'The case for borrowing powers is now unassailable'
Remember this locomotive? Well the one bound for Scotland is working up quite a head of steam. Trailed by Nick Clegg during a visit to North Queensferry last Thursday, the Treasury has just confirmed the new package of financial powers that will be offered to the Scottish Government - and they're significant.
According to the Treasury, "They will provide Scottish Ministers with a total of £12 billion of financial powers and represents the largest single transfer of fiscal power from Westminster in the history of the United Kingdom".
Most eye-catching from a Welsh point of view is that borrowing powers will be offered to Scottish Ministers well-nigh immediately.
No wonder the statement rushed out by the Welsh Government on Thursday evening after Mr Clegg's trip to Scotland carried something of a "me too" feel about it.
Carwyn Jones said, "The case for borrowing powers for Wales is now unassailable. I call on the UK Government to deliver these powers as soon as possible. Wales cannot remain the only part of the UK where the government cannot borrow to fund roads and hospitals.
"This would put us at a unique disadvantage and the UK Government now has a responsibility to rectify this. The Deputy Prime Minister says this deal is good for the economy of Scotland. I say to him what is good for Scotland is good for Wales and the same responsibilities must now be transferred from Westminster to Cardiff. The people of Wales will now expect similar announcements to be made by the Prime Minister and Deputy Prime Minister, when they next visit Wales."
The changes announced today by the Treasury are:
- Introducing a power in the Scotland Bill which will enable the Government to amend, in future, the way in which Scottish Ministers can borrow to include bond issuance, without the need for further primary legislation. The Government will conduct a review of the costs and benefits of bond issuance over other forms of borrowing, and will consider extending Scottish Ministers' powers where this does not undermine the overall UK fiscal position or have a negative impact on total UK borrowing;
- Removing the requirement for Scottish Ministers to absorb the first £125 million of tax forecasting variation within their budget - this will give the Scottish Government more flexibility to decide how best to respond to variations in tax receipts compared to forecasts;
- Allowing Scottish Ministers to make discretionary payments into the Scottish Cash Reserve for the next five years, up to an overall total of £125 million - this will help manage any variation in Scottish income tax receipts compared to forecasts in the initial phase of the new system; and
- Bringing forward to 2011 pre-payments, a form of cash advance, to allow work on the new Forth Replacement Crossing to begin.
That word "bonds" - vague though the context is - brings back some memories too. Remember the lengthy and complicated row about Plaid Cymru's "Build for Wales" scheme in the run up and during the Assembly election campaign? There'll be some wry smiles in the Plaid camp today, I suspect, about that particular aspect.
An interesting quote, too from the Chancellor of the Exchequer George Osborne: "I have always believed that devolution brings rights, but also responsibilities. The far reaching changes we are introducing means that 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.
"I think this will significantly improve the fiscal responsibility and accountability of the Scottish Government, which can only be good for the people of Scotland."
So where now for Wales, in the wake of this announcement? Well, there are still no details on the "Calman-style commission" proposed in the UK coalition agreement but the UK government has pledged to lay out the details before MPs break for their summer recess next month.
It's still not clear whether it will be a full blown independent Commission, or whether the work done by Gerry Holtham will be taken as a starting point for inter-governmental negotiations. Before that, the First Minister will make a statement to the Assembly on his view of the way forward next week. The mood music coming out from both sides is that they want to work together to deliver a financial package that suits Wales' needs. I wonder how long that will last.