Scotland Bill

There are annual amounts and cumulative amounts. The annual amount at 10% of the capital departmental expenditure limit is very modest and the cumulative amount is less than the amount spent on capital in recent years. That strikes me as inappropriate when we are seeking to stimulate the economy and do all the things that the hon. Gentleman and I both want to see happen. As we can have revenue streams coming in to offset some of this, I do not want to put a limit on it, but the code of practice would do that. [Interruption.] I am not going to be drawn on that. I have explained why and I want to move on to bonds, which is another important issue. Professor Gerald Holtham said in his evidence to the Committee that there is no macro-economic rationale to prevent the Scottish Government from having bond-issuing powers. I raised that on Second Reading, when I said:"““The borrowing powers in the Bill will limit the Scottish Government to certain types of borrowing. They will be able to use loans, rather than bonds or other instruments that would provide greater flexibility. Transport for London, which is a local authority in respect of its borrowing powers, is currently issuing ""commercial paper worth £7 billion for Crossrail and other projects. Birmingham city council issued paper to the tune of £250 million in 2006””.—[Official Report, 27 January 2011; Vol. 522, c. 541.]" As I said at the time, it is strange that what should be a seriously enhanced power for the Scottish Parliament, as described in the Bill, does not even put it on a par with TfL or Birmingham city council in its ability to raise cash through commercial paper for important national infrastructure works. Professor Iain McLean and others have noted that bond issues would have several benefits. First, they would provide the Scottish Government with greater flexibility in the financing of capital projects, and the ability to issue a range of instruments would allow projects to be financed by a mixed portfolio of borrowing both in terms of repayment periods and the interest and other terms of the borrowing instrument. Secondly, in certain circumstances, issuing instruments in the market may offer a better deal on rates and repayment terms than a loan from the Treasury or a commercial bank. Indeed, the Treasury recently announced in the spending review a 1% rise in the charge or cost on loans from the Public Works Loan Board, increasing the cost of local authority borrowing. Having an option to seek financing from the market would provide an alternative in the event of a punitive interest rate being imposed at some future point by the Treasury. Professor McLean said in his evidence that"““it should be for the Scottish Parliament and Scottish ministers—not the UK Parliament or UK ministers—to decide on the soundness of the capital projects to which they commit themselves, and to deal with revenue fluctuations.””" That is the answer to the point raised by the hon. Member for Congleton (Fiona Bruce). If we are serious about responsibility—I hope that we all are—the Scottish Government must be allowed to make the decisions. Those decisions should land squarely on the desks of Scottish Ministers, or those in whatever other body is responsible for raising capital. I am pleased that the Scottish Parliament Committee has recommended that there should be higher capital borrowing limits and that they should be introduced earlier, that the limit for prudential borrowing should be increased from £2.2 billion to about £5 billion—the fact that the Committee considers that figure reasonable is a good starting point for negotiations in terms of the code of practice—that Scottish Ministers should have complete discretion in relation to what the money is spent on without having to seek agreement from the Treasury, and that the borrowing powers should be introduced earlier in the next Scottish Parliament. I also welcome the recommendation that the Scottish Parliament should have power to borrow directly from the markets by issuing bonds. Given the considerable support for these proposals and the deep concern throughout the Committee about some of the Bill's provisions, I should like to know whether the Government intend to table the necessary amendments for debate on Report on 22 March, or to table them in another place after that point. The Scottish people are entitled to know about the shape of revenue and capital borrowing, and Members representing constituencies in Scotland—and, indeed, elsewhere—are entitled to be able to scrutinise properly whatever proposals may be presented. I hope that the Minister will be able to give us definite information about when amendments will be tabled, and whether they will accord with the recommendations of the Scottish Committee.