FORMER SNP MSP Andrew Wilson has called for the Treasury to consider "transformational" new borrowing powers for Holyrood to overhaul Scotland’s economy.

Writing in The Times, Wilson — who headed the SNP’s most recent economic blueprint for independence — argued that the current devolution settlement "cannot cope with the economics of Covid-19 nor the hard Brexit that could be imminent".

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The plans would see Scottish ministers able to issue large-scale bonds to rejuvenate industries that have been hit hard by coronavirus.

He says universities — which face a funding crisis as fees from overseas students are set to stop — is a sector where money could be provided.

“We could issue a long-term bond that endowed the research-intensive [universities] in return for a radical overhaul of how the whole sector is structured and governed,” Wilson writes. “Not a ‘bailout’ but an investment in an entirely new system.”

The plans are supported by Lord Macpherson of Earl’s Court, who was the permanent secretary — the most senior rank in the civil service — to the Treasury under Gordon Brown, Alistair Darling and George Osborne.

Wilson, a former RBS economist, believes that such reforms could include mergers as a way of driving funding towards the best-performing universities and giving ministers and the public value for money.

Holyrood can borrow up to £450 million per year under the Scotland Act 2016. Critics have cautioned that abolishing the cap could plunging Scotland’s public finances into the red.

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Wilson continued: "A major intervention would create not so much a “sovereign wealth fund” for Scotland as an intergenerational renewal fund, investing for returns that will more than repay costs in securing actions that could give the next generations the opportunity to inherit a better, more sustainable country."

Lord Macpherson said: "I agree with Andrew that the current crisis is putting pressure on the devolution settlement, not least on university finances,” he said.

“More public borrowing is part of the solution in the short run though this is probably better done by Westminster than the Scottish government. If the Scottish government were to borrow more, I would expect the Treasury to insist that the Scottish taxpayer bears the risk of the extra debt.”

Alan McFarlane, chairman of the Reform Scotland think tank, said that Wilson's plan should be investigated but that a "careful review" would be needed for any changes to Scotland's borrowing powers.