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Publication - Factsheet

Fiscal framework: factsheet

Last updated
11 July 2024 - see all updates
Topic
Money and tax, Public sector

Detailed information about the fiscal framework agreed between the Scottish and UK Governments.

History of the fiscal framework

The Smith Commission was convened in September 2014 and charged with reaching a cross-party agreement on the devolution of further powers to the Scottish Parliament. The Smith Commission published its report in November 2014.

Paragraph 94 of the Smith Commission report recommended that 'The devolution of further responsibility for taxation and public spending, including elements of the welfare system, should be accompanied by an updated fiscal framework for Scotland, consistent with the overall UK fiscal framework.'

Paragraph 95 sets out that the fiscal framework should 'encompass a number of elements' including:

  • the funding of the Scottish Budget
  • planning, management and scrutiny of public revenues and spending
  • the manner in which the block grant is adjusted to accommodate further devolution
  • the operation of borrowing powers and cash reserve
  • fiscal rules
  • independent fiscal institutions

Scottish and UK Government Ministers met as the Joint Exchequer Committee (JEC) to negotiate the detail of Scotland’s fiscal framework from July 2015 to 23 February 2016, when the fiscal framework between the two governments was agreed. The negotiations were guided by the principles set out in the Smith Commission, which are detailed in Annex A of the fiscal framework.

Fiscal framework reviews

The fiscal framework states that there should be periodic reviews of the agreement, on a five yearly basis, but not more than once in any UK or Scottish electoral cycle.

In 2021, the Scottish and UK Governments agreed to conduct the first review of the fiscal framework, which would again be guided by the Smith Commission principles. Negotiations concluded in summer 2023 with the revised fiscal framework being published in August 2023. 

It will be open to either government to propose changes to the fiscal framework as part of future reviews. The Joint Exchequer Committee will agree conclusions, recommendations and revisions of the review.

Related documents

Contact

Email: ceu@gov.scot

First published
20 November 2017
Last updated
11 July 2024 - show all updates

  1. Information added to the updates page.

  2. Multiple pages updated.

  3. Multiple pages updated.

  4. Publications page updated with text and link to statement.

  5. Publications page updated with text and link to statement.

  6. Minor update to amend link to annex 'B' in Scottish Government’s Medium Term Financial Strategy.

  7. Added link to the Scottish Government’s Medium Term Financial Strategy.

  8. Added link to letter to the Chief Secretary to the Treasury regarding agreement in principle to commission an independent report on the Block Grant Adjustment arrangements on publications page.

  9. Added link to 22 July letter about the income tax reconciliation process and the provisional 2019-20 income tax reconciliation.

  10. Added link to 15 March letter about the BGAs for the Scottish Budget 2021-2022 on publications page.

  11. Updated following the Scottish Budget 2021-2022.

  12. Link to 23 December letter regarding fiscal powers and flexibility added to publications page.

  13. Link to 7 December letter regarding fiscal powers and flexibility added to publications page.

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