Swinney rejects new borrowing powers to fund Forth crossing

The UK Government's Scotland Bill, unveiled ten days ago, will allow the Scottish Government to borrow money for the first time, with a maximum limit of 2.2 billion for capital spending. But the Scottish Government is to press ahead with its plans to pay for the 2bn crossing from its year-to-year capital budget.

It said the fact Scotland would only be permitted to borrow up to ten per cent of its capital budget each year meant it would take ten years to get enough to pay for the bridge, when it is currently scheduled for completion by 2016.

Mr Swinney said: "The government's plans for the Forth replacement crossing remain entirely intact. We will finance the Forth replacement crossing out of traditional capital."

He acknowledged, however, that the new bridge would take up such a big chunk of the capital budget that it would have "major implications" for other projects. He said: "Borrowing powers would allow us to deliver some of the wider capital programme."

The Scottish Government originally wanted to borrow from future capital budgets to pay for the bridge, but that was vetoed by the previous Labour government at Westminster.

The SNP then announced it would finance the crossing year by year from the normal capital budget.

Launching the Scotland Bill on St Andrew's Day, Scottish Secretary Michael Moore highlighted the new Forth crossing as one of the projects which could benefit from the new borrowing powers. The possibility of borrowing to finance the bridge was also specifically mentioned in official documents accompanying the Bill.

However, a Scottish Government aide said the borrowing powers, due to come into effect in 2013, were too late and too restricted to be of use in funding the crossing.

He said: "The Scotland Bill would allow us to borrow up to a maximum of ten per cent of our capital budget year on year. That would mean it would take ten years to get to 2bn, so that would take us to 2023.

"This underlines the modesty of the borrowing powers proposed.

"We need to look at the borrowing powers and see how they could best be applied. They could be of assistance and make a contribution to our overall capital budget and allow our existing capital resources to go that bit further."

A Scotland Office spokesman said the borrowing powers contained in the Scotland Bill went much further than proposed by the Calman Commission.He said: "This important new power would enable the Scottish Parliament to spread the costs of capital investments across the lifespan of projects. It is not ring-fenced in any way, either for the Forth crossing or any other project. It would be for Scottish ministers to decide where to allocate that money."