Fiscal framework: factsheet

Original agreement – 2016/17 – 2023/24

Updated agreement – from 2024/25

BGA Mechanism

Run both Indexed Per Capita (IPC) and Comparable methods. Only use IPC in practice, but on an interim basis.

IPC mechanism agreed on a permanent basis, prioritising the ‘No Detriment’ Smith Commission principle.

Resource borrowing

Up to £300m p.a. to cover forecast error.

Up to £600m p.a. to cover forecast error, indexed to inflation (GDP deflator).

Capital borrowing

Up to £450m, p.a.; £3bn cumulative cap.

Up to £450m p.a., £3bn cumulative cap, both indexed to inflation (GDP deflator).

Reserve drawdown limits

£250m resource; £100m capital.

Abolished (no limits).

Overall reserve limit

£700m.

£700m indexed to inflation (GDP deflator).

VAT Assignment

The two Governments agreed that VAT Assignment will be implemented in 2019-20.

How and when to implement VAT Assignment will be discussed at a future Joint Exchequer Committee.

Crown Estate

Deduction to the Block Grant of £6.6m p.a.

Starting in 2024-25 deduction to the Block Grant profiled at £10m / £10m / £15m/ £20m / £40m. Fixed in nominal terms at £40m beyond.

Fines and penalties

Block Grant Adjustment to fines and penalties revenue.

Flat deduction to the Block Grant.

Coastal Communities Fund

Baseline addition made to block grant equivalent to UKG spending on CCF in year prior to transfer.

Absorbed into Barnett (no immediate impact on funding).

Scotland Specific Economic Shock

Forecast Error Borrowing powers temporarily increased to £600m when triggered.

Provision removed – now covered by improved resource borrowing powers.