Draft Scotland Act 1998 (Increase of Borrowing Limits) Order 2025
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.
Martin McCluskey
I am looking at the hon. Gentleman because he clearly struggled with these figures last year as well.
The order provides the Scottish Government with certainty over the cumulative borrowing limits for this financial year. It is for the Scottish Government to decide how they use these borrowing powers and the increased limits, and they are accountable to the Scottish Parliament for these decisions.
In making this order, the UK Government uphold our commitment to the 2023 agreement and deliver for the people of Scotland. As ever, Scotland Act orders are possible only with the joint working of officials in both Governments, and I thank officials in the Scotland Office, the Treasury and the Scottish Government for their work on this order. This positive way of working delivers for the people of Scotland. I commend the draft order to the Committee.
Harriet Cross (Gordon and Buchan) (Con)
It is a pleasure to serve under your chairmanship, Mr Efford. I am grateful for the opportunity to speak on behalf of the official Opposition as we consider the draft Scotland Act 1998 (Increase of Borrowing Limits) Order 2025. As Members will be aware, the instrument proposes an increase to the Government’s resource borrowing limit from £1,779.351 million to £1,834.303 million, and the capital borrowing limit from £3,050.316 million to £3,144.519 million. This represents an uplift of around 3.1% for both limits, which is in line with the annual inflation adjustments in previous years.
This is not the first time that this House or its Committees have considered such an order. These annual increases have become a routine feature of the fiscal framework between the UK Government and the devolved Administration in Scotland. This is process is familiar, but that does not mean that we should treat it as a routine exercise. What we are considering today is the capacity for the Scottish Government to borrow funds and, as in this place, that comes with significant responsibility, not just to the Treasury but to the people of Scotland—our constituents.
To be clear, the UK Government, under successive Conservative Administrations between 2010 and 2024, consistently recognised the importance of providing the Scottish Government with the appropriate tools to manage their finances. These borrowing limits are not arbitrary figures; they are designed to strike a balance between providing flexibility for the Scottish Government and maintaining fiscal discipline across the UK. The annual uplift ensures that the real value of these borrowing powers is preserved in the face of inflation.
However, greater borrowing levels must come with significantly greater scrutiny and far more robust accountability. It is simply not sufficient to approve increases year on year without requiring clear, transparent accounts of how the borrowed sums are being spent. It is the role of this House, and particularly of those of us representing Scottish constituencies, to ensure that every penny borrowed on behalf of the Scottish people is spent wisely and for the benefit of our communities.
Currently, there are mechanisms in place for this oversight—the UK Treasury and the Scotland Office provide some level of monitoring—but, frankly, given the sums involved and the track record of the Scottish National party Administration at Holyrood, we must ask whether those are enough. There is a pressing need for improved transparency and much more detailed public reporting on how the Scottish Government allocate and spend these funds. Regular independent audits and clear public reporting are essential steps towards rebuilding public confidence, which has been sorely tested in recent years.
This is not a theoretical concern. Questions have been raised about the efficiency of capital projects overseen by the Scottish Government, with serious doubts about the value delivered for the substantial sums invested. From the delays in ferry services, to millions spent on a climate review to excuse the SNP failing to deliver the dualling of the A96, to ongoing issues with the NHS, the public have witnessed too many examples of funds being allocated to projects without clear, demonstrable outcomes. The Scottish people expect to see real, tangible improvements in infrastructure, public services and their local economies, and they deserve transparency about how these funds are being spent.
While we acknowledge that the SNP Government have significant devolved powers, they have too often fallen short of the standard of fiscal transparency that the people of Scotland have the right to expect. This Government, therefore, should consider what specific checks and balances they will institute to ensure that the increased borrowing is used efficiently and effectively. It is one thing to increase the borrowing capacity, but it is another to demonstrate that those funds are being used to create tangible improvements in communities across Scotland.
The previous Conservative Government consistently sought to improve transparency and accountability in Scotland’s financial dealings, and we should expect the same from the Labour Government. It is crucial that this House remains an active participant in scrutinising the Scottish Government’s financial decisions.
While we do not oppose this order, recognising its routine and necessary nature, I urge the Government to use this moment to strengthen the systems of oversight and reporting that accompany these powers. The people of Scotland—those in our constituencies and beyond—deserve nothing less than the highest standards of accountability. They deserve to know that their money is being used in the best way possible, and that the Scottish Government are prioritising projects that bring real benefits for our communities.
John Lamont
I just want to make a few remarks, Mr Efford; I will not detain colleagues for long. I commend the Minister for his remarks, and I associate myself with the remarks from the shadow Minister, my hon. Friend the Member for Gordon and Buchan. Just over a year ago that I was moving a similar draft order on behalf of the previous Government, so I congratulate the Minister on reading out those numbers so accurately.
It is important to record, as the Minister and my hon. Friend did, that this additional funding will potentially be used by the Scottish Government to fund vital public services that many of our constituents depend on, whether that is schools, roads or other infrastructure projects that are vital to many of our constituents. But it is a great shame that the Scottish SNP Government perhaps do not use all of the resources available to them to fund those types of policy areas, and instead obsess repeatedly about independence referendums. Indeed, just this week, the First Minister spoke about how next year’s Scottish parliamentary election will be about independence referendums—again.
From the SNP Government’s record, it is not hard to see how they have failed to deliver for the people of Scotland: one in six Scots is stuck on NHS waiting lists, drug deaths remain the highest in Europe, there are more than 900 fewer police officers today than prior to the pandemic, there are 1,500 fewer teachers, and the Government have failed to close the attainment gap. We also all know how much money was wasted on their reckless gender reform Bill.
It is a shame that no SNP Members are present to welcome this additional funding from the UK Government or to defend their record in government in Scotland. As my hon. Friend the Member for Gordon and Buchan said, the SNP Government are accountable to Members of the Scottish Parliament, but is the Minister confident that the SNP Government will use this additional funding for the public services that our constituents use every day?
Martin McCluskey
I thank hon. Members for their contributions, which I will address in turn. For the record, this year’s increase is 2.37%, and that is based on the OBR’s GDP deflator at the time of the Scottish Government Budget.
I am slightly surprised by Opposition Members’ comments about the devolution settlement. These are issues for the Scottish Parliament, and it is for the Scottish Parliament to scrutinise the Scottish Government. Opposition Members may not have confidence in Conservative Members of the Scottish Parliament to appropriately scrutinise the Scottish Government, but I have confidence in Labour Members of the Scottish Parliament to appropriately scrutinise the decisions of the Scottish Government.
The hon. Member for Berwickshire, Roxburgh and Selkirk will be familiar with the 2023 fiscal framework from his time as a Minister. It contains provision for the Scottish Government to notify the Treasury monthly on any planned capital borrowing, outstanding debt and the repayment profile. Obviously, that all has to be set within limits.
As I said earlier, resource borrowing can take place only in very specific circumstances. It is not unconstrained, but is specific to two categories, which I laid out in my speech a moment ago.
I agree with the hon. Member that the Scottish Government could do a lot more with their powers, and if there were any SNP Members on the Committee, we might hear about some of their plans. Whether or not we were MPs at the time, I think we all remember that extensive powers were devolved to the Scottish Parliament through the 2014 Smith Commission, and many of those are gathering dust on the Scottish Government’s desk. I am thinking specifically about welfare powers, but others could be taken up by the Scottish Government and have not been. I would have liked to have heard from some SNP Members about how they planned to use those powers.
In conclusion, the draft order is an expression of joint work between the Scottish and UK Governments. I thank officials on both sides for their work on it. I commend the order to the Committee.
Question put and agreed to.