THE UK Government has rejected calls from Scottish ministers for extra financial powers – insisting that £1.9 billion of additional money will cover the costs of the Covid-19 crisis.
Chief Secretary to the Treasury, Steve Barclay, has claimed the extra funding for Scotland, taking the total to £6.5 billion during the pandemic, was in response to a request from the Scottish Government.
But Scottish Finance Secretary, Kate Forbes, said the additional powers would "not cost the UK Government a penny" and that Westminster's stance was "disappointing".
Mr Barclay spoke to Ms Forbes on Friday, hours after she again asked for greater flexibility on fiscal matters and the ability to borrow more.
Similar repeated requests have been made, including one alongside the finance ministers in Wales and Northern Ireland, who also took part in the discussion with Mr Barclay, but all were turned down.
Mr Barclay said: “What the Scottish Government said is that they wanted greater flexibility to be able to deal with some of the uncertainty of the pressures from Covid and they gave us an estimate as to what that cost would be.
“We’ve listened to that and we’ve responded with something that’s not been done before, which is giving that in-year clarity as to the additional Covid funding for the rest of the year.”
After the £1.9 billion of extra funding was announced, Ms Forbes welcomed the help - but stressed it changed nothing about the need for more flexible financial powers to be handed over.
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Ms Forbes added that the Scottish Government is "still deprived" of the borrowing powers the UK Government has at its disposal, stressing that "we need agreement on fiscal flexibilities".
Mr Barclay questioned how Scotland would borrow the extra funding it seeks.
He said: “It’s difficult to see even what currency the Scottish Government would be borrowing under. The UK, through pooling its resources, is able to borrow at low interest rates.
“Through the block grant, Scotland benefits in terms of its funding – £125 per head compared to £100 in England.
“But the measures today are in addition to that and they sit within the wider package of UK support, and that’s because across the UK we’re better able to weather the storm of the Covid crisis.”
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When asked about the prospect of Scottish independence or another referendum on the issue in the near future, the Chief Secretary echoed comments made by Prime Minister Boris Johnson when he visited Scotland on Thursday that the union has worked for Scotland and the rest of the UK in the response to Covid-19.
Mr Barclay also highlighted that 60 per cent of Scottish trade is with the rest of the UK, but when asked if an independent Scotland could make a trade deal with the rest of the UK in the same way the UK Government is currently attempting to with the European Union, he said: “The question would be for the Scottish Government as to what sort of trading relationship they were hoping to secure.”
Mr Barclay also claimed the people of the UK want to see politicians “coming together” to protect jobs and the economy during the pandemic.
Ms Forbes said: “If we are to meet the challenges of coronavirus, we also require additional fiscal flexibility and it is disappointing the UK Government failed to agree to this today.
“The powers we and the other devolved governments seek are reasonable, straightforward and would not cost the UK Government a penny.”
She added: “At the moment, for example, I can’t take money from the capital budget, which we have been unable to spend because of Covid-19, and use it for revenue. Yet it is revenue that pays for our health services and schools, supports businesses and keeps our transport systems running.
“Unlike other countries across the world we cannot respond quickly to emerging needs by borrowing, leaving us overly-dependent on policy decisions made by the UK Government.”
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