The Scottish Fiscal Framework will be subject to an independent report followed by a joint review by the Scottish Government and UK Government. Preparations for the independent report are underway and the review is expected to begin in early 2022.
The Committee is therefore undertaking work to understand how the framework has operated to date. This work will help inform the Committee’s scrutiny of the independent report and the review that will follow.
The UK Government and the Scottish Government agreed a Fiscal Framework in 2016 (pdf). That framework sets out the funding arrangements that help determine the size of the Scottish Budget each year.
The fiscal framework includes
Both governments agreed the independent report should examine Block Grant Adjustments. These are adjustments to the Scottish Budget to reflect the devolution of tax and social security.
The Committee will therefore focus on this part of the Fiscal Framework first.
The Scottish Block Grant is funding for the Scottish Budget. It is calculated based upon UK Government funding. That funding is then adjusted by the UK Government to reflect that some taxes are now the responsibility of the Scottish Government.
It is also adjusted because the Scottish Government has responsibility for certain welfare payments.
In both cases these are called Block Grant Adjustments.
The work on the independent report on Block Grant Adjustments will include the following:
Letter from the Convener to the Chief Secretary to the Treasury of 7 October 2021
Letter from the Convener to the Cabinet Secretary for Finance and the Economy of 7 October 2021
Letter from the Cabinet Secretary for Finance and the Economy to the Convener of 2 November 2021
Letter from the Chief Secretary to the Treasury to the Convener of 2 November 2021
Letter from the Cabinet Secretary for Finance and the Economy to the Convener of 21 December 2021
Letter from the Cabinet Secretary for Finance and the Economy to the Convener of 8 March 2022
Letter from the Cabinet Secretary for Finance and the Economy to the Convener of 27 June 2022
The Scottish Government provided the following briefing paper on block grant adjustments:
Briefing Paper from the Scottish Government on Block Grant Adjustments
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The Committee made the following response to the consultation to inform the Fiscal Framework Independent Report:
Finance and Public Administration Committee Response to the Fiscal Framework Independent Report Consultation (161KB, pdf) posted 20 September 2022