Andrew Wilson: Funding is "absurd"

A vote of MSPs on Wednesday has ensured that work on the current Scottish Parliament building at Holyrood in Edinburgh will continue.

The cost will be around �195m, but nationalists say nearly a third of that - more than �50m - will end up in the Treasury as VAT and tax paid by employees and contractors.

The SNP's finance spokesperson, Andrew Wilson, used the building project to back up his argument that the parliament should have wider control of tax than the present limited powers.

The MSP told the debate on Thursday: "It's absurd that �1 in every �3 we spend on the Holyrood project will be recycled back to the London Treasury in tax.

"That means less for the Scottish budget, less for spending on health and education."

Mr Wilson had earlier told BBC Radio Scotland that every other devolved institution in Europe has greater financial independence than Scotland.

He said: "It is possible to have fiscal autonomy like the Basque country and other parts of Europe where you raise and spend money in Scotland and then send some money south.

'Financial disadvantage'

"I think people will be both surprised and alarmed that money is being diverted from health and education spending straight back into the UK Treasury without being seen by anyone in Scotland."

He also argued that Scotland was at a financial disadvantage due to the fact it does not have the same borrowing powers as other devolved institutions and independent countries.

"Normal countries would not pay for a building out of this year's health and education spending.

"There would be significant savings if we could borrow through a low interest government bond which would also mean repayments could be spread over 30 years.

Ken Macintosh: SNP suggestion is "ludicrous"

"Even councils can borrow in this way and this could save Scotland in the region of �40m," said Mr Wilson.

Ministers, though, believe Scotland works well within the wider financial framework of the United Kingdom.

The country's Finance Minister Jack McConnell pointed out to MSPs that Scotland gets more in public spending than in pays in tax.

The Scottish Executive is also arguing that with the Holyrood building row now settled, everyone should concentrate on keeping the project on target.

Presiding Officer Sir David Steel has expressed concerns at the restrictions on the funding of the project.

Alternative funding

Labour MSP Ken Macintosh, a member of the parliament's finance committee, admitted that alternative funding methods should be examined.

He said all approaches to finance should be scrutinised.

"There is certainly an argument to be looked at of separating revenue spending from capital spending," said Mr Macintosh.

But he added: "Andrew Wilson seemed to be under the illusion that if we defer spending it would be cheaper.

"If you take out a loan, you still have to pay the money back and you have to pay interest on that."

He described Mr Wilson's suggestion that the money going to the Treasury was unfair as "ludicrous".