Scottish Parliament financial powers set to be boosted

The Scottish government is seeking greater fiscal autonomy for Scotland

The UK government has unveiled plans to give the Scottish Parliament more financial powers.

Holyrood will be able to borrow more money, issue bonds to access cash from capital markets and protect itself from sudden changes in spending levels.

Chancellor George Osborne said it would significantly improve the Scottish government's responsibility.

Scottish First Minister Alex Salmond described the move as a "down payment" towards greater Holyrood powers.

The enhanced financial responsibility will be brought forward in an enhanced Scotland Bill, which is already going through Westminster.

The Treasury and Scotland Office said the Scotland Bill would now give Holyrood ministers £12bn of financial powers, under the largest, single transfer of fiscal power from Westminster ever seen in the United Kingdom.

The chancellor said: "I have always believed that devolution brings rights, but also responsibilities.

"The far-reaching changes we are introducing means the Scottish people and their elected representatives will be much more responsible not just for decisions on public spending in Scotland, but also for the Scottish taxes needed to pay for those decisions."

The changes announced to the Scotland Bill would:

• Allow the government to amend the way in which Scottish ministers can borrow to include bond issuance, without the need for further primary legislation.

• Remove the need for Scottish ministers to absorb the first £125m of tax forecasting variation within their budget, providing more flexibility when responding to changes in spending levels, due to variations in tax income compared to forecasts.

• Allow Scottish ministers to make discretionary payments into the Scottish cash reserve for the next five years, up to an overall total of £125m, to help deal with tax income changes, in the initial phase of the new system.

The Scottish government has already been told it can borrow about £200m this year to pay for big projects, such as the new Forth road bridge.

Holyrood was due to be given extra borrowing powers in two years time and the announcement gave ministers access to some of that cash this year.

Scottish Secretary Michael Moore, said: "Along with other measures in the Scotland Bill, these proposals will allow Scotland to shape the economy we want and generate the jobs we need.

"They will do so within the framework of a strong and stable UK."

The UK government said it was still waiting to receive forthcoming submissions from the Scottish government on the extra Holyrood powers it wanted.

SNP ministers want control over areas including corporation tax and Crown Estate revenues.

Mr Salmond said: "Let's welcome the element of concession today as a down-payment on what Scotland needs to get our economy moving."

"Looking at the statements made today, I doubt if it's of the scale and the size that the Scottish Parliament is looking for, not just the SNP or the Scottish people are looking for.

"Basically we want to get on with the job of building things in Scotland - we want to get the economy moving and we don't want to see the growth we're now seeing in the Scottish economy cut short by the lack of availability of capital spending so we'll be putting that case."

The changes to the bill will come just before it goes to its report stage and third reading in the Commons, on 21 June.

The legislation will also go to the House of Lords and will be subject to a further vote by the Scottish Parliament.