Recommendations & Conclusions
6 items
1
Conclusion
1st report – The financing of the Scott…
Accepted
We note the Scottish Government’s call for full fiscal autonomy, but do not consider that this currently appears to be a realistic prospect. Fundamental questions remain about how full fiscal autonomy would work in practice, and whether it would be operable within the constraints of the UK’s current devolution settlement. …
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We note the Scottish Government’s call for full fiscal autonomy, but do not consider that this currently appears to be a realistic prospect. Fundamental questions remain about how full fiscal autonomy would work in practice, and whether it would be operable within the constraints of the UK’s current devolution settlement. Practicality aside, we do not believe that a compelling case has been made that such a change would automatically result in Scotland receiving a higher level of funding. Given that the Scottish Government did not accept the invitation to come before us to explain its proposal and respond to these fundamental questions, we do not see how we can consider this a serious proposition, and we remain to be convinced that this proposal is desirable in principle, let alone workable in practice. (Conclusion, Paragraph 20)
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Government response AI summary
The government agreed with the committee's conclusion that full fiscal autonomy is not a serious proposition, contrasting it with the financial stability provided by the UK and highlighting a potential £14 billion funding gap for Scotland.
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Scotland Office
2
Conclusion
1st report – The financing of the Scott…
Accepted
Whilst the Barnett formula is an imperfect method of calculating Scotland’s funding, we have heard no convincing evidence of a workable alternative. We therefore consider the formula to be fit for purpose and are not convinced there is clear need to reform it significantly. (Conclusion, Paragraph 33)
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Whilst the Barnett formula is an imperfect method of calculating Scotland’s funding, we have heard no convincing evidence of a workable alternative. We therefore consider the formula to be fit for purpose and are not convinced there is clear need to reform it significantly. (Conclusion, Paragraph 33)
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Government response AI summary
The government accepts the conclusion, citing the significant real-terms settlement for the Scottish Government delivered through the Barnett formula via Phase 2 of the Spending Review, affirming the formula's role in providing financial certainty.
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Scotland Office
3
Conclusion
1st report – The financing of the Scott…
Accepted
In particular, we are not convinced there is a need to introduce a needs- based factor into the Barnett formula at this time. Scotland currently may be receiving more than it would if a needs-based factor, like the floors introduced in Northern Ireland and Wales, were to be introduced. However, …
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In particular, we are not convinced there is a need to introduce a needs- based factor into the Barnett formula at this time. Scotland currently may be receiving more than it would if a needs-based factor, like the floors introduced in Northern Ireland and Wales, were to be introduced. However, whilst such a factor is not appropriate at this time, the need of one should be kept under review. (Conclusion, Paragraph 34) Transparency
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Government response AI summary
The government accepts the conclusion, reiterating the substantial funding increases for the Scottish Government through the existing Barnett formula, which provides financial certainty and stability without the need for a needs-based factor at this time.
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Scotland Office
4
Conclusion
1st report – The financing of the Scott…
Accepted
The operation of the Barnett formula is not as transparent as it could or should be. In particular, there is a lack of transparency around how comparability percentages are calculated. Comparability percentages are a fundamental feature of the Barnett formula and the only multiplier which cannot be effectively scrutinised by …
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The operation of the Barnett formula is not as transparent as it could or should be. In particular, there is a lack of transparency around how comparability percentages are calculated. Comparability percentages are a fundamental feature of the Barnett formula and the only multiplier which cannot be effectively scrutinised by the public. We have heard no 43 good reason for this opacity, which limits the ability of the public and UK and Scottish Parliaments to hold their respective Governments to account. (Conclusion, Paragraph 41)
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Government response AI summary
The government stated that details on how comparability percentages are calculated, including a programme-by-programme breakdown, are already included in Annex B of the Statement of Funding Policy document published in June 2025.
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Scotland Office
8
Conclusion
1st report – The financing of the Scott…
Accepted
HM Treasury, and therefore the UK Government, is the “ultimate arbiter” of the Barnett formula. As the formula is non-statutory, there is no legal recourse for the Scottish Government to challenge the UK Government’s application of it. There is also currently no formal, objective dispute resolution process relating to the …
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HM Treasury, and therefore the UK Government, is the “ultimate arbiter” of the Barnett formula. As the formula is non-statutory, there is no legal recourse for the Scottish Government to challenge the UK Government’s application of it. There is also currently no formal, objective dispute resolution process relating to the application of the formula, although there are existing intergovernmental structures through which such matters can be raised. An imbalance persists however, with HM Treasury’s position enduring when agreement between parties cannot be reached, as reflects the UK Government’s constitutional position within the UK’s devolution arrangement. (Conclusion, Paragraph 68)
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Government response AI summary
HM Treasury sets out the impact on Scotland of policy changes at fiscal events in the publicly available fiscal event documents.
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Scotland Office
11
Conclusion
1st report – The financing of the Scott…
Accepted
The timing of supplementary estimates and UK Government fiscal events can cause clear challenges for the Scottish Government in terms of financial planning, with the Scottish Government’s final funding position not confirmed until close to the end of the financial year. This uncertainty is compounded by in-year changes to UK …
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The timing of supplementary estimates and UK Government fiscal events can cause clear challenges for the Scottish Government in terms of financial planning, with the Scottish Government’s final funding position not confirmed until close to the end of the financial year. This uncertainty is compounded by in-year changes to UK Government spending plans, and the possibility of multiple fiscal events per year. We welcome the UK Government’s commitment to “one major fiscal event” every year and the stated commitment to informing the Scottish Government of relevant funding changes as early as possible. While noting the regular official- level communication regarding spending, we remain concerned about the significant impact UK Government spending decisions can have on the Scottish Government’s budget, often at very short notice and without warning. (Conclusion, Paragraph 92)
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Government response AI summary
The government explained that the Block Grant Transparency is published annually, and the Scottish Government is informed of changes at the earliest possible opportunity, justifying its current practices as appropriate for managing market sensitive information.
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Scotland Office