Source · Select Committees · Scottish Affairs Committee
Recommendation 15
15
Deferred
Consider removing the cap on the Scotland Reserve at next Fiscal Framework review
Recommendation
At the next Fiscal Framework review, the UK Government should consider removing the cap on the Scotland Reserve, to ensure the Scottish Government’s fiscal flexibility is not unduly limited and to avoid the undesirable possibility of it having to return funds. (Recommendation, Paragraph 101)
Government Response Summary
The government deferred considering removing the cap on the Scotland Reserve to the next Fiscal Framework review, expected in 2028, with preliminary scoping work beginning soon. They noted the current limit was agreed with the Scottish Government and is uprated annually.
Government Response
Deferred
HM Government
Deferred
The Scotland Reserve limit was agreed with the Scottish Government who are responsible for managing annual expenditure within agreed budgets. There are no annual payment or draw down limits on the Scotland Reserve and the limit is uprated annually in line with the latest GDP deflator at the time of the Scottish Government’s draft Budget. We expect the next Fiscal Framework review point to be in 2028. The scope of the next Fiscal Framework review will be determined by the Joint Exchequer Committee (Scotland) at least 3 months before the review is to start. Any future reviews would require mutual agreement between the Scottish and UK Governments. As set out in the 2023 Scottish Fiscal Framework, The Smith Commission recommended that the Fiscal Framework should be reviewed periodically, with subsequent reviews to take place on a 5 yearly basis but not more than once in any UK or Scottish electoral cycle. Following discussion with the Chief Secretary to the Treasury and Cabinet Secretary for Finance and Local Government, HM Treasury and Scottish Government officials have agreed to begin preliminary work on the scope for the next review of the Fiscal Framework in the coming months.