Coronavirus: Scottish finance secretary makes fresh call for new powers

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Ms Forbes has previously called for a “robust” review of the devolved funding arrangements

Scotland’s finance secretary has repeated her call to be allowed to switch capital funding to day-to-day revenue.

Speaking ahead of the UK Chancellor’s summer statement, Kate Forbes also called for an end to “arbitrary” limits on borrowing.

Ms Forbes said she was asking for “relatively limited powers”.

But she said the move would “ease some of the immense pressures on our budget” caused by the coronavirus crisis.

The Chancellor is to announce a £2bn “kickstart scheme” on Wednesday to create more jobs for young people.

The fund will subsidise six-month work placements for people on Universal Credit aged between 16 and 24, who are at risk of long-term unemployment.

It will cover England, Scotland and Wales.

The UK government says Scotland has already benefitted from £3.8bn of Barnett consequentials as a result of increased spending in England during the pandemic.

And it has said that the Scottish government is already able to borrow up to £450m per year for capital projects and £300m to support day-to-day spending.

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The UK Chancellor is to launch a fund to help young workers

Ms Forbes originally made a request to be allowed to borrow £500m this year and to be given the flexibility to reallocate any unused capital funding on day-to-day spending in a letter to the Treasury two weeks ago.

Prime Minister Boris Johnson said at the time that he would consider the request – but Ms Forbes subsequently told the BBC’s Good Morning Scotland programme that it has been “kicked into the long grass” by the Treasury.

She has now made a fresh request alongside her counterparts in Wales and Northern Ireland.

Ms Forbes said: “At the moment, any extra money spent bolstering services and supporting the economic recovery must be taken from other areas.

“That creates risks for our essential public services, jobs and businesses.

“I am therefore calling on the Chancellor to ease these rigid fiscal rules and give us the flexibility we need to properly address the monumental challenges our economy is facing.”

Ms Forbes also repeated her call for the UK government to show “greater ambition in the level of investment in our economy” by introducing an £80bn stimulus package.

The Scottish government wants to see a stimulus package worth 4% of UK GDP to “deliver an investment-led recovery” in the wake of the coronavirus crisis.

It also wants “major investment in low-carbon, energy efficiency and digital infrastructure”.

This would include support for consumers and businesses through tax cuts, cash grants to individual households, a public sector investment programme to focus on green technology, and an extension of wage subsidy schemes for the hardest-hit sectors.

The Scottish government also wants the standard rate of VAT levied on goods and services to be cut from 20% to 15% for six months post-lockdown, and to 5% for the hospitality sector.

The UK government says it has already introduced emergency tax and spending measures worth an estimated £133bn, with its jobs retention “furlough” scheme covering more than a quarter of the workforce.

It has described its support package for coronavirus as “one of the most generous in the world”, and has said that more than 770,000 jobs in Scotland have been saved through the job retention and self-employed schemes.

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