The Fiscal Framework behind the Scottish Budget has finally been updated, giving the Scottish Government greater leeway when it comes to tax and spend poli
“under current Scottish and UK fiscal policies, if public services in Scotland are to continue to be delivered as they are today, Scottish Government spending over the next 50 years will exceed the estimated funding available by an average of 1.7% each year.”
“Are current fiscal powers optimal for managing day-to-day and longer-term risks? And do the devolved administrations have the right tools to manage the financial risks they are likely to face now and in the future?”
The author, fiscal expert at FAI, examines the tax changes designed to achieve greater fairness made in the fifth Scottish Parliament – and the scope for reform and greater powers in the next.
‘The scheme will apparently operate ‘UK wide, using the new financial assistance powers in the UK Internal Market Bill’. Whilst the fine details are awaited, the lack of explicit reference to the devolved governments will antagonise intergovernmental relations in area where tensions are already running high.’
“This lack of economic engagement by senior SNP Ministers remains a weakness for the independence message on the economy. Such a policy vacuum in a key area of the independence debate may be manageable when minds are focussed elsewhere but if a Second Referendum were to become a reality then it would soon turn into a significant weak point in the pro-independence argument.”
‘The comment by the Scottish Finance Secretary at the time of publication that “Scotland’s economy and public finances are strong” seems fanciful given any reasonable analysis of recent low economic growth figures and a still high, by international standards, fiscal deficit.’
MSPs on finance committee debate the Scottish Budget: ‘Coming in the midst of the parliament’s 20th anniversary celebrations, this was not a good advert for parliamentary effectiveness in holding the government to account’.
A key aim of the Smith Commission was to improve accountability and make Scotland’s politicians responsible for the money that they spent. Unfortunately rather than helping to deliver this aim, the current proposals for VAT assignment risk undermining that principle.
‘Whilst there is clearly a negotiating advantage in the government holding back some monies as part of their tactics to get the Budget Bill through, one can see MSPs from now on assuming that £100 million is a useful ballpark for the amount the government may have ready to hand to push through a deal’.