The Scottish Government's Medium Term Financial Strategy

Annex B: Fiscal Framework

This Annex sets out the implications of the Fiscal Framework for the Scottish Budget. The Fiscal Framework Technical Note sets out more detail on how the Fiscal Framework operates including the evolution of the fiscal powers of the Scottish Parliament, the timelines for reconciliations and how they affect the Scottish Budget, the limits of the borrowing powers and Scotland Reserve, and the Fiscal Framework Review.^[21]

This Annex details the latest BGAs published alongside the 2022-23 UK Budget on 27 October 2021, which have been updated following the publication of final outturn data for [insert which outturn has been published, which affected the final BGAs]. The latest SFC revenue and expenditure forecasts have been published alongside the 2022-23 Scottish Budget.

Tax

Table B.1 shows the latest forecasts for tax revenues from the SFC and the latest BGA estimates following the 2022-23 UK Budget.

Table B.1: Forecasts of tax revenues and Block Grant Adjustments

		2019-20	2020-21	2021-22	2022-23	2023-24	2024-25	2025-26	2026-27
Income Tax2	Revenue	11,833	11,938	13,002	13,671	14,313	15,056	15,790	16,445
	BGA1	-11,685	-11,989	-12,996	-13,861	-14,571	-15,167	-16,036	-16,862
	Difference	+148	-51	+6	-190	-257	-111	-246	-417
LBTT2	Revenue	597	517	720	749	796	839	881	924
	BGA1	-533	-397	-620	-664	-688	-717	-753	-802
	Difference	+64	+121	+101	+86	+108	+122	+128	+122
SLfT2	Revenue	119	107	123	101	83	85	70	18
	BGA1	-99	-87	-90	-82	-82	-77	-69	-78
	Difference	+20	+20	+34	+18	+1	+9	+1	-60
Total	Revenue	12,549	12,562	13,846	14,521	15,193	15,980	16,741	17,387
	BGA1	-12,316	-12,473	-13,706	-14,607	-15,340	-15,961	-16,859	-17,742
	Difference	+233	+89	+140	-86	-148	+20	-117	-355

Note 1: The BGAs shown are calculated using the Indexed Per Capita (IPC) indexation method. This method in practice determines the BGAs applied to the budget.
Note 2: The 2019-20 Income Tax, LBTT and SLfT and 2020-21 LBTT and SLfT revenue and Block Grant Adjustment are outturn figures.
Figures may not sum due to rounding.

The forecasts of tax revenues and BGAs for 2022-23 inform the Scottish Budget.

Forecasts of future years provide an indication of the level of revenues that the SFC anticipates, but these figures will not be used to set future budgets, which will draw upon updated SFC forecasts.

Social Security

Table B.2 shows the SFC's latest expenditure forecasts for social security benefits and the latest BGA estimates following the 2022-23 UK Budget. Executive competence for Cold Weather Payments (CWP) will transfer to the Scottish Government in 2022-23 and BGAs were agreed for CWP for the first time alongside the 2022-23 UK Budget.

Table B.2: Forecasts of social security expenditure and Block Grant Adjustments (£ million) ⁴

		2020-21	2021-22	2022-23	2023-24	2024-25	2025-26	2026-27
Attendance Allowance	Expenditure	-528	-519	-545	-575	-600	-628	-653
	BGA1	521	521	545	579	605	630	648
	Difference	-6	+2	0	+4	+5	+3	-5
Personal Independence Payment	Expenditure	-1,626	-1,734	-1,948	-2,322	-2,588	-2,806	-3,034
	BGA1	1,585	1,723	1,933	2,176	2,390	2,619	2,820
	Difference	-41	-11	-15	-146	-198	-187	-214
Disability Living Allowance	Expenditure	-722	-700	-710	-721	-712	-699	-687
	BGA1	721	687	687	692	664	639	657
	Difference	-1	-13	-23	-29	-48	-61	-29
Carer's Allowance2, 3	Expenditure	-296	-301	-315	-348	-380	-412	-445
	BGA1	291	295	323	351	378	413	453
	Difference	-5	-6	+8	+3	-3	0	+8
Industrial Injuries Disablement Scheme	Expenditure	-83	-81	-81	-81	-80	-79	-78
	BGA1	81	79	79	80	78	77	75
	Difference	-1	-1	-1	-1	-2	-2	-3
Severe Disablement Allowance	Expenditure	-7	-7	-6	-6	-5	-5	-4
	BGA1	8	7	6	5	4	4	3
	Difference	0	0	0	0	-1	-1	-2
Cold Weather Payments	Expenditure	N/A	N/A	-21	-21	-21	-21	-22
	BGA1	N/A	N/A	14	14	14	14	14
	Difference	N/A	N/A	-7	-7	-7	-7	-8
TOTAL SS	Expenditure	-3,262	-3,343	-3,626	-4,074	-4,387	-4,650	-4,922
	BGA1	3,207	3,313	3,587	3,898	4,134	4,395	4,670
	Difference	-55	-30	-38	-176	-253	-255	-252

