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

Budget Process and Engagement

Scottish and Local Government are committed to new ways of working in the fiscal relationship going forward, which supports transparency and accountability. This will encourage a relationship based on collaboration and improve our shared information and evidence base. The Fiscal Framework will set out agreement on engagement with regards to:

• high level policy ambitions,
• strategic issues,
• the demands of the previous and current financial year,
• the fiscal and economic circumstances in which decisions must be made for the next financial year,
• horizon scanning and the impacts for medium to long term financial plans.

The framework will establish specific mechanisms and anticipated cycles of meetings to facilitate this engagement tied to key fiscal and policy events over the financial year. See draft Annex B.

There has been progress in agreeing the nature of this process for engagement, and improved budgetary engagement has already begun in 2023-24 with more to begin from the next cycle as this approach is embedded.

The key area outstanding for further development is whether to include a ‘rules-based approach’ to the setting of the Local Government Settlement – further work is underway and will inform future discussions between COSLA Leaders and Scottish Ministers.

Subject to this, further consideration will also be given to the appropriate distribution of risk and responsibility, and the approach to any in-year changes.