
Look at increasing Scottish Government borrowing limits, MPs tell UK Government
But in a report from the Scottish Affairs Committee at Westminster on the fiscal arrangements north of the border, MPs pushed for the limits to be increased.
The report said: 'At present, the Scottish Government's limited borrowing powers constrain its ability to manage fiscal shocks, as it is only able to borrow for resource purposes to cover forecast errors.
'Capital borrowing limits are currently linked to, and grow in line with, inflation, which may not necessarily be the highest metric of growth.'
It added: 'We agree with the Secretary of State that borrowing limits should be linked to the measure which offers the Scottish Government the highest level of flexibility but, crucially, we note that which metric delivers this remains undetermined.
'The UK Government should therefore publish a transparent analysis of what borrowing limits would look like based on the different metrics advised in the evidence for this inquiry.
'At the next fiscal framework review, we encourage the UK Government to consider reforming the Scottish Government's capital borrowing powers, by automatically coupling borrowing to the metric which offers the highest limit.'
The report comes at the end of an inquiry by the committee which sought to gauge the effectiveness of the Barnett Formula – the measure which dictates the level of funding the UK Government sends to Scotland every year.
The MPs found the measure was 'fit for purpose', although it is 'imperfect'.
The committee also rejected calls for the formula to shift and provide funding to Scotland based on need.
Scotland, the report said, already receives more funding per head than any other country in the UK and a change in the framework could see funding cut.
In written evidence to the committee, Scottish Finance Secretary Shona Robison reiterated the Scottish Government's support for full fiscal autonomy – an arrangement which would see powers over tax and spending devolved.
But the committee dismissed such a move as not being a 'realistic prospect'.
'Fundamental questions remain about how full fiscal autonomy would work in practice, and whether it would be operable within the constraints of the UK's current devolution settlement,' the report said.
'Practicality aside, we do not believe that a compelling case has been made that such a change would automatically result in Scotland receiving a higher level of funding.'
Ms Robison declined an invitation to appear before the committee, leading the MPs to say 'do not see how we can consider this a serious proposition, and we remain to be convinced that this proposal is desirable in principle, let alone workable in practice'.
Responding to the report, Ms Robison said: 'This report rightly recognises that Scotland's finances remain largely dictated by the UK Government's spending decisions, irrespective of the impact on Scottish public services.
'That has meant Scotland has been left with a shortfall of £400 million to pay for the Chancellor's national insurance increase, and saw Scotland short-changed by more than a billion pounds over the next three years at the recent spending review.
'The decisions we have taken to ask higher earners to pay a little bit more – while most income tax payers pay less than in the rest of the UK – mean that we can support vital public services and provide free tuition, prescriptions and the Scottish child payment to help tackle child poverty.'
Scottish Secretary Ian Murray said: 'The spending review provided the Scottish Government with an extra £9.1 billion, giving them a record settlement.
'People will expect that to deliver better outcomes for Scots – lower NHS waiting lists and better attainment in our schools.
'Spending per head in Scotland is around 20% higher than the rest of the UK thanks to the Barnett formula. This report confirms that it appears to be the position of the Scottish Government to scrap that formula that delivers higher funding – they should explain why they want less money for public services in Scotland.
'Their plans for full fiscal autonomy would mean a £12 billion cut in public spending for Scotland.'