Note 1: The BGAs shown are calculated using the Indexed Per Capita (IPC) indexation method. This method in practice determines the BGAs applied to the budget.
Note 2: The 2020-21 Social Security expenditure and Block Grant Adjustment are outturn figures.
Note 3: Carer's Allowance Expenditure Forecast does not include Carer's Allowance Supplement expenditure.
Note 4: There are minor differences in the methodology used to calculate the SFC's spending forecasts and the BGA forecasts, which are based on expenditure outturn and OBR forecasts, so comparisons should be interpreted with caution.
Figures may not sum due to rounding.

Benefits Yet to Commence

Responsibility for Winter Fuel Payments has yet to be transferred to the Scottish Government and therefore these payments are not funded from within the Scottish Budget. The Department for Work and Pensions will continue to make these payments to people in Scotland for winter 2022-23. An update will be provided in due course.

Reconciliations and implications for the Scottish Budget

The forecasts for Scottish tax revenues and social security expenditure, and the corresponding BGAs, are based on the latest available information at the time of the Budget. Once outturn data are available, reconciliations are made to the Scottish Budget to ensure that the funding available ultimately corresponds to actual revenues and the BGAs based on the outturn data.

Reconciliations are made for both the revenues and the BGA for Income Tax. For Fully Devolved Taxes (LBTT and Scottish Landfill Tax), Social Security, and Non-Tax Revenues (Fines, Forfeitures and Fixed Penalties - FFFP), reconciliations are only made to the BGA element of funding.

In relation to Income Tax, a reconciliation for both revenues and the BGA for the 2019-20 financial year will be applied to the 2022-23 Scottish Budget. Updated forecasts for the other past years - 2020-21 and 2021-22 – do not have any immediate impact on the Scottish Budget. Under the Fiscal Framework, a single reconciliation takes place three years after the original Budget was set and the updated forecasts in the interim have no direct impact.

In relation to the Fully Devolved Taxes, Social Security benefits and FFFP, reconciliations for the BGAs for 2020-21 financial year will be applied to the 2022-23 Scottish Budget.

The Fully Devolved Taxes and Social Security BGAs are also subject to an additional in-year reconciliation which takes place within each financial year, based on the latest OBR forecasts. There is no in-year reconciliation for FFFP.

Income Tax

For Scottish Income Tax, outturn data is normally available around 16 months after the end of the financial year. Given this long lag of availability of outturn data, Income Tax revenue and BGAs are fixed for three years from the time the Budget is set. A single reconciliation is then applied to the Budget three financial years after the Budget is set, e.g the reconciliation for 2018-19 Income Tax was applied to the 2021-22 budget. Provisional outturn data for 2019-20 Income Tax was published 22 July 2021, which has been confirmed by HMRC's publication of its Trust Statement^[22]. Table B.3 shows the confirmed 2019-20 Income Tax reconciliation applying to the 2022-23 Budget.

Table B.3: Confirmed Income Tax reconciliation applying to 2022-23 Budget (£ million)

2022-23 Income Tax	Revenues	BGA*	Net Position
Forecast as of Budget 2019-20	11,684	-11,501	+182
Outturn	11,833	-11,685	+148
Outturn against forecast	+149	-184	-34

* The BGA has been revised upward – this has a negative effect on net revenues.

