Commons lifts borrowing limit for Scottish Government

Scottish Government ministers can borrow more to support their spending after the House of Commons agreed to a new set of limits.

MPs have agreed to cap borrowing by the devolved government in Edinburgh from Whitehall at £1.78bn, up from £1.75bn.

The Scottish Government may borrow up to £3.05bn for spending on long-term projects, known as capital expenditure, up from £3bn.

Scotland Office minister John Lamont said the figures “reflect inflation”, but the SNP’s Westminster Scotland spokesperson Tommy Sheppard said the money “mainly goes in the construction industry, where we’ve been looking at 40% to 50% inflation”.

Lamont said: “This is the result of collaborative working between the two governments in action.”

He described the process as “devolution in action” and added: “This order will increase the Scottish Government’s cumulative capital and resource borrowing limits to reflect inflation.”

Lamont said the timing of the Scotland Act 1998 (Increase of Borrowing Limits) Order 2024 gives the Scottish Government “certainty over the cumulative borrowing limits for the 2024/2025 financial year”, but the Scottish Government “still remains accountable to the Scottish Parliament and the people of Scotland on how they choose to use these increased borrowing powers”.

Intervening, independent MP Angus MacNeil described the devolved administration as being a “hostage of the UK Government”.

Lamont said: “I know the honourable member and his friends on the nationalist benches continue to obsess about independence, but what he seems to forget is the people of Scotland and their say on that back in 2014 and voted in record numbers to remain part of a strong UK.

“I would suggest that the honourable members opposite should focus on delivering for frontline services in Scotland, like supporting our NHS, like supporting our schools, supporting our transport network, and getting on with the day job of governing Scotland rather than talking perpetually about referendums and independence.”

Sheppard said: “There’s been a suggestion that there is nothing to see here, that all that’s happening is a statutory instrument to give effect to an agreement that has been reached between the Scottish and UK governments.; that’s not quite the case though is it?

“Of course officials in both governments have worked out agreements on how things should be calculated – how inflation and various other factors should be determined – and it’s good to see that officials in both governments are singing from a common hymn sheet when it gets to analysing the situation before them.

“But that is not to pretend that the quantum of money involved is the subject of consensus or agreement,“ he continued. “In fact, I must say that I would have thought even Scottish ministers would be even a little concerned to suggest that this is an inflation-related increase in borrowing limits.

“The increase is 1.6% over seven years, for money that mainly goes in the construction industry where we’ve been looking at 40% to 50% inflation over the same period.”

According to the Building Cost Information Service forecast published in March, building costs will rise by 15% over the next five years, while tender prices will rise by 17% over the same period.

Sheppard warned of a “double whammy” and said: “Not all capital spending is to do with big, grandiose projects, a lot of capital spending is focused on improving the day-to-day operational delivery of public services, and therefore the consequences of cuts and delays are going to impact on revenue budgets as well.

“If we cannot improve the energy efficiency of a particular building through capital improvements, it’s going to cost more to run that building.”

Don’t miss the latest headlines with our twice-daily newsletter – sign up here for free.