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Scottish Government requests new financial powers to deal with coronavirus crisis

By Gregor White

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Finance Secretary Kate Forbes.
Finance Secretary Kate Forbes.

The Scottish Government has formally requested new powers to help meet the "significant economic and fiscal challenges" of coronavirus.

Writing to the UK government's Chief Secretary to the Treasury, Scotland's Finance Secretary, Kate Forbes, details temporary changes being sought.

These include the ability to switch money from the capital budget to day-to-day spending and the flexibility to borrow up to £500 million this year to support the Covid-19 response.

She says: "I welcome the estimated funding that the UK government has notified to date in respect of Covid-19, and the efforts to minimise the fiscal uncertainty that the devolved administrations have to manage.

"I am also grateful for your recognition that, as we move towards the recovery phase, there remain significant economic and fiscal challenges ahead for the devolved governments.

"Given the nature and scale of this crisis, and the economic impact it is having, I believe there is a strong case for temporary additional powers and flexibilities beyond those currently set out in the Fiscal Framework, alongside continued discussions on establishing clear and certain levels of consequential Covid-19 funding.

"To be clear, this request is not about permanently revising the existing Framework. Rather, it is about providing 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.

"The Scottish Government has already reprioritised £255 million at the Summer Budget Revision in order to deploy greater resources to combat coronavirus.

"Since then I have identified around £600 million in further savings, including £450 million of Capital and Financial Transactions.

"However, our fixed budget could respond more effectively with some relatively minor fiscal flexibilities.

"I cannot emphasise how critical these are to our ability to support recovery."

Ms Forbes, who is also MSP for Skye, Lochaber and Badenoch, also talks of the need to discuss permanent new financial arrangements which she said would help the devolved administrations better manage budgetary risk.

"While I am clear that these additional flexibilities are not about permanently revising the current Fiscal Framework, I believe that the COVID-19 crisis makes clear the need for the upcoming review of the Fiscal Framework not only to robustly consider the case for revisions to the existing arrangements (such as increased reserve and borrowing flexibility), but also to examine whether the Scottish Parliament’s existing powers are sufficient to manage the budgetary risks we face in operating the additional powers devolved in the Scotland Act 2016 and the Fiscal Framework, and to tackle the many challenges of the post-Covid-19 world, in line with its devolved responsibilities.

"I would welcome a discussion with you in due course on how our governments can work together to deliver this robust review."

The letter has been sent ahead of the latest regular meeting of finance ministers from the UK, Scottish, Welsh and Northern Irish governments, which is due to take place remotely on Friday.

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