Scotland 'needs spending powers'

Scotland could better achieve its economic potential as an independent nation with full spending powers, the Scottish Government has said.

SNP ministers said the move would deal with immediate problems, such as the financial crisis, while laying the path for a successful future.

Meanwhile, Labour MSP Andy Kerr backed calls for the Scottish Parliament to be given new powers to borrow money.

He said his party also supported further consideration of the idea.

The Scottish Government's call came in the latest phase of its "National Conversation" on Scotland's constitutional future.

The SNP knows that their previous case for independence now looks like economic suicide Tavish Scott Scottish Liberal Democrat leader Read Brian Taylor's blog

Speaking as he launched a publication on Scottish fiscal autonomy, Finance Secretary John Swinney said the Scottish economy was facing its greatest challenge in decades, yet its budget was determined by Westminster.

"This government is doing all it can to put in place a comprehensive recovery programme to help businesses and households through the difficulties they face," he said.

"However, the impact of the economic crisis has starkly exposed the limits of Scotland's current fiscal framework."

Mr Swinney set out five options for constitutional change - ranging from maintaining the status quo with a few tweaks, to the SNP's top priority of independence.

One scenario, described as "devolution max", would see Scotland gaining powers to raise all its own revenue, but Mr Swinney again stated his government's preferred option of seeing Scotland operate independently.

'Economic suicide'

Scottish Lib Dem leader Tavish Scott branded the document a "face-saving exercise", adding: "The SNP knows that their previous case for independence now looks like economic suicide.

"So, they need to stop the National Conversation they are only having with themselves and work with others."

The comments by Mr Kerr, a former finance minister, came as Scottish Labour made its submission to the Calman Commission, which is examining devolution 10 years on.

Party leader Iain Gray said, while the Scottish Parliament had some tax varying powers, there should be consideration of borrowing powers.

He added: "The SNP are stuck in a time warp as there is nothing new with their latest report on fiscal autonomy. It is the same old argument.

"The Calman Commission, which was set up with cross party support, has rejected fiscal autonomy as not in the best interests of Scotland."

Holyrood ministers aim to hold an independence referendum in 2010, although they currently lack enough parliamentary support for such a move.

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