Alex Salmond: Scotland should borrow as much as possible to rebuild after Covid

He said “the old tax and spend economics are part of the past”, and Scotland could instead “embrace a different sort of economics” to finance public spending.

He said: “Raising cash is not going to be the problem. Spending it is going to be the key priority.”

Holyrood’s limited borrowing powers are already used to the full.

Mr Salmond also said he would always “love the SNP”, but did not expect to return to it, although he would have if asked last year.

However he conspicuously refused to rule out the idea of him becoming First Minister again.

He merely said his “present ambition” was to lead Alba, which he called the reincarnation of the “glorious grassroots Yes campaign of the high summer of 2014”.

Mr Salmond, who will set out Alba’s reconstruction plans this week, makes the comments in a wide-ranging Herald podcast with the former BBC Scotland Political Editor Brian Taylor.

The Institute of Fiscal Studies is today expected to report Scotland’s deficit tripled to £40bn, or around a quarter of GDP, in 2020/21 largely because of the pandemic.

Asked his prescription for recovery, Mr Salmond highlighted the potential to borrow more with the powers of independence.

Mr Salmond, who wants to start independence talks with London in the first week of the next parliament if there is a majority for independence, said: “Nothing I've seen from Westminster or Holyrood to date, matches the enormity of what requires to be done.

“The reconstruction required is fare more fundamental surgery than just a bandage.

“In terms of what requires to be done right now, we're in a world where borrowing costs are lower than they've been in the modern era. Therefore, there has to be a reassessment of what's acquired in terms of debt and its ratio to GDP.

“And the most important thing is to make sure that the application of that borrowing goes to areas which are going to benefit the economy over the long term. And with great respect fiddling a pence or two on income tax up downwards or sideways is not the issue.

“The old tax and spend economics are part of the past, where we are now is major reconstruction that's required to provide the basis for a future economy.”

Asked how more spending could be afforded given Scotland’s already high deficit, Mr Salmond said: “We are now in the position where interest rates are effectively zero or very marginal. In that context, we should be borrowing long term as much as we possibly can.

“That is quite different from previous context we've been in for many, many years.

“Therefore, over the period of time, that means that government debt is officially offered at no cost. Because if interest rates are near zero, all you do is roll over that debt when the time comes.

“The task is not now to decide how you're going to finance spending programmes.

“That is obvious. The task is how to make sure the spending programmes that you finance actually enhance productivity, human capital and prepare for the new economy.

“So it's much more about discretionary spending, than it is about the ability to raise cash.

“Raising cash is not gonna be the problem. Spending it is going to be the key priority.”

Asked about SNP’s policy programme, the party’s former leader said it needed a better opposition, not the “dislocated, powderpuff, inept, weak, pathetic opposition” from a hodgepodge of Unionist parties that “couldn’t bust a paper bag”.

He said: “What the SNP actually needs… is an opposition which will be supportive, indeed, more urgent on the independence question and critical, perhaps in a constructive and friendly way, but still critical, a critical friend, on social and economic policies.

“I don't really know what the SNP social and economic policy is at the present moment, apart from, you know, motherhood and apple pie, and wanting to do extremely good things.

“I listened to the manifesto launch. I heard some big claims, and then I looked at the numbers that were attached to them. Anyone can make a big number by multiplying it by 10 years. Is that going to change the economic social framework for Scotland? No, it's not.

“What Alba is offering is a total reverse of the unionist opposition. We're going to be cheerleaders urging on constitutional progress and giving friendly, constructive but critique of the social and economic programme of the SNP, which I don't think in fairness meets the scale of the challenges that Scotland's about to face.”

Mr Salmond also refused to rule out the idea of him becoming First Minister again.

He merely said his “present ambition” was to lead Alba, which he described as the rebirth of the “multifarious, glorious grassroots Yes campaign of the high summer of 2014”.

He said he would have accepted an invitation to return to the SNP last year after a two-year bar on his membership expired, but he was now committed to Alba.

He said of a return to the SNP: “I think that boat may have sailed. If you'd asked me that a year or so ago, I would have hoped and believed that an invitation in thar repsect state might have been offered. If so it would have been accepted.”

In a rare admission of error, Mr Salmond said he had made a “major mistake” in the run-up to the 2014 independence referendum by putting the SNP in charge of the campaign, and only belatedly embracing a more diverse Yes movement.

He said: “One of the lessons I learned back in 2012-2014 was a mistake I made as First Minister and SNP leader.

“I was a member of SNP for 40 years and more. I was leader of the SNP for 20 years. “Therefore it was quite natural for me, given that the SNP had done all of the heavy lifting politically in the cause of independence, to associate independence, almost totally with the SNP. I mean, I love the SNP. Always will, and for natural and proper reasons.

“But of course, what I learned between 2012 and 2014, that was a major mistake.

“Under my leadership, the SNP won a sensational, earth-shattering, system-breaking victory in the 2011 Scottish elections... but the dial on support for independence didn't shift.

“We won that majority but the dial on Independence was stuck around 30% of the vote.

“That dial did not shift Brian until the high summer of 2014.

“When realising we were facing a heavy defeat in the referendum, I took the quite deliberate decision to embrace what was happening on the ground - a much wider yes movement than simply one controlled by the Scottish National Party.

“It was that multifarious grassroots variety of opinion, upsurge of interest and independence that in my estimation, carried the independence vote forward from 30% to perhaps touching 50% within days of the poll, and then back to settle at 45%.

“And the lesson I would take from that is that the independence movement is strengthened when it is carried forward by a variety of opinions as opposed to be confined in the ranks of one political party.”

‘The Brian Taylor Podcast’ can be found on Spotify and Apple Music from 9am today.