Fiscal framework outturn report: 2019

6. Proceeds of Crime

6.1 Revenue seized under the Proceeds of Crime Act 2002 is also subject to a BGA. The basis on which this is carried out is currently a subject of dispute between the Scottish and UK Governments.

6.2 Prior to devolution, the Scottish Government had an agreement with the UK Government whereby it retained all sums from Proceeds of Crime (PoC) under an administrative cap of £30 million. This cap was never breached whilst it was in force, so the UK Government never received any revenue raised in Scotland prior to devolution in 2017-18.

6.3 The no detriment principle set out by the Smith Commission is clear that neither government's budget should be larger or smaller simply as a result of the devolution of powers. Despite this, the UK Government has made a Block Grant Adjustment of £4m per year for PoC since 2017-18. This means that the Scottish Government's budget is now £4m worse off a year and the UK Government's budget is £4m larger as a result of devolution. This contravenes the no detriment principle.

6.4 This BGA remains under active discussion through the Joint Exchequer Committee. The BGA remains at £4m while the dispute remains unresolved.

6.5 This report uses provisional 2018-19 outturn revenue data. The final revenue data will be published as part of Scotland Government's Consolidated Accounts in October 2019.

6.6 Table 13 shows the net effect on budget for 2018-19, comparing outturn data for revenues and BGAs with forecasts for the same.

Table 13: POC Budget Position For 2018-19 Compared with Forecasts (£ Million)

6.7 No reconciliation takes place while the BGA remains the subject of dispute between the Scottish and UK Governments.

6.8 Table 14 compares forecasts of the net budget position for PoC in 2019-20. As with 2018-19, this is not expected to lead to a reconciliation.

Table 14: Forecast POC Budget Position For 2019-20 (£ Million)