Fiscal framework outturn report: 2025

6. Proceeds of Crime

49. Revenue seized under the Proceeds of Crime Act 2002 is subject to a BGA. The basis on which this is carried out is the subject of dispute between the Scottish and UK Governments.^[9]

50. Under the Fiscal Framework, where there is a dispute, an automatic pause is placed on the disputed finances. That being so, the BGA for POC has been set at £4.3m and will remain so while the dispute remains unresolved, i.e. the BGA will not change in line with the change in corresponding revenue growth in rUK.

51. Further to discussion through the official-level Joint Exchequer Committee (JEC(O)), the Cabinet Secretary for Finance and the Chief Secretary to the Treasury agreed via Ministerial correspondence in December 2020 and January 2021 that the issue should be considered as part of the Fiscal Framework Review.

52. However, due to the narrow scope eventually agreed for the Fiscal Framework Review and the pace of negotiations, the dispute was not considered as part of the review. Securing the indexed per capita BGA mechanism and increasing borrowing limits were prioritised by SG.

53. The dispute still stands and a resolution will be sought in due course.

54. Final outturn revenue recovered under the Proceeds of Crime Act in 2024-25 is £6.8 million. The Scottish Government receives all revenues recovered under the Proceeds of Crime Act, however, outturn revenues are hypothecated for spend on community projects.^[10] Due to this hypothecation of funds and the negative £4.3 million BGA, the net position for the Scottish Budget is negative £4.3 million while this BGA remains in force.