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Scottish Fiscal Framework: Independent Report and Review

The Scottish Fiscal Framework will be subject to an independent report followed by a joint review by the Scottish Government and UK Government. The Committee therefore has undertaken work to understand how the framework has operated to date to inform scrutiny of the report and the review. The Committee has also agreed to scrutinise the outcome of the review and the revisions to the Fiscal Framework.

On 2 August 2023 the review was completed when a revised Fiscal Framework agreement between the Scottish and UK Governments was published:

About the Fiscal Framework

The  (pdf). That framework sets out the funding arrangements that help determine the size of the Scottish Budget each year.

The fiscal framework includes

• how the Scottish Block Grant will be adjusted to take account of the Scottish Parliament’s tax and welfare powers
• how forecasts of the funding raised from the new taxes and welfare spending will be provided and by whom
• rules around revenue borrowing powers and a reserve fund to manage funding from year to year
• rules around capital borrowing powers
• how policies made by either government but which directly ‘spill over’ and impact the other government’s finances will be managed
• administrative procedures such as how operational costs are paid for, how disputes between both governments will be managed and how the framework will be reviewed in future.

About Block Grant Adjustments

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. Both governments agreed that the independent report should examine Block Grant Adjustments.

The independent report

The work on the independent report on Block Grant Adjustments was completed when the report was published on 2 August 2023:

To inform that report there was a call for views. 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

Briefing Paper from the Scottish Government

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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