Orders are made each year and
more than 250 have been passed since the start of devolution.
-
The target date for the order to come into force is 17 June
2024, subject to the date of signing.