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles


Powys County Times
21 minutes ago
- Powys County Times
Britain risks being ‘dumping ground' for forced labour goods
Britain risks being a 'dumping ground' for goods linked to forced labour in countries like China unless the Government reforms its anti-slavery laws, Parliament's human rights watchdog has warned. Existing rules are failing to prevent products flown from Xinjiang, where Beijing is accused of employing Uighur Muslim people against their will, ending up on UK shelves, according to a new report. In the 99-page document, MPs and peers on the influential Joint Committee on Human Rights (JCHR) called on ministers to impose import bans on goods linked to forced labour. Mandatory human rights due diligence for UK firms and penalties for flouting the requirements should also be introduced, the cross-party group said. This would establish a legal duty for businesses to manage any risk of human rights abuse in their operations, such as by requiring suppliers to fulfil certain conditions, rather than the existing 'voluntary' approach. Key to UK laws governing forced labour is the Modern Slavery Act 2015, but the committee warned a lack of 'enforceable legislation' is leaving loopholes in the system. 'The evidence we heard demonstrates that goods produced by forced labour are being sold in the UK,' the JCHR said. 'Cargo flights are permitted to bring goods directly from the capital of Xinjiang to the UK unhindered and media investigation has provided strong evidence that tomatoes produced under forced labour conditions are used in products sold in UK supermarkets.' Britain's approach to imports has fallen behind other key markets like the EU and the US, which have introduced bans on goods linked to forced labour, according to the report. 'The UK's lack of equivalent legislation puts the UK at risk of becoming a dumping ground for goods that cannot be sold elsewhere,' it said. It recommended the Government bring in a similar measure to establish who is responsible for preventing the import of such goods and what happens if goods are confiscated. This ban should make clear that no company that uses or allows state-imposed forced labour in its supply chains can import goods to the UK, the committee said. Concerns have also been raised over the UK's free trade deal with India, where human rights groups estimate more than 11 million people are living in modern slavery. Meanwhile, more than a million people are estimated to live in modern slavery in the US, according to the same data, compiled by the International Labour Organisation and Walk Free in partnership with the UN. The JCHR said the UK could learn from the EU's policy of using 'political clauses' in its deals to promote the bloc's values, as it continues negotiations with some Gulf states amid concerns about their human rights records. It urged the Government to make it an explicit policy to include provisions concerning forced labour in future trade agreements, and to avoid entering negotiations with countries participating in state-imposed forced labour. Sir Keir Starmer's Government has sought to balance a revival of relations with Beijing in its pursuit of growth with matters of national security amid concerns about Chinese interference in Britain and human rights concerns. China has denied accusations it is subjecting the Uighur minority to forced labour. Lord David Alton, chairman of the JCHR, said its inquiry had seen 'shocking evidence' of human rights abuses in a wide range of industries at the heart of UK trade. 'Most of all, we want to see strong leadership from the Government. It's intolerable in the 21st century that we profiteer on the broken backs of slave labour, from Uighur servitude in Xinjiang to child labour in the cobalt mines of the Congo, and elsewhere,' he said. 'The Government knows (the) nature of the problem and the challenge but meaningful action has been lacking.'

Rhyl Journal
21 minutes ago
- Rhyl Journal
Whisky tariffs to be halved by ‘fantastic' India trade deal
Sir Keir Starmer will welcome his Indian counterpart Narendra Modi on Thursday to sign the deal, which will see tariffs on whisky cut from 150% to 75%, and potentially dropping to 40% in the next decade. While tariffs on soft drinks will drop gradually from 33% to 0%, the UK Government estimated a £190 million boost for Scotland as a result of the deal. Speaking ahead of the signing, Scottish Secretary Ian Murray said: 'This is great news for Scotland and Scottish jobs. 'Our trade deal with India is fantastic news for Brand Scotland, with our goods, businesses and services gaining access to what is projected to be the world's third-largest economy by 2027. 'From food, drink and textiles production, to clean energy, advanced manufacturing, life sciences and financial services, Scotland has so much to offer India. 'It's fantastic news in particular for the world-famous whisky industry, with Indian import tariffs slashed on Scotch having the potential to be transformational for the industry. It's also good news for our other national drink, with tariffs on soft drinks cut. 'As the UK Government delivers our Plan for Change, we are also bringing inward investment to Scotland to create jobs, boost economic growth and improve living standards right across the UK.' Scotch Whisky Association chief executive Mark Kent said the industry had 'long championed' a deal with India, adding: 'The signing of the FTA is an historic moment and is an important milestone to reducing tariffs on Scotch whisky in a growing market. 'This will contribute to the Government's growth objective, by laying the foundations for further investment and jobs.'