Figures may not sum due to rounding.

The potential scale of the reconciliations applying to the 2023-24 and 2024-25 Budgets are shown in tables B.4 and B.5 using the latest forecasts.

Table B.4: Forecast Income Tax reconciliation applying to 2023-24 Budget (£ million)

2020-21 Income Tax	Revenues	BGA	Net Position	Forecast Reconciliation
Forecast as of Budget 2020-21	12,365	-12,319	+46
Latest forecast	11,938	-11,989	-51	-97
Change	-427	+330

Figures may not sum due to rounding.

Table B.5: Forecast Income Tax reconciliation applying to 2024-25 Budget (£ million)

2021-22 Income Tax	Revenues	BGA	Net Position	Forecast Reconciliation
Forecast as of Budget 2021-22	12,263	-11,788	+475
Latest forecast	13,002	-12,996	+6	-469
Change	+739	-1,208

Figures may not sum due to rounding.

Based on the latest forecasts, the reconciliation to the Scottish Budget 2023-24 for 2020-21 Income Tax is expected to be negative £97m. A reconciliation of negative £469 million is expected to apply to the Scottish Budget 2024-25 to account for 2021-22 Income Tax.

However, these forecasts are not certain and the final position will not be known for sure until outturn receipts are available for 2020-21 in summer 2022, and for 2021-22 in summer 2023.

Fully Devolved Taxes

Revenue Scotland manages and collects Land and Buildings Transaction Tax (LBTT) and Scottish Landfill Tax (SLfT) and these revenue streams feed in to the Scottish Budget as they are collected. There is no reconciliation required for these revenues; the Scottish Government manages any variance between what was forecast and actual revenues as part of its in-year budget management process. The latest 2021-22 revenue forecasts for LBTT and SLfT and the previous revenue forecasts are shown in Table B.6.

Table B.6: 2021-22 revenue forecast (£ million)

LBTT	SFC Revenue Forecast – Budget 2021-22	586
	SFC Revenue Forecast – Budget 2022-23	720
	Change	+134
SLfT	SFC Revenue Forecast – Budget 2021-22	88
	SFC Revenue Forecast – Budget 2022-23	123
	Change	+35

Figures may not sum due to rounding.

The BGAs for these taxes are reconciled in two stages. An in-year reconciliation is made within the same financial year. This is usually on the basis of OBR forecasts produced alongside the UK Autumn Budget. The in-year reconciliations for 2021-22 LBTT and SLfT are shown in table B.7.

Table B.7: 2021-22 in-year BGA reconciliations (£ million)

LBTT	Forecast BGA – UK Spending Review November 2020	-515
	Forecast BGA – 2022-23 UK Budget October 2021	-620
	In-year reconciliation to 2021-22 Budget	-104
SLfT	Forecast BGA – UK Spending Review November 2020	-95
	Forecast BGA – 2022-23 UK Budget October 2021	-90
	In-year reconciliation to 2021-22 Budget	+5

Figures may not sum due to rounding.

As set out in Table B.8, the net effect on the Scottish Budget 2021-22 of the latest fully devolved revenue forecasts, when compared to the in-year BGA reconciliations, is +£71m, (comprising £30m for LBTT and £41m for SLfT).

90. Table B.8: change in net position for 2021-22 Scottish Budget (£ million)

91. Fully Devolved Tax 92.	93. In-Year BGA Reconciliation	94. Change in SFC revenue forecast from 2021-22 Scottish Budget	95. Net Position
96. LBTT	97. -104	98. 134	99. +30
100. SLfT	101. 5	102. 35	103. +41
104. TOTAL	105. -99	106. +170	107. +71

108. Figures may not sum due to rounding

Outturn data becomes available in the autumn following the end of each financial year. Using these outturn figures, a final reconciliation is applied to the Block Grant in the financial year two years after the Budget was set. Table B.9 shows the final reconciliations for 2020-21 LBTT and SLfT BGAs applying to the 2022-23 Scottish Budget.

