Fiscal framework outturn report: 2019

1. Introduction

1.1 This is the second Fiscal Framework Outturn Report published by the Scottish Government. It forms part of a revised budget process, as recommended by the final report of the Budget Process Review Group.

1.2 In keeping with the recommendations of the Group, it contains the following information:

• Outturn data for Scottish tax revenues (including comparison of outturn with forecast)
• Calculation of outturn Block Grant Adjustments (BGAs) and comparison with forecast
• Net effect on budget (revenue/expenditure minus BGA) for each tax relative to forecast
• Implications of reconciliation for subsequent financial year
• Commentary on latest available interim outturn data on income tax.
• Payments into the Reserve and withdrawals from the Reserve (with explanations for reasons for withdrawal or source of surplus)
• Balance of Scottish Reserve at the start and end of the previous financial year
• Borrowing undertaken during the past financial year, and assessment of how far Government remains below its various different borrowing limits
• Implications of borrowing in terms of estimated profile of future repayments

1.3 This publication follows on from Scotland's Fiscal Outlook: The Scottish Government's Five Year Financial Strategy,^[1] published in May, which includes updated forecast reconciliations for tax and social security powers, and the Fiscal Framework Data Update published in July,^[2] which includes outturn data for 2017-18 income tax. In addition, since the publication of those documents more data has become available, including outturn for devolved taxes for 2018-19. This is in addition to data on outturn BGAs and expenditure for some Social Security benefits which, like income tax reconciliation figures, are being published for the first time.

1.4 This year's Outturn Report also includes outturn for Fines, Forfeitures, and Fixed Penalty Notices and revenues seized as Proceeds of Crime, both of which are also being included for the first time.

1.5 In summary, the following points are relevant for 2020-21 budget considerations:

• The total reconciliation required in the 2020-21 Budget will be -£207 million. This figure includes reconciliations for 2017-18 Income Tax revenue and BGA and the final reconciliations of the 2018-19 BGAs for Land and Building Transaction Tax, Scottish Landfill Tax, Carer's Allowance and Fines, Forfeitures, and Fixed Penalties.
• The closing balance of the Scotland Reserve in 2019-20 is £233.5 million, on the basis of planned drawdowns outlined at provisional outturn 2019.
• Under current plans, the Scottish Government's capital debt will be £1.66 billion by the end of 2019-20, well within its overall £3 billion limit. No resource borrowing has been undertaken.
• Terminology used in this document

1.6 The Scottish Government must rely on forecasts when setting each Budget, and the UK Government also relies on forecasts when determining BGAs. When information about actual revenues and expenditure becomes available – known as 'outturn data' – subsequent Budgets are adjusted to account for the difference between forecast and outturn data. This process is known as 'reconciliation', and can involve additions or reductions to Scotland's Block Grant.

1.7 Because this data becomes available for different taxes and social security benefits at different times, reconciliations are made throughout the budget cycle. A full explanation of the reconciliation process, Block Grant Adjustments, and the calculation of Scotland's Block Grant can be found in the Technical Note on the Fiscal Framework.^[3]