HC 660 - Revising Scotland's Fiscal Framework

Book excerpt: The relationship between Scotland and the rest of the United Kingdom is changing. The Smith Commission, set up in the wake of the 2014 referendum on Scottish independence, recommended that further powers be devolved to the Scottish Parliament. The UK Government accepted the Commission's recommendations in full and transposed those powers into legislation in the form of the Scotland Bill 2015. The Bill is currently being considered in the UK Parliament and soon the Scottish Parliament will do the same when it is invited to scrutinise and give its consent to the legislation. However, the Scotland Bill 2015 is only part of the process of further devolution. In order for the tax and spending provisions contained in the Bill to be successfully devolved, the way in which Scotland is funded must change. The fiscal framework for Scotland underpins the devolution settlement. The success of this latest round of devolution will depend to a large extent on the outcome of negotiations over the framework. Both governments have agreed not to comment on the negotiations while they are ongoing but this has led to concerns of a lack of debate over the appropriate degree of risk and incentives that Scotland should face as a result of the new settlement. As we aim to set out in this Report, these questions are fundamental to the whole process.