Devolved governments urge UK Government to ease ‘rigid fiscal rules’
Finance ministers from the Scottish, Welsh and Northern Irish administrations have joined together to urge the UK Government to ease the “rigid fiscal rules” imposed on devolved governments, ahead of Chancellor Rishi Sunak’s summer statement today.
Sunak is expected to announce £3bn of new investment in green projects as part of a pledge to “kickstart eco-friendly economic recovery” and create jobs in low carbon industries.
Scottish Finance Secretary Kate Forbes has joined with Welsh and Northern Irish ministers for finance Rebecca Evans and Conor Murphy to call for “assurances that will give them the freedom to switch capital funding to day-to-day revenue and put an end to the arbitrary limits on borrowing”.
“The powers we are seeking will enable the Scottish Government to respond to COVID-19 more effectively and reboot our economy. They are relatively limited powers, but would ease some of the immense pressures on our budget and give us more tools to kick-start our recovery,” Forbes said.
“At the moment, any extra money spent bolstering services and supporting the economic recovery must be taken from other areas. That creates risks for our essential public services, jobs and businesses. I am therefore calling on the Chancellor to ease these rigid fiscal rules and give us the flexibility we need to properly address the monumental challenges our economy is facing.”
Additionally, she said: “I also want to see greater ambition in the level of investment in our economy.”
Murphy said it was “crucial” that devolved administrations were equipped to respond effectively to the challenges that could arise from the pandemic.
“More financial flexibility can help us deal with these challenges and use our budgets to support public services, protect the vulnerable, and deliver an economic recovery,” he said.
Evans said there was “no clear rationale for these rules, which undermine good budget management in Wales”.
“Our response to the COVID-19 crisis has been hampered by UK imposed rules that limit our ability to get more resources to the frontline,” she said.
“The Welsh Local Government Association, Wales TUC, FSB Cymru and Institute for Fiscal Studies and, more recently, the Senedd’s Finance Committee, have all made the same calls for change.
“The crisis has made the issue urgent. It’s time for the UK Government to act and provide the flexibility we need to respond and invest in Wales’ recovery.”