Table B.9: 2020-21 final BGA reconciliation (£ million)

LBTT	Forecast BGA – 2021-22 Scottish Budget January 20211	-391
	Outturn	-397
	Reconciliation to 2022-23 Budget2	-6
SLfT	Forecast BGA – 2021-22 Scottish Budget January 20211	-87
	Outturn	-87
	Reconciliation to 2022-23 Budget2	+0

Note 1: As a UK Budget had not been published at the time of the Scottish Budget in January 2021, provisional Block Grant Adjustments (BGAs) were used to inform the Scottish Budget as directed under the Fiscal Framework. Updated BGAs were produced at the UK Budget in March. However, the provisional BGAs were used to inform the Scottish Budget.
Note 2: The final BGA reconciliation effectively calculates the difference between the in-year forecast of the BGA (used to calculate the in-year reconciliation) and the outturn data.
Figures may not sum due to rounding.

Table B.10 shows the confirmed net effect on the budget for 2020-21 LBTT and SLfT and compares outturn to forecasts.

Table B.10: 2020-21 outturn compared with forecasts (£ million)

		Revenues	BGA	Net Position
LBTT	Forecast as of Budget 2020-21	641	-557	+85
	Outturn	517	-397	+121
	Outturn against forecast	-124	+160	+36
SLfT	Forecast as of Budget 2020-21	116	-87	+29
	Outturn	107	-87	+20
	Outturn against forecast	-9	0	-9

Figures may not sum due to rounding.

Social Security

The latest 2021-22 expenditure forecasts for Social Security and the previous expenditure forecasts are shown in Table B.11.

Table B.11: 2021-22 expenditure forecast (£ million)

Attendance allowance	SFC Expenditure Forecast – Budget 2021-22	-550
	SFC Expenditure Forecast – Budget 2022-23	-519
	Change	+30
Personal independence payment	SFC Expenditure Forecast – Budget 2021-22	-1669
	SFC Expenditure Forecast – Budget 2022-23	-1734
	Change	-65
Disability living allowance	SFC Expenditure Forecast – Budget 2021-22	-696
	SFC Expenditure Forecast – Budget 2022-23	-700
	Change	-5
Carer's allowance	SFC Expenditure Forecast – Budget 2021-22	-306
	SFC Expenditure Forecast – Budget 2022-23	-301
	Change	+5
Industrial injuries disablement scheme	SFC Expenditure Forecast – Budget 2021-22	-80
	SFC Expenditure Forecast – Budget 2022-23	-81
	Change	-1
Severe disablement allowance	SFC Expenditure Forecast – Budget 2021-22	-7
	SFC Expenditure Forecast – Budget 2022-23	-7
	Change	+0
Total social security	SFC Expenditure Forecast – Budget 2021-22	-3,308
	SFC Expenditure Forecast – Budget 2022-23	-3,343
	Change	-34

Figures may not sum due to rounding.

As with the fully devolved taxes, the BGAs for benefits are reconciled in two stages. An in-year reconciliation is made within the same financial year. This is usually on the basis of OBR forecasts produced alongside the UK Autumn Budget. The in-year reconciliations to the 2021-22 Social Security BGAs are shown in Table B.12.

Table B.12: 2021-22 in-year BGA reconciliation (£ million)

Attendance allowance	Forecast BGA – UK Spending Review November 2020	546
	Forecast BGA – 2022-23 UK Budget October 2021	521
	In-year reconciliation to 2021-22 Budget	-25
Personal independence payment	Forecast BGA – UK Spending Review November 2020	1,682
	Forecast BGA – 2022-23 UK Budget October 2021	1,723
	In-year reconciliation to 2021-22 Budget	+42
Disability living allowance	Forecast BGA – UK Spending Review November 2020	685
	Forecast BGA – 2022-23 UK Budget October 2021	687
	In-year reconciliation to 2021-22 Budget	+2
Carer's allowance	Forecast BGA – UK Spending Review November 2020	309
	Forecast BGA – 2022-23 UK Budget October 2021	295
	In-year reconciliation to 2021-22 Budget	-14
Industrial injuries disablement scheme	Forecast BGA – UK Spending Review November 2020	81
	Forecast BGA – 2022-23 UK Budget October 2021	79
	In-year reconciliation to 2021-22 Budget	-1
Severe disablement allowance	Forecast BGA – UK Spending Review November 2020	7
	Forecast BGA – 2022-23 UK Budget October 2021	7
	In-year reconciliation to 2021-22 Budget	-1
Total social security	Forecast BGA – UK Spending Review November 2020	3,310
	Forecast BGA – 2022-23 UK Budget October 2021	3,313
	In-year reconciliation to 2021-22 Budget	+3

Figures may not sum due to rounding.

