Parliamentary scrutiny of the Scotland Bill has started with the unusual sight of a UK Treasury minister appearing before a committee of the Scottish Parliament.
One of the important gaps in the Bill is a provision that debars the Scottish Government from issuing bonds. David Gauke MP told MSPs that Holyrood could not be given the same power as local authorities to issue investment bonds because such a move could damage the UK’s credit rating.
Scottish Labour MSP Peter Peacock asked why Holyrood should be denied the right to issue bonds to fund capital projects. Mr Gauke replied: “We have a concern that if the Scottish Government was also able to issue bonds there is a risk of confusion in the gilts market. We don’t want to create any uncertainty that may damage the UK’s position."
This is clearly absurd as local authorities already have these powers and no one has suggested that these damage the UK's credit rating. Brian Adam MSP probably got closer to the truth when he said “Is stability just another word for Treasury control? Isn’t it the truth that the Treasury have had to be dragged kicking and screaming to allow devolution of any of these financial powers?”
This is an important issue on the day the Scottish Government published its consultation paper on Scottish Water. 'Building a Hydro Nation' sets out an ambitious vision for developing the role of Scottish Water and bonds would be one way of financing it. Given that the Scottish Conservatives and Liberal Democrats take every opportunity to undermine our public water service, I do wonder if there is any link to the UK Con-Dem minister's position on this?