Fiscal framework between Scottish Government and local government: progress report December 2023

Joint Foreword

In June of this year, Local Government and Scottish Government committed to improving our partnership working and to addressing three shared priorities – poverty, net zero and sustainable public services. In signing the Verity House Agreement, we jointly accepted that changes were required to our relationship - the way we work together, how we will approach our shared priorities, and how we engage with each other in a positive and proactive manner.

We recognise that in the period since signing, there have been challenges and disagreements, but that those have made it even more important for us to deliver on actions set out in the Verity House Agreement. Among those is the commitment to deliver a Fiscal Framework between local and national government.

The commitment to deliver a fiscal framework was first made in December 2019, but progress paused during the Covid Pandemic, as both spheres of government prioritised our pandemic response and recovery. Since early 2022, discussions have recommenced, and good progress has been made. It was identified as essential that the partnership agreement take precedence, to agree what our priorities were and how we would deliver them, and to then focus on developing and agreeing a fiscal framework.

We are pleased that progress has been made on a draft framework, and some of this has already been put into practice including improved evidence-based pre-budget discussions and joint working to consider new local taxes and reform of existing local taxes.

However, there remains more to do. We both acknowledge that there is a need to consider the options and impacts of a rules-based approach to setting the budget for local government, and joint exploration of that is ongoing. It is essential that, if such an approach is taken, we get it right given the sums of money involved, and therefore will take more time.

To demonstrate the progress we have made, and to affirm our commitment, we are publishing this report, but we are already putting the principles and approach set out into practice.

Progress Report on the work to develop and agree a Fiscal Framework between Scottish Government and Local Government

Note: This document is a progress report on a working draft which remains subject to change in the light of completion of the document as a whole, and eventual consideration by the appropriate governance mechanisms in both the Scottish Government and Local Government.