Scotland's finances December 2016: key facts and figures

Key information about how the system of public finances in Scotland stands in 2016 to 2017 and how it will change in 2017 to 2018 and beyond.

Scotland's Finances: Key facts and figures

Competent, financially prudent Scottish Government

This part of the guide sets out key information about how the system stands in 2016-17. The next part sets out how it will change in 2017-18 and beyond.

Devolved Finances

  • The Scottish Government is accountable to the Scottish Parliament and the people of Scotland for its use of public money.
  • Scottish Ministers decide spending plans that have to be approved by Holyrood.
  • Since 2009-10, the Scottish Government has produced its accounts on the basis of international accounting standards.

Barnett Formula

Westminster decides how much it will spend in England on public services. Holyrood is automatically allocated a population share of changes in spending on public services devolved to Scotland.

Money In Arrow The Scottish Consolidated Fund Arrow Money Out

Block Grant,
EU Funds,
Scottish Rate Of Income Tax,
Land And Buildings Transaction Tax,
Scottish Landfill Tax,
Non-Domestic Rates,

Spending on priorities including Schools, Hospitals, Police, Housing, Farming, Fishing, Infrastructure and The Economy.

Delivered by Scottish Government, Executive Agencies, NHS, Crown Office, Local Councils, Third Sector and Other Bodies.

Our financial system in 2016-17

The Scottish Budget in 2016-17 is £37 Billion

  • The Scottish Government has to set and deliver a balanced budget each year.
  • The Scottish Government accounts for 2015-16 were given a clean bill of health by Audit Scotland. This was the 11 th consecutive year they received an unqualified opinion.
  • For financial year 2015-16, the Scottish Government, its Executive Agencies and the Crown Office and Procurator Fiscal Service made 98.4% of all payments within 10 days.
  • Where taxes are raised in Scotland, the block grant is reduced.

Taxes in 2016-17 planned to be raised in Scotland:

  • Scottish Rate of Income Tax
  • Non-Domestic Rates Income
  • Land and Buildings Transaction Tax
  • Scottish Landfill Tax

The Scottish tax landscape 2016-17

UK Government

UK Block Grant

Scottish Government

Block Grant

Local Government

Fuel Duty
Oil and Gas Receipts
Income Tax
National Insurance
Corporation Tax
Air Passenger Duty
Tax on Alcohol,
Inheritance Tax
Capital Gains Tax

Scottish Rate of Income Tax
Business Rates (collected by local authorities and redistributed by SG)
Land and Buildings Transaction Tax
Scottish Landfill Tax

Council Tax

Illustrative chart based on devolved powers in 2016-17

* General Revenue Grant
** Non-Domestic rates Income (Business Rates)
***General Capital Grant

What is planned to be spent in 2016-17

Portfolio expenditure from draft budget 2016-17
(some percentages rounded)*

Portfolio expenditure from draft budget 2016-17

In 2016-17 the local government settlement to support 32 councils adds up to more than £10 billion.
*As published in Scotland's Spending Plans and Draft Budget 2016-17 (Published Dec 2015), adjusted to reflect portfolio changes in May 2016.
Total portfolio expenditure from draft budget 2016-17 £37bn

The shape of fiscal responsibility in 2017-18 and beyond

The Fiscal Framework is an agreement made in February 2016 between the Scottish and UK governments setting out the rules by which Scotland's new financial and social security powers are transitioned and managed.

  • The terms of the agreement are designed to ensure no detriment to the Scottish budget. If tax policy and economic performance in Scotland remains the same as in the rest of the UK, then the Scottish budget will be no better or worse off than it would have been under the Barnett Formula.
  • The Fiscal Framework requires forecasting of information by a body independent of Government. From April 2017 the Scottish Fiscal Commission will assume statutory powers as an independent body to produce relevant fiscal forecasts.
  • From 2017-18 income tax in Scotland will be raised and spent by the Scottish Government, estimated to be in excess of £11bn.

Timeline of change

1999 2015 2016 2017 2018 2019

Scottish Parliament can increase or reduce Income Tax by 3p in the pound.

Scottish Parliament has powers over Non-domestic Rates.

Scottish Parliament controls Fully Devolved Taxes, Land and Buildings Transactions Tax and Landfill Tax.

Scottish Parliament gains partial powers to set the Scottish Rate of Income Tax.

Scottish Parliament gains further powers to set Income Tax rates and bands.

Replacement for Air Passenger Duty.

Assignment of Vat Receipts.

  • From April 2017 the Scottish Parliament will control the management of the Crown Estate in Scotland, with revenues to be used to develop Island and Local Communities.
  • The Scottish Rate of Income Tax for 2016-17 set at 20% basic rate so Scottish taxpayers are on the same rates of tax as the rest of the UK.
  • The capital borrowing cap has been increased from £2.2 billion to £3 billion. From 2016-17 annual borrowing will be limited to £450m (15% of the cap).
  • The UK Government has retained power to set the VAT rate but from April 2019 broadly half of the estimated money received from VAT on purchases made in Scotland will be passed to the Scottish Government instead of HM Treasury.
  • When taxes are raised or assigned in Scotland the block grant is reduced.

How our funding system is changing

Where the Scottish Government budget comes from

Where the Scottish Government budget comes from

How our system is changing

The value of social security benefits to be devolved from 2019-20

Estimates based on 2015-16 figures. At the point that devolution takes place, numbers will reflect changes in public spending at UK level in the intervening years.

Benefit Value
Disability Living Allowance £1,400m
Attendance Allowance £487m
Personal Independence Payment £318m
Carer's Allowance £222m
Winter Fuel Payment £181m
Industrial Injuries Disablement Benefit £87m
Severe Disability Allowance £51m
Discretionary Housing Payment £13m from DWP topped up by £35m from Scottish Government £49m
Funeral Payment £4m
Sure Start Maternity Grant £3m
Cold Weather Payment £3m
Total £2.8bn

Number of people receiving benefits in Scotland:

Benefit Number of people
Disability Living Allowance
Figures as at May 2016
Attendance Allowance
Figures as at May 2016
Discretionary Housing Payment
For financial year 2015-16


Pie Chart

Once powers are devolved the Scottish Parliament will control 15.3% of the UK Social Security budget spent in Scotland.

Control over 84.7% of the UK Social Security spend in Scotland, including Universal Credit, will remain reserved to the UK Government.

  • The Scottish Government will be responsible for employment support from April 2017. Ministers have awarded initial contracts for the transitional service. Work First Scotland will offer employment support to disabled people, while Skills Development Scotland will provide support for those with a long-term health condition through Work Able. There will be one fully devolved employment service from April 2018.


Email: Gavin Henderson

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