Table B.13 sets out the net effect on the Scottish Budget 2021-22 of the latest total devolved social security expenditure forecasts when compared to the total in-year BGA reconciliations, is negative £31m.

Table B.13: Change in net position for 2021-22 Scottish Budget (£ million)

Fully Devolved Tax	In-Year BGA Reconciliation	Change in SFC expenditure forecast from 2021-22 Scottish Budget	Net Position
117. Total social security benefits with a BGA1	+3	-34	-31

1) Carer's Allowance, Attendance Allowance, Child Disability Payment, Disability Living Allowance, Adult Disability Payment, Industrial Injuries Disablement Allowance, Severe Disability Allowance
Figures may not sum due to rounding

Outturn data becomes available in the autumn following the end of each financial year. Using these outturn figures, a final reconciliation is applied to the Block Grant in the financial year two years after the Budget was set. Table B.14 shows the reconciliation for the 2020-21 Social Security BGAs applying to the 2022-23 Scottish Budget.

Table B.14: Social security 2020-21 final BGA reconciliation (£ million)

Attendance allowance	Forecast BGA – 2021-22 Scottish Budget January 20211	531
	Outturn	521
	Reconciliation to 2022-23 Budget2	-9
Personal independence payment	Forecast BGA – 2021-22 Scottish Budget January 20211	1,555
	Outturn	1,585
	Reconciliation to 2022-23 Budget2	+30
Disability living allowance	Forecast BGA – 2021-22 Scottish Budget January 20211	719
	Outturn	721
	Reconciliation to 2022-23 Budget2	+2
Carer's allowance	Forecast BGA – 2021-22 Scottish Budget January 20211	289
	Outturn	291
	Reconciliation to 2022-23 Budget2	+1
Industrial injuries disablement scheme	Forecast BGA – 2021-22 Scottish Budget January 20211	84
	Outturn	81
	Reconciliation to 2022-23 Budget2	-2
Severe disablement allowance	Forecast BGA – 2021-22 Scottish Budget January 20211	8
	Outturn	8
	Reconciliation to 2022-23 Budget2	0
Total social security	Forecast BGA – 2021-22 Scottish Budget January 20211	3,185
	Outturn	3,207
	Reconciliation to 2022-23 Budget2	+22

Note 1: As a UK Budget had not been published at the time of the Scottish Budget in January, provisional Block Grant Adjustments (BGAs) were used to inform the Scottish Budget as directed under the Fiscal Framework. Updated BGAs were produced at the UK Budget in March. However, the provisional BGAs were used to inform the Scottish Budget.
Note 2: The final BGA reconciliation effectively calculates the difference between the in-year forecast of the BGA (used to calculate the in-year reconciliation) and the outturn data.
Figures may not sum due to rounding.

Table B.15 shows the confirmed net effect on the budget for 2020-21 Social Security benefits and compares outturn to forecasts.

Table B.15: 2020-21 social security outturn compared with forecasts (£ million) ¹

		Expenditure	BGA	Net Position
Attendance allowance	Forecast as of Budget 2020-21	-532	535	+3
	Outturn	-528	521	-6
	Outturn against forecast	+5	-14	-9
Personal independence payment	Forecast as of Budget 2020-21	-1,583	1,601	+19
	Outturn	-1,626	1,585	-41
	Outturn against forecast	-43	-16	-60
Disability living allowance	Forecast as of Budget 2020-21	-718	669	-49
	Outturn	-722	721	-1
	Outturn against forecast	-4	+52	+48
Carer's allowance	Forecast as of Budget 2020-21	-292	303	+12
	Outturn	-296	291	-5
	Outturn against forecast	-4	-13	-17
Industrial injuries disablement scheme	Forecast as of Budget 2020-21	-80	85	+5
	Outturn	-83	81	-1
	Outturn against forecast	-2	-4	-6
Severe disablement allowance	Forecast as of Budget 2020-21	-7	9	+1
	Outturn	-7	8	+0
	Outturn against forecast	+0	-1	-1
Total social security	Forecast as of Budget 2020-21	-3,213	3,203	-10
	Outturn	-3,262	3,207	-55
	Outturn against forecast	-49	+5	-45

