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:
Fiscal Framework: Agreement between the Scottish and UK Governments
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
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 work on the independent report on Block Grant Adjustments was completed when the report was published on 2 August 2023:
Fiscal Framework Review: Independent Report
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
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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