Fiscal framework: factsheet

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 will be 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 will be reviewed in 2021, with both the Scottish and UK Governments required to agree on a method that must be consistent with the Smith Commission Principles, including no detriment to either government from the decision to devolve power, nor to taxpayer fairness or economic responsibility.