Year: 2016
Type: report
Abstract: Outline of presentation• The new powers and the need for block grant adjustments (BGAs)• The agreed method for calculating the BGAs -How does it compare to what each governments wanted?-To what extent does it meet Smith Commission's principles?-What are its implications?• Scenarios for the Scottish Government's budget • Policy change, spillovers and 'compensation payments' • Uncertainty and risk: forecasting and borrowing • International perspective on the Fiscal Framework © Institute for Fiscal Studies Scotland's traditional funding regime • Scottish Government traditionally funded largely via block grant from Westminster • Block grant updated each year using Barnett formula -Previous year's block grant -Plus population-share of change in comparable spending in England • Protects Scottish budget from revenue risk • But means no financial incentive to grow revenues -And therefore weak fiscal accountability for decisions • And limited scope to vary policy and revenues/level of spending © Institute for Fiscal Studies Devolution of fiscal powers • Some tax powers and revenues devolved under Scotland Act 2012 -Stamp Duty Land Tax -Landfill Tax -Part of Income Tax • Smith Commission and Scotland Bill 2015-16 go much further -With an aim of giving more control -And more financial incentives and accountability © Institute for Fiscal Studies Taxes and welfare revenues to be devolved • Around £2.5 billion of welfare benefits -Mostly related to disability (e.g.DLA/PIP, Carers Allowance) -Also winter fuel & cold weather payments -And a few others © Institute for Fiscal Studies Tax Revenue (£m, 2013-14) When?Income tax (non-savings; non-dividend) 10,900 2017-18 Assignment of half VAT receipts 5,000 2019-20 Air Passenger Duty 250 2018-19 Aggregates Levy 50 TBC Need for a new Fiscal Framework • Smith Commission recognised these new powers meant a need for a new "Fiscal Framework" -Borrowing powers to reflect increased exposure to revenue volatility and forecast error -Arrangements for independent scrutiny of fiscal forecasts -New inter-governmental relationships and dispute resolution mechanisms• Barnett Formula to continue to determine Scotland's block grant• But recognised that block grant adjustments (BGAs) needed, to account for newly devolved revenues and welfare responsibilities -Did not say how these should be calculated -But did lay out a set of principles
Authors: David Bell, David Eiser, David Phillips
Language: English
Field: Social Sciences
Domain: Social Sciences
Open Access status: gold
OpenAlex ID: W4403173353