Salmond set for Whitehall showdown over funding plan

Published on Friday 27 July 2007 00:05

ALEX Salmond is set for a showdown with Whitehall over his plans to fund Scottish schools and hospitals through a bond issue scheme, after the Treasury insisted the Executive had no powers to borrow.

The First Minister has discussed the plan with Ken Livingstone, the London mayor, who was also blocked from raising finance from bond issues for the London Underground system from the then-chancellor, Gordon Brown.

Mr Salmond said, "Ken Livingstone has considerable experience looking at financing infrastructure with bond issues."

The First Minister was bullish about his plans, saying: "There is some indication there will be a more progressive attitude towards capital investment in the new administration."

A spokesman for the Treasury said: "The Scottish Executive has no powers to borrow. There are no plans to change this."

The Executive will attempt to get around restrictions on its money-raising powers by setting up a separate trust to issue the bonds. A source said:

"It would not be borrowing by the Executive but through a trust, at arm's length from government."