Fiscal framework: factsheet

Detailed information about the fiscal framework agreed between the Scottish and UK Governments.

The fiscal framework: agreement between the Scottish and UK Governments determines how we are funded and underpins the powers set out in the Scotland Act 2016.

The funding model agreed in the fiscal framework guarantees a fair and transparent mechanism for adjusting the block grant to reflect the introduction of newly devolved revenues and the transfer of responsibility for social security to the Scottish Government.

Block grant adjustments are separately indexed each year and applied to the overall Scottish block grant, reducing the risk of an artificially high or low initial deduction being 'locked in' for subsequent years.

The Fiscal Framework also gives us additional access to resource borrowing powers, to ensure budgetary stability and manage the volatility associated with greater revenue-raising powers. This funding arrangement was reviewed in 2023, with both the Scottish and UK Governments agreeing to make the Indexed per Capita method a permanent arrangement. The review also considered the findings of an Independent Report, which concluded that no single Block Grant Adjustment mechanism satisfied all the Smith Commission principles.



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