Scotland's Fiscal Outlook: The Scottish Government's Medium-Term Financial Strategy

Glossary

Barnett Formula

a formula used by HM Treasury to calculate consequentials which form the Block Grant to devolved governments in Scotland, Wales and Northern Ireland. The Barnett formula gives these governments a proportion (or consequential) of increases or decreases in UK expenditure on devolved policy.

Budget

a document prepared by the government to present its anticipated tax revenues and proposed spending/expenditure for the coming financial year.

Block Grant

the grant received by the Scottish Government made up consequentials of UK expenditure, calculated by the Barnett Formula.

Block Grant Adjustment (BGA)

deductions or additions to the Scottish Government's total Block Grant to reflect devolved tax receipts or social security expenditure.

Capital Borrowing

money borrowed specifically for the purpose of Capital Expenditure.

Capital Expenditure

money spent on providing or improving non-current assets, which include land, buildings and equipment, which will be of use or benefit in providing services for more than one financial year.

Consequentials or Barnett Consequentials:

a Barnett Consequential is the change to a devolved administration's assigned budget as a consequence of changes in spending in devolved areas by the UK Government.

Deficit

occurs when a government spends more money than it takes in.

Demand-led

refers to expenditure which can be predicted at the beginning of the year e.g. the payment of benefits but which will ultimately depend on the number of eligible claimants.

Financial Transactions (FTs)

results primarily from a range of UK Government housing-related equity and loan finance schemes, such as 'Help to Buy.' When the UK Government invests in such schemes in areas that are devolved to the Scottish Parliament, the Scottish Government receives a proportional share of the UK Government's investment.

Fiscal Framework

the Fiscal Framework agreement was published alongside the Scotland Act 2016 setting out the new funding arrangements, fiscal rules and borrowing powers for the Scottish Government.

Fiscal Framework Review

the Fiscal Framework is due to be reviewed in 2022. The review will be preceded by an independent report, on the Block Grant Adjustment arrangements.

Funding Outlook

projection of future funding built up by forecasting separate elements of funding and then aggregating these to produce a path for the total level of potential funding.

Gross domestic product

a measure of the size of a country's economy over a period of time (usually one quarter or one year).

Income Distribution

covers how a country's aggregate income is distributed amongst its population.

Inflation

the increase in prices of a representative basket of goods and services over time. How quickly those prices go up is the rate of inflation.

National Outcome

outcomes for Scotland determined by the Scottish Government in consultation with the communities in Scotland and the Scottish Parliament, which are reviewed at least every 5 years.

Non-Domestic Rates (NDR)

Non-domestic rates, often described as business rates, are a tax on non-domestic properties to help pay for local council services. These include services like education, social care and waste management.

Net zero

achieving an overall balance between emissions produced and emissions taken out of the atmosphere.

Outturn Data

official published statistics about actual revenues and expenditure.

Omicron

variant of the COVID-19 virus which became dominant in the UK in December 2021.

Poundage

Non-Domestic rates are levied on the basis of a national poundage multiplied by the Rateable Value of the property you occupy. If you are the ratepayer for a property with a rateable value in excess of £51,000 then you will be required to pay a supplement on the poundage. The poundage is set annually by the Scottish Government and covers the period 1 April to 31 March.

Public sector enabling infrastructure

investment in public sector assets to stimulate private sector investment e.g., road junctions and train station improvements, not investment in the private sector directly.

Reconciliations

adjustments to address historical budgets' forecast errors.

Resource Borrowing

money borrowed specifically for the purpose of Resource Expenditure.

Resource Expenditure

money that is spent on day-to-day resources and administration costs.

Resource Spending Review

a review to balance the spending ambitions of the Scottish Government within its fiscal constraints.

Scotland Reserve

a cash management facility, allowing the carry-forward of a limited amount of funding from financial year to financial year.

Social Security

A Government support system to provide people in need with financial support (such as people on low incomes or who have health related costs)

UK Spending Review

allocation of funding to UK government departments.

Volatility

the tendency to change rapidly and unpredictably.

Wellbeing economy

an economy that is inclusive and that promotes sustainability, prosperity and resilience, where businesses can thrive and innovate, and that supports all of our communities across Scotland to access opportunities that deliver local growth and wellbeing.