Publication - Corporate report
The Scottish Government's Medium Term Financial Strategy
This is the fourth Medium Term Financial Strategy (MTFS) published by the Scottish Government. The MTFS provides the context for the Scottish Budget and the Scottish Parliament.
Glossary
| Austerity | a set of policies that aim to reduce government budget deficits, usually through spending cuts, tax increases, or a combination of both. |
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| 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 seeks to give these governments a proportion (or consequential) of UK expenditure incurred in policy areas which are devolved. |
| 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 from 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 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 which will depend on the number of eligible claimants. Usually managed through Annually Managed Expenditure (AME). |
| Fair work | work that supports job security, fair reward, and opportunities for personal and workplace development |
| 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 informed by an independent report, due to be completed in early 2022, 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. |
| Furlough (or COVID-19 Job Retention Scheme) | a scheme, which ran from May 2020 to September 2021, through which the UK Government paid up to 80% of people's wages for employees unable to work because their place of work has been forced to close, up to a maximum of £2,500 per month. |
| Gross domestic product | a measure of the size and health of a country's economy over a period of time (usually one quarter or one year). |
| Income Distribution | covers how a country's total GDP is distributed amongst its population. |
| Just transition | the approach to addressing climate change and creating a more cohesive and resilient economy that improves the opportunities, life chances, and wellbeing of every citizen in our country. |
| Levelling Up Fund | a £4.8 billion infrastructure investment programme established in 2021 by the UK Government, targeted at regenerating town centres and high streets, upgrading local transport, and investing in cultural and heritage assets. The funding is being delivered using the UK Internal Market Act. |
| National Outcomes | the Scottish Government's broad policy aims. |
| 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. |
| 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 new Scottish Government within its fiscal constraints. |
| Scotland Reserve | enables the Scottish Government to manage volatility associated with the fiscal powers. |
| Social Security | monetary assistance from the state for people with an inadequate or no income. |
| Tax Credits | a means-tested government payment to help with day-to-day expenses for working people on low incomes. |
| UK Spending Review | allocation of funding to government departments. |
| Universal Credit | a UK social security payment to help eligible individuals pay for living costs |
| 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. |
Contact
Email: sophie.osborn@gov.scot
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