Asked by: Ian Murray (Labour - Edinburgh South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what recent progress his Department has made with the Scottish Government on the fiscal framework negotiations.
Answered by Simon Clarke
In October 2021 we reached agreement with the Scottish Government to jointly commission an independent report that will cover the Block Grant Adjustment arrangements. This independent report will inform a broader review of the Scottish Government’s Fiscal Framework later this year.
We are currently working with the Scottish Government to finalise the arrangements for commissioning the independent report.
Asked by: Ian Murray (Labour - Edinburgh South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment his Department has made of the potential difference between projections and actual Scottish income tax receipts from the fiscal framework mechanisms.
Answered by Simon Clarke
The fiscal framework agreement explicitly included new tools to help the Scottish Government manage the additional volatility in its funding in relation to tax and welfare devolution, including from forecast error.
This includes the creation of the new £700 million Scotland Reserve, which the Scottish Government can use to save receipts that are higher than forecast and drawdown funding when receipts are lower than forecast. The framework also includes the ability, in normal times, to borrow up to £300 million per year in relation to tax and welfare forecast error. Under the terms of the fiscal framework, we have doubled this limit to £600 million per year in 2021-22 and the following two years.
Asked by: Ian Murray (Labour - Edinburgh South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to page 23 of Scotland’s Economic and Fiscal Forecasts, published by the Scottish Fiscal Commission in December 2021, what assessment his Department has made of the implications for its policies of the £355 million shortfall in income tax receipts to the Scottish Government in the financial year 2026-27.
Answered by Simon Clarke
The agreed Block Grant Adjustment arrangements provide substantial support to help the Scottish Government with its new tax and welfare powers, for example by shielding the Scottish Government from UK-wide impacts. However, there are residual risks as well as rewards in relation to these powers.
While the Scottish Government has tools to manage these risks, the fundamental challenge is to grow the economy in Scotland and therefore the income tax base. The UK Government is committed to building back better and levelling up all parts of the UK, including in Scotland. We would encourage the Scottish Government to similarly use all its own economic levers – from tax to skills to planning to infrastructure – to help grow Scotland’s economy and boost its own income tax receipts in the process.
Asked by: Ian Murray (Labour - Edinburgh South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, what assessment his Department has made of the potential impact of the £1 billion shortfall identified by the Scottish Fiscal Commission in the Scottish Government public finances in the financial year 2026-27.
Answered by Simon Clarke
The Scottish Government now has substantial tax and welfare powers and is responsible for its own policy choices in these areas.
For example, if the Scottish Government chooses to spend an additional £512 million on new welfare benefits then this means £512 million less spending on other areas or £512 million of additional revenue raising. These types of choices are a direct consequence of devolving tax and welfare powers.
The UK Government continues to operate the Fiscal Framework, including the block grant adjustments for tax and welfare devolution, as agreed with the Scottish Government.
Asked by: Ian Murray (Labour - Edinburgh South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, with reference to page 49 of Scotland’s Economic and Fiscal Forecasts, published by the Scottish Fiscal Commission in December 2021, what assessment his Department has made of the implications for its policies of the increase in PAYE employees between February 2020 and October 2021 being substantially lower in Scotland than other regions and nations in the UK.
Answered by Simon Clarke
In July 2020, the Government launched the Plan for Jobs to protect, support and create jobs across the country. As demonstrated in the Plan for Jobs Progress Update, it is clear that the plan is working.
This includes the Kickstart Scheme, which funds jobs for young people at risk of long-term unemployment, to improve their chances of progressing into long-term and sustainable work. As of 5th December, around 112,000 Kickstart jobs have been started by young people across Great Britain, of which 9,730 were in Scotland.
In addition to Kickstart, the Youth Offer provides a guaranteed foundation of support to 16- and 17-year-olds on in the Intensive Work Search group on Universal Credit in Great Britain.
The Job Entry Targeted Support Scheme (JETS) provides personalised support to those in Great Britain who have been unemployed for 3-12 months. So far, JETS has supported over 176,000 jobseekers across England, Scotland and Wales, with over 43,000 job outcomes achieved.
JETS support is worth around £1,000 per claimant.
Additionally, over 910,000 jobs have been protected by the Coronavirus Job Retention Scheme (CJRS) in Scotland since March 2020.
Asked by: Ian Murray (Labour - Edinburgh South)
Question to the HM Treasury:
To ask the Chancellor of the Exchequer, how much of the estimated £40 million in Barnett consequentials from the £300 million final round of the Culture Recovery Fund has been delivered to the Scottish Government.
Answered by Simon Clarke
The Barnett formula applies to changes in departmental DEL budgets, not when departments make spending or policy announcements.
The UK government has provided the Scottish Government with an additional £6.5bn of Barnett-based funding this year and it is for the Scottish Government to decide how to allocate this funding across its devolved responsibilities, including how to provide support to the culture sector.
If the Treasury provides additional funding to departments in areas that are devolved in Scotland then the Scottish Government will receive additional Barnett based funding. For example, the Scottish Government’s funding for this year was increased by £605 million at the Autumn Budget through the Barnett formula.