John Swinney makes further offer on the fiscal framework

Deputy First Minister John Swinney has written to the Chief Secretary to the Treasury, Greg Hands, with a further offer on the fiscal framework.

Swinney said the new proposal would ensure that taxpayers in the rest of the UK are no better or worse off as a result of the powers being devolved.

“Under the Scottish Government’s method, taxpayers in the rest of the UK will see no detriment. They do not lose a single penny under these plans. And, it will ensure that the Scottish budget bears the risk of population changes relative to the rest of the UK via the Barnett formula,” he explained.

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He said the Scottish budget would bear the full financial costs or reap the rewards of decisions taken in Scotland, with the country bearing the risk of delivering economic growth via tax receipts.

Once the Scotland Bill is passed, Scotland will take on responsibility for raising £16bn of taxes, equivalent to 50 per cent of the country’s funding.

“If we perform better relative to the rest of the UK, Scotland receives the benefit of that success - if we perform less well than the rest of the UK, Scotland bears the cost,” Swinney said.

“That is exactly in line with the Smith Agreement, it is in line with the consensus among academics and the reports of the both UK and Scottish parliamentary committees.”

He added: “The Treasury have already agreed to look at this proposal, and I have listened carefully to the arguments they have put forward. This proposal addresses each of the specific technical concerns the UK Government has raised publicly and privately.

“It systematically takes those issues on, deals with them and meets the Smith Agreement. We hope the UK Government will now act in good faith and agree this proposal.

“I hope this moves the discussion on from the Treasury’s determination to discuss how much detriment the Scottish budget should bear, to how we best we deliver the Smith Commission recommendations on no detriment to taxpayers in Scotland and in the rest of the UK.

“Agreement on indexation would then allow us to focus on agreeing the remaining outstanding matters under the fiscal framework. I hope we now have the basis of a deal.”

The two governments have just over a week to reach an agreement, with the details due to be published in Friday 19 February before the framework has to be presented to the Devolution (Further Powers) Committee on Tuesday 23 February.