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Kate Forbes, Scottish Finance Secretary wrote to the Secretary of the Treasury, Stephen Barclay seeking temporary changes to their arrangements. The MSP warns that the funding is “critical” to securing a recovery from the coronavirus crisis.
In the letter, Ms Sturgeon’s finance secretary said that coronavirus makes the need for a “robust” review of funding arrangements clear.
The calls emerge after government figures show that Scottish GDP fell by 18.9 percent in April, the highest drop on record with the SNP warning there was a £500million hole between the extra cost of the COVID-19 pandemic and the funding given to Scotland from Westminster.
First Minister of Scotland Nicola Sturgeon said the record economic decline “confirms the scale of the economic crisis that has inevitably been caused by the health crisis we face”.
Edinburgh currently receives a fixed budget from Westminster every year under the Scotland Act.
Speaking at Holyrood’s Finance and Constitution Committee, the Finance Secretary said she would have “one hand tied behind my back” as the economy emerges from the pandemic.
At the same time, Scottish authorities wanted they faced “devastating” financial black holes with Highland Council being the worst figures.
Figures show the authority faces a £96.6million gap in its finances due to lost revenues which represents the equivalent of £411 for every resident, the worst in the UK.
Ms Forbes added in the letter: “To be clear, this request is not about permanently revising the existing framework.
“Rather, it is about providing enabling relatively minor flexibilities given the extraordinary pressures that the devolved governments are currently under, to ensure that our fiscal powers are commensurate with the risks we face.
“However, our fixed budget could respond more effectively with some relatively minor fiscal flexibilities.
“I cannot emphasise how critical these are to our ability to support recovery.”
Of the ability to borrow £500 million, the finance secretary requested that the repayment period is doubled to ten years, up from five years.
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They also stressed that there should be more flexibility on drawing down reserve money with the limit increased to £220 million.
The Scottish government’s overall budget for the 2020-21 financial year currently stands at more than £52 billion, up from an earlier estimate of £49.25 billion.
Ms Forbes added that the COVID-19 crisis shows an upcoming review of funding arrangements should be “robust”.
She said: “I would welcome a discussion with you in due course on how our governments can work together to deliver this robust review.
“I recognise that the UK Government will expect us to consider all options to use our budget as effectively as possible to respond to the cost pressures of COVID-19.
“We are fully committed to doing that, and indeed have already identified significant reprioritisation to support our response.”
Ms Forbes is due to meet her colleagues from Wales, Northern Ireland, Scotland and the UK Government on Friday to discuss the UK’s financial situation.
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