UK government boosts Scotland: UK Government Increases Scotland’s Borrowing Powers
The UK Government has taken a significant step to enhance the financial autonomy of the Scottish Government. Ian Murray, the Scottish Secretary, has laid “The Scotland Act 1998 (Increase of Borrowing Limits) Order 2025” before Parliament, which aims to increase the Scottish Government’s borrowing limits.
Increased Borrowing Limits
The Order will raise the Scottish Government’s cumulative borrowing limits to £3 billion for capital and £629 million for resource. These limits are adjusted annually in line with inflation, as outlined in the Fiscal Framework Agreement between the UK and Scottish Governments.
Legislative Background
As the cumulative borrowing limits are legislated under the Scotland Act 1998, secondary legislation is required to effect the annual changes. In contrast, the annual limits are non-legislative, and no legislative change is necessary to amend these.
Still on UK government boosts Scotland
Statement from the Scottish Secretary
Ian Murray expressed his satisfaction with laying the Order, stating, “I’m very pleased to have laid this Scotland Act Order which increases the Scottish Government’s cumulative borrowing limits to a total of £3.6 billion.” He highlighted the additional £4.9 billion provided to the Scottish Government in the Autumn Budget, which ended austerity.
Record Funding Settlement
The Scottish Government will have access to record funding of £47.7 billion in the current financial year. Murray emphasized that the increased borrowing powers complement this funding settlement, demonstrating the UK Government’s commitment to maintaining the devolution settlement.
Implementation and Debate
The Order is set to take effect on June 30, 2025. Before then, there will be a debate in the House of Commons to discuss the implications of the increased borrowing limits.
Fiscal Framework Agreement
The 2023 Fiscal Framework Agreement between the Scottish and UK Governments outlines the Scottish Government’s funding arrangements, including budget management tools such as borrowing powers. Officials from both governments collaborated to deliver the Order, reflecting their ongoing cooperation on Scotland Act Orders.
Enhanced Financial Autonomy
The increased borrowing limits will provide the Scottish Government with greater financial flexibility to manage its budget and deliver public services. This development is a key aspect of the UK Government’s commitment to devolution and supporting the Scottish Government’s responsibilities.
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