Draft Scotland Act 1998 (Increase of Borrowing Limits) Order 2025
Debate between John Lamont and Martin McCluskey
Martin McCluskey (Inverclyde and Renfrewshire West) (Lab)
I beg to move,
That the Committee has considered the draft Scotland Act 1998 (Increase of Borrowing Limits) Order 2025.
It is a pleasure to serve under your chairmanship, Mr Efford. This draft order was laid before the House on 23 April 2025, and I am grateful for the opportunity to debate it today. As with all Scotland Act orders that have appeared before Committees in this Session, it is the result of collaborative working between Scotland’s two Governments and upholds the 2023 fiscal framework agreement.
The 2023 agreement, made by the Scottish Government and the last UK Government, builds on the agreements made by the Smith Commission in 2014, which devolved significant powers to the Scottish Government, including those over welfare, tax and borrowing. The Scottish Government’s borrowing powers apply to both resource and capital and, as agreed between the Governments, are limited. In resource borrowing, the Scottish Government may pursue borrowing within the limits for in-year cash management and for forecast error in relation to devolved and assigned taxes and demand-led welfare expenditure that arise in specific circumstances. Capital borrowing is again set by the limits in legislation, and they are in addition to the Scottish Government’s block grant.
The draft order deals with the cumulative borrowing limits for the Scottish Government. As with the increase in borrowing limits introduced by the Scotland Act 1998 (Increase of Borrowing Limits) Order 2024—introduced by the hon. Member for Berwickshire, Roxburgh and Selkirk in May 2024—this order, if made, will increase the Scottish Government’s cumulative capital and resource borrowing limits to reflect inflation. The draft order would be made under sections 67 and 67A of the Scotland Act 1998, which set out the amounts available to borrow under section 66. As specified in these sections, we are bringing forward this order with the consent of the Treasury.
Turning briefly to the detail of the order, in the 2023 agreement, the UK Government agreed to amend the Scotland Act 1998 to increase these limits as necessary. The 2023 agreement sets out the cumulative limits for capital and resource borrowing. This order will increase these limits based on the Office for Budget Responsibility’s GDP deflator forecast at the time of the Scottish Government’s draft budget. This order amends section 67(2) of the Scotland Act 1998 and, if made, would increase the cumulative resource borrowing limit from £1,779.351 million to £1,834.303 million. It would also increase the cumulative capital borrowing limit from £3,050.316 million to £3,144.519 million.
