The UK government has announced that it is taking the next step in Scottish devolution by beginning the formal process to give the Scottish government the power to issue bonds from 1 April 2015.
This is part of the UK government’s promise to deliver on its previous commitments on devolution.
The Treasury will today (Friday 12 December) introduce legislation allowing the Scotland Office to amend the sources of capital borrowing available to Scottish Ministers so they will be able to issue bonds.
The Scotland Office will now be able to lay the amendment order before Parliament rises for the Christmas recess.
Chief Secretary to the Treasury Danny Alexander received agreement from Deputy First Minister and Cabinet Secretary for Finance, Constitution and Economy John Swinney MSP and Parliamentary Under-Secretary of State for Scotland David Mundell MP, to begin the final legislative process that will give the Holyrood administration an extra source of financing when it gets new borrowing powers from 1 April 2015.
Danny Alexander, Chief Secretary to the Treasury, said:
This is a big step that shows that the UK government is keeping its devolution promise to Scotland. By beginning this process now, we will be able to have legislation in place to ensure that Scotland can issue bonds from April next year.
Being able to issue bonds will give the Scottish government an additional source of capital funding as part of its new tax and borrowing powers contained in the Scotland Act 2012.
By the time we have fully implemented this Act and the Smith Commission’s agreement, the Scottish government’s new powers will make it one of the most powerful devolved administrations in the world.
The government first announced in February 2014 that the Scottish government would be given the power to issue its own bonds, following a public consultation in 2012.
This will broaden the sources of financing available to the Scottish government for capital investment such as major transport projects, hospitals, schools and flood defences.
The Scotland Act 2012 currently provides for the Scottish government to be able to borrow up to a total of £2.2 billion for capital investment via the National Loans Fund and commercial loans from 2015-16.
It also provides for the means of borrowing to be varied through secondary legislation, which is now being used to enable the Scottish government to issue bonds.
This announcement relates to implementation of existing agreements following the Calman Commission’s report and subsequent Scotland Act 2012, and is separate to the Smith Commission process on further devolution.