The Golden Rule
You seemed to rise to the previous post re: Scottish borrowing. So herewith a bit more.
In response to one query, the Northern Ireland Executive does indeed have a borrowing power of up to £2bn. It was introduced in May 2002 as part of a reinvestment and reform initiative.
The exec can borrow from the National Loans Fund (Proprietor, HM Treasury.)
Borrowing must be to finance capital investment - not current spending. Aka the Golden Rule (Proprietor, G. Brown.)
To the end of 2007-8, the NI Exec had borrowed £723m.
So is that the model for Scotland? Well, I keep hearing decided scepticism from the UK Government (Prop., see above).
They argue that the NI deal is tantamount to the aggregation of borrowing powers by Scottish local authorities, stressing that many functions carried out locally here are delivered throughout NI by central boards.
New liberty
They argue further that borrowing does not of itself create new, unfettered resources. It is borrowing. Borrowing that has to be paid back.
If Scotland were to be granted borrowing powers, it is argued, that would simply replace the capital element of the present allocation, as determined by Barnett.
It is argued that Scotland could not be granted substantial new liberty in borrowing powers without affecting: a) public spending totals; and b) the amount of capital investment available elsewhere in the UK.
It is argued further that, if additional capital borrowing is granted, that would also require a revenue hike to cover interest payments. Consequently, borrowing would have to be strictly limited by HM Treasury.
Against that, it is argued that HMT is insufficiently flexible - as witness the current impasse over the Forth Crossing.
I'd welcome further contributions, perhaps particularly those which address the issue of how borrowing would be repaid. And to whom. Treasury borrowing only? Or open market?
I'm 
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