Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Scotland’s first minister said the country would issue its own government bonds for the first time to finance infrastructure and help build credibility with investors as the governing Scottish National party makes a renewed push for independence.
“To fund vital infrastructure like affordable housing projects, we will issue Scotland’s first ever bond,” Humza Yousaf, the leader of SNP, told delegates on Tuesday, as he closed the party’s annual conference in Aberdeen.
“In doing so, we will show the world not only that we are a country to invest in today. We will also demonstrate the credibility to international markets that we will need when we become an independent country.”
The administration in Edinburgh has had the right to go to the capital markets directly since 2015 under additional powers agreed with the UK Treasury following the failed independence referendum in 2014, with 55 per cent of Scots voting to remain part of the union.
Despite arguing hard for the extra powers, the pro-independence SNP, which has governed Scotland since 2007, has so far opted not to issue bonds, leading critics to accuse the party of not being serious about using all its financial levers.
Yousaf, who was closing his first party conference since taking over as leader from Nicola Sturgeon, did not specify the size of the first bond issuance, which he said would be subject to “due diligence assessments”.
Under the existing framework, the government at Holyrood can raise up to £450mn per year and £3bn in total. It has been reluctant to go to the bond market because it would likely have to pay a premium above the borrowing costs the UK government does when it issues gilts.
The SNP leader also announced a plan to freeze council tax in Scotland. The policy is likely to be opposed by Yousaf’s critics on the left of the party because it would benefit relatively wealthy homeowners in contrast to the government’s stated commitment to “progressive taxation”.
Yousaf also said his government would provide £300mn to cut NHS waiting lists over three years and £500mn over five years “to anchor a new offshore wind supply chain” in Scotland.
Yousaf has sought to use his first conference to heal internal divisions and stabilise the SNP after it was plunged into further turmoil by a police investigation into its finances towards the end of Sturgeon’s tenure.
The party suffered two blows in recent weeks when the SNP lost by more than expected to Labour in the Rutherglen and Hamilton West by-election, outside Glasgow, and Lisa Cameron, MP for East Kilbride, defected to the Tories, the UK governing party.
At the start of the conference on Sunday, delegates backed a change to the party’s independence strategy, which would allow it to claim a “mandate” for a new vote on separation from Britain if it were to win a majority of Scottish seats at the next UK general election.