Figures may not sum due to rounding.
Note 1: There are minor differences in the methodology used to calculate the SFC's spending forecasts and the BGA forecasts, which are based on expenditure outturn and OBR forecasts, so comparisons should be interpreted with caution

Non-Tax revenue

Fines, Forfeitures and Fixed Penalties

Revenue from Fines, Forfeitures and Fixed Penalties (FFFP) is paid into the Scottish Consolidated Fund after being collected by the Scottish Courts and Tribunals Service. No reconciliation takes place for revenue, as the Scottish Government deals with any variation between forecast and receipts through in-year budget management. The SFC does not provide revenue forecasts for FFFP and instead the Scottish Government calculates its own estimates.

The latest Scottish Government 2021-22 revenue forecast for FFFP and the previous revenue forecasts are shown in Table B.16.

Table B.16: 2021-22 revenue forecast (£ million)

FFFP	SG Revenue Forecast – Budget 2021-22	25
	SG Revenue Forecast – Budget 2022-23	19
	Change	-6

Figures may not sum due to rounding.

Unlike the devolved taxes, there is only one round of reconciliation for the BGA. Outturn data are normally available three months after the end of the financial year, and the reconciliation is applied to the Block Grant for the financial year thereafter (i.e. two years after the Budget was set).

Table B.17 shows the final reconciliation for the 2020-21 FFFP BGA applying to the 2022-23 Scottish Budget.

Table B.17: 2020-21 final BGA reconciliation (£ million)

FFFP	Forecast BGA – Budget 2020-21	-24
	Outturn	-20
	Reconciliation to 2022-23 Budget	+4

Figures may not sum due to rounding.

Table B.18 shows the confirmed net effect on the budget for 2020-21 FFFP and compares outturn to forecasts.

Table B.18: 2020-21 outturn compared with forecasts (£ million)

		Revenues	BGA	Net Position
FFFP	Forecast as of Budget 2020-21	25	-24	+1
	Outturn	14	-20	-5
	Outturn against forecast	-11	+4	-7

Figures may not sum due to rounding.

Proceeds of Crime

Revenue seized under the Proceeds of Crime Act 2002 is also subject to a BGA. The basis on which this is carried out is currently the subject of dispute between the Scottish and UK Governments and the BGA remains at -£4m while the dispute remains unresolved.^[23] The Scottish and UK Governments agreed to consider this issue as part of the review of the Fiscal Framework.

Final outturn revenue recovered under the Proceeds of Crime Act in 2020-21 is £5.2 million. The Scottish Government receives all revenues recovered under the Proceeds of Crime Act, however, outturn revenues are hypothecated for spend on community projects.^[24] Due to this hypothecation of funds and the negative £4 million BGA, the net position for the Scottish Budget is negative £4 million while this BGA remains in force.

No reconciliation takes place while the BGA remains the subject of dispute between the Scottish and UK Governments.

Reconciliations applying to 2022-23 Budget

Table B.19 sets out the reconciliations which will be applied to the 2022-23 Budget.

Table B.19: Reconciliations applying to 2022-23 Budget

Income Tax 2019-20		-34
Of which:
Final revenue reconciliation	+149
Final BGA reconciliation	-184
LBTT 2020-21 BGA reconciliation		-6
SLfT 2020-21 BGA reconciliation		+0
FFFP 2020-21 BGA reconciliation		+4
PoC 2020-21 BGA reconciliation		N/A
Social Security 2020-21 BGA reconciliation		+22
Total Reconciliation Requirement		-14.7

Sources of Data

To view the various sources of data for Tax and Social Security that have been used to compile this Annex B, please see the data annex in the Fiscal Framework factsheet.

