Consultation launched on whether Scotland should issue its own bonds

A consultation has been launched into whether the Scottish Government should be allowed to issue its own bonds.

The power would give Scotland more control over its own borrowing, as provided for in the Scotland Act, which was passed recently at Westminster.

Danny Alexander, Chief Secretary to the Treasury, said he wanted to examine the advantages and disadvantages of Scottish ministers being able to issue bonds on the international financial markets.

He said: "This takes forward the commitments we made in the Scotland Act, which represented the greatest transfer of powers from Westminster for 300 years.

"I hope that academics, investors and other market participants will respond to this next step in potential further devolution of powers to Scotland."

However, the Scottish Government said it was unconvinced the move would tackle the need for extra investment in the economy.

The SNP was highly critical of the Scotland Bill during its passage through Parliament, claiming it had been "bypassed by events", but eventually agreed to pass a legislative consent motion in Holyrood.

The Act gives the Scottish Parliament control over £10bn worth of taxes, but does not contain any of the six demands made by the SNP for additional powers.

A Scottish Government spokesman said: "Our priority is getting more investment into Scotland's economy now, to support business and jobs in the current economic climate.

"Unfortunately, these proposals - which are nothing new - do not deliver on our call on the UK Government to invest £300m in shovel-ready projects that could be creating and supporting jobs now, not in three years' time.

"We have long called for the UK Government to give the Scottish Parliament the powers to borrow, and we have said we would welcome quick and substantial steps in that direction.

"It remains to be seen if this will deliver a penny of extra investment in the economy or simply replace other sources of funding - and so we will be looking at the Treasury proposal closely."

The consultation, which will run until September 14, will not include any questions about what would happen if Scotland were to become independent.

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