Fiscal Framework Agreement

Posted On: 26th February 2016

The agreement between the Scottish and UK Governments on the financial arrangements to underpin the Scotland Bill has been published.Government Opportunities

The fiscal framework agreement confirms:

  • The method for adjusting Scotland’s block grant to ensure no detriment as a result of acquiring taxation powers
  • An independent review of the block grant adjustment by the end of 2021, with a method from the start of 2022 financial year to be jointly agreed by both Governments
  • £200m to support implementation of new social security powers, with annual funding for ongoing administration costs
  • Scotland’s capital borrowing limit will be increased to £3bn, with an annual borrowing limit of £450m
  • New resource borrowing powers to deal with increased budget volatility will be capped at £1.75bn
  • The Scottish Fiscal Commission will prepare independent forecasts of Scottish tax revenue, demand-driven welfare spending and onshore GDP
  • Commencement arrangements and timescales for devolution of new powers.


Deputy First Minister John Swinney said:

“The fiscal framework agreement with the UK Government implements the Smith Commission and is fair to taxpayers in Scotland and across the UK.

“The agreement makes clear that the Barnett formula will remain and that Scotland’s block grant will be adjusted annually to ensure no detriment to Scotland as a result of having new powers.

“The fiscal framework increases the Scottish Parliament’s financial responsibility and allows future Scottish Governments to exercise new powers effectively to create a fairer and more prosperous Scotland. I am pleased the agreement has now been published to allow Parliament and the public to scrutinise and judge for themselves.”

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