Capital Borrowing

The 2022-23 Scottish Budget confirmed the intention to borrow the annual maximum of £450 million capital, assumed to be over a period of 20 years. It was also assumed that £300m capital borrowing would be taken in 2023-24. Final decisions on all future borrowing will be taken over the course of the applicable financial years.

Chapter 5 sets out the Scottish Government's policy of borrowing between £250 million and £450 million over the remaining period of the National Infrastructure Mission.

On the basis of existing and planned borrowing included in the table, the Scottish Government will have accumulated £2.42 billion in capital debt by the end of 2022-23, 81% of its overall limit. However, as repayments of principle increase over time this ensures sufficient borrowing headroom will be available to support the National Infrastructure Mission in subsequent financial years.

Table B.20: Capital borrowing and repayment schedule

£million	2017-18	2018-19	2019-20	2020-21	2021-22	2022-23	2023-24	2024-25	2025-26	2026-27
Debt Stock at start of Year	283	607	1,036	1,258	1,617	1,744	2,064	2,421	2,609	2,730
New In Year Borrowing	450	250	405	200	400	450	300	250	250	-
Principal Repayments	-	7	26	52	60	64	65	65	66	67
Interest Repayments	-	8	11	13	14	14	13	12	12	11
Existing Resource Cost	-	15	37	64	74	78	78	78	78	78
Resource Cost of Projected Borrowing	-	-	-	-	-	14	40	61	91	106
Projected Total Resource Cost	0	15	37	64	74	92	117	139	168	184
Debt Stock at end of Year	1,036	1,258	1,617	1744.	2,064	2,421	2,609	2,730	2,829	2,661
Percentage of Debt Cap	35%	42%	54%	58%	69%	81%	87%	91%	94%	89%
Notional Borrowing Repayments	9.4	20.5	20.5	20.5	20.5	20.5	20.5	20.5	20.5	20.5
Headroom	1,964	1,742	1,383	1,256	936	579	391	270	171	339

*New In Year Borrowing from 2021-22 is projected borrowing based on the current Central Scenario.

Resource Borrowing

As set out in Chapter 5, the Scottish Government will make full use of resource borrowing in 2022-23. Table B.21 below shows the full budget impact of borrowing and reconciliations over the period.

Table B.21: Medium-term impact of reconciliations and resource borrowing (£ million)

	2020-21	2021-22	2022-23	2023-24	2024-25	2025-26
Known and Forecast Reconciliations	- 207	-319	-15	-97	-470	-
Planned Resource Borrowing	207	319	15	97	300	-
Projected Resource Cost of Resource Borrowing	-	21	76	109	121	164
Net Impact	-	21	76	109	-48	164
YOY Net Impact		21	55	33	-157	212

The incremental impact of resource borrowing, the costs of resource borrowing and known and forecast Income Tax reconciliations is as follows:

• The projected resource cost of borrowing line comprises repayments of both principal and interest, both of which impact the resource budget.
• All drawdowns are based on National Loans Fund (NLF) annuity structure loans, this is the only source of resource borrowing available to the Scottish Government under the Fiscal Framework.
• These loans are priced at 11 basis points above the equivalent UK par Gilt yield. Assumptions in Table B.21 use the implied forward rates as of 23 November 2021 plus a premium of 50 basis points.
• NLF annuity loans have principal deferred in the first (semi-annual repayment) period.
• A five-year tenor is assumed in all cases (the maximum allowable under the Fiscal Framework).

As stated in 4.1.2 The Scottish Government will assess all planned Resource Borrowing decisions to smoothen the funding trajectory over five years. The graphs below demonstrate what this trajectory would look like under three scenarios:

• Borrowing the full allowance – as per table above
• Borrowing half the available allowance
• Borrowing nothing

In the case of 'no borrowing' the swings in the funding position are most pronounced for both budgets. The graphs below show the impact in the original and future budget years, taking into consideration actual or expected borrowing for reconciliations in each of the years as well as repayment of borrowing and interest in subsequent fiscal years.

Note: Positive values connote reconciliation requirements and repayments which reduce the budget.