THE Scotland Act, the new one, represents the biggest transfer of fiscal powers to Scotland for 300 years, as Scottish Secretary Michael Moore is fond of reminding us.
Judging by the opinion polls Holyrood's growing responsibilities should be popular, yet when the Act received Royal Assent on May 1 last year, it was greeted with little by way of celebration or, for that matter, interest. The Nationalists only backed it after months of criticism, at one point describing the new income tax powers as a "pig in a poke" that could leave Scotland worse off. Since then, the pro-UK parties' commitment to consider further devolution has served to rub some of the gloss off the 2012 Scotland Act.
There is perhaps another reason for its failure to set the heather alight: the long timescales involved. The first Scottish Rate of Income Tax - which should make up about half the total income tax you pay - will not take effect until April 1, 2016. The same applies to another key provision of the Act, Holyrood's new borrowing powers. That same year the Scottish Government will be able to borrow money for the first time, a cool £2.2bn to be precise.
It's been assumed this will be good news when it finally happens. SNP and Labour MSPs agree that investing in infrastructure is essential to kickstart the economy, and borrowing should help get more projects off the ground. But last week the Centre for Public Policy for Regions (CPPR) think tank spotted a potential spanner in the works.
In a report which attracted precious little attention, the Glasgow University-based economists dredged up a largely-forgotten Scottish Government pledge (the curse of the Scotland Act is indeed a powerful thing) never to allocate more than 5% of its budget to repaying costs associated with building projects. This fiscal rule, the CPPR felt, was ambiguous in that it wasn't exactly clear what types of infrastructure funding were covered. But according to one set of calculations, adding in Private Finance Initiatives (PFIs); Public Private Partnerships (PPPs); the SNP's own version, the Non-Profit Distributing method (NPDs), and different schemes for funding rail and water investment, the Scottish Government's repayments are already nudging perilously close to the 5% cap. By financial year 2015/16 they could amount to 4.9% of the budget, the CPPR warned. In other words, John Swinney's credit card could be maxed out just as the new borrowing powers become available.
Clearly that could have a big impact on the Scottish Government's infrastructure programme and all those shovel-ready projects it wants to get started with. In response the Scottish Government insisted its current commitments were "affordable" and emphasised the need for its fiscal rule. That view is shared by the CPPR but the report's co-author, Jo Armstrong, maintained that "for the rule to offer confidence on Scotland's finances, we need greater clarity on what any cap should be, how the rule should be calculated and regular updates on how well we are managing our liabilities." MSPs, she said, should be pressing ministers for answers. It will be interesting to see if they take up the challenge as 2015 approaches.
We moderate all comments on HeraldScotland on either a pre-moderated or post-moderated basis. If you're a relatively new user then your comments will be reviewed before publication and if we know you well and trust you then your comments will be subject to moderation only if other users or the moderators believe you've broken the rules, which are available here.
Moderation is undertaken full-time 9am-6pm on weekdays, and on a part-time basis outwith those hours. Please be patient if your posts are not approved instantly.