Rhyl Journal
21 minutes ago
- Rhyl Journal
UK-wide strategy needed to tackle pensioner poverty, says committee
The Government should also decide on – and ensure – a minimum level of retirement income, the Work and Pensions Committee urged. Once set, a plan should be created for everyone to reach that level, it added. Given that the state pension is the core of the Government's offer to pensioners, a guiding principle should be that it provides the amount needed for a 'minimum, dignified, socially acceptable standard of living', the committee said. It urged the Government to commit to a UK-wide, cross-government strategy for an ageing society, that it said would help target support to tackle pensioner poverty. If it does not effectively tackle poverty as one of the causes of ill-health, 'the Government will not be able to achieve its goal of building a health and social care service that is sustainable', the Pensioner Poverty report warned. The report also highlighted longer-term trends that 'threaten to undermine pension adequacy', such as people renting into later life. The committee also called for a pension credit take-up strategy for England by the end of 2025. Despite being worth up to £4,000 a year, the take-up of pension credit has hovered between 61% and 66% for a decade, with an estimated 700,000 households being eligible but not claiming, the committee said. A taper to pension credit should also be considered to 'mitigate the cliff-edge effect' for those who currently miss out, the report said. Under current rules, some pensioners just above income thresholds could end up worse off than those with slightly lower incomes, it added. Pension credit can 'passport' recipients to other benefits such as housing benefit, council tax support, the warm homes discount, a free TV licence, help with dental treatment and, in winter 2024/25, the winter fuel payment. The committee argued that reliance on top-ups such as pension credit and housing benefit is not sufficient to ensure people do not fall below the poverty line. The report said: 'After a decline in pensioner poverty in the 2000s, the number of pensioners in relative low income started to rise again from 2010. This has been exacerbated by increases in the cost of living since 2021.' It continued: 'The number of people of pension age living in relative poverty (below 60% of median income) is 1.9 million or 16% of pensioners. 'Measures which factor in the cost of living show that between 2008/09 and 2022/23, the number of pensioners in households below the Minimum Income Standard (MIS)—the amount needed for a minimum dignified socially acceptable standard of living—rose from 1.5 to 2.8 million. 'The proportion of pensioners below 75% of MIS (where the risk of material deprivation increases substantially) rose from 5.9% in 2021/22 to 9.5% in 2022/23. 'In practice, this means cutting back on essentials, like food, energy use and seeing friends, in an attempt to manage costs. Health experts explained the implications for health. Financial hardship can accelerate the ageing process, making it more likely that an older person will enter hospital or need care.' The committee said that in some places, organisations are working together towards shared objectives. The report continued: 'However, not all areas do this. We heard that it would help to have a national cross-government strategy for our ageing society and older people. 'This could provide a framework to hold the different partners to account for their role in delivering the agreed outcomes. It could also ensure that central government departments developed policy with shared objectives in mind.' Committee chairwoman Debbie Abrahams said: 'To boost incomes, the Government needs to come up with a strategy to increase pension credit take-up. It's a scandal that so many have missed out for so many years, often through an aversion to claiming benefits altogether, or lack of support. 'The fairness of the pensions credit eligibility criteria where if you are a penny above the threshold, you miss out on thousands of pounds, also needs to be looked at. 'Ultimately, the Government should decide what it thinks is enough for a dignified retirement, and then work to ensure that all pensioners are on at least that level. 'Faced with a combination of high energy costs, ill-health and ever higher rates of pensioners in more costly privately rented accommodation, tackling pensioner poverty is not simply a DWP (Department for Work and Pensions) issue. So, we're calling for a nationwide, cross-government strategy for an ageing society that should be rooted in equity and wellbeing.' On Tuesday, Chancellor Rachel Reeves said that a review into raising the state pension age is needed to ensure the system is 'sustainable and affordable'. The Government review is due to report in March 2029 and Ms Reeves said it was 'right' to look at the age at which people can receive the state pension as life expectancy increases. The state pension age is currently 66, rising to 67 by 2028 and the Government is legally required to periodically review the age. A Government spokesperson said: 'Supporting pensioners is a top priority, and thanks to our commitment to the triple lock, millions will see their yearly state pension rise by up to £1,900 by the end of this parliament. 'We have also run the biggest-ever campaign to boost pension credit take-up, with nearly 60,000 extra pensioner households being awarded the benefit, worth on average around £4,300 a year. 'But we know there is a real risk that tomorrow's pensioners will be poorer than today's, which is why we are reviving the Pension Commission, to tackle the barriers that stop too many people from saving.' Emma Douglas, wealth policy director at Aviva, said: 'The pensions industry – alongside a revitalised Pensions Commission – has a critical role to play in helping people save for retirement and then turn their hard-earned pension pots into lasting financial security. 'With many people likely to manage their money well into their 90s, we must ensure those savings work harder and stretch further – especially as later life can bring complex challenges like cognitive decline.' She said that Aviva and Age UK were exploring a 'mid-retirement MOT' to help give people tools, guidance, and confidence to stay financially resilient throughout retirement. Caroline Abrahams, charity director at Age UK, said: 'We warmly welcome this thoughtful and wide-ranging select committee report, which comes closer to providing a thorough and progressive strategic overview of the issues facing older people on low incomes and proposing workable solutions than anything successive governments have produced in recent years. 'When the Government announced the launch of the Pensions Commission earlier this week, ministers made it clear that its task is to think about the creation of a better system for future pensioners. 'This is necessary and important, but this committee report reinforces the point that there's work to do to improve the situation of today's pensioners on low incomes as well.'