Scotland Act 2012 financial provisions implementation: fifth annual report

Chapter 4 - Fiscal Framework Implementation

Scotland Act 2016

56. The Fiscal Framework further determines in relation to the Scotland Act 2016 tax and spending powers: an agreed transfer of funding for administration and implementation costs; funding arrangements for all further spending powers other than social security; a commitment to update Audit and accountability arrangements, and principles to ensure no detriment as a result of UK government or Scottish Government policy decisions post-devolution.

Administration and Implementation Costs

57. There are administration and implementation costs associated with the new powers and functions being devolved. The UK and Scottish Governments agreed in the Fiscal Framework that the UK Government will provide a one-off non-baselined transfer of £200m to the Scottish Government to support the implementation of the new powers and a baselined transfer of £66m to cover the ongoing administration costs associated with the new powers.

58. Within these totals, £100m for implementation costs and £22m administration costs will be transferred for 2017-18. The remaining transfer(s) will be agreed by both Governments in due course.

Funding Arrangements for Powers Other Than Social Security

59. To reflect the new powers and functions being devolved from April 2017, the Scottish Government has agreed with HM Treasury funding transfers to reflect the additional costs incurred or revenue generated as a result of delivering these powers and functions.

60. These powers and functions are Consumer Protection (devolved in May 2016), the Coastal Communities Fund, the Crown Estate, Discretionary Housing Payments and Employment Support Services.

No Detriment as a Result of Policy Decisions Post-Devolution

61. The Fiscal Framework includes provisions on 'policy spillovers' to implement the Smith Commission's conclusion that where either the UK or the Scottish Governments makes policy decisions that affect the tax receipts or expenditure of the other, the decision-making government will either reimburse the other if there is an additional cost, or receive a transfer from the other if there is a saving.

62. We are currently considering with UK Government officials the production of guidance setting out how the provisions on policy spillovers should be applied in practice. Final arrangements will be agreed by Scottish and UK Ministers at the Joint Exchequer Committee ( JEC).