Scotland\'s Fiscal Framework
The RSE has responded to the Scottish Parliament Finance Committee’s call for evidence on Scotland’s Fiscal Framework.
The RSE is concerned about the speed at which implementation of the Smith Commission recommendations for the devolution of new powers to the Scottish Parliament is proceeding. There is a fundamental need to consider the underpinning principles of the constitutional structure sought. This would include:
- Clearly established understanding of which risks and opportunities should be pooled and which of them should be devolved.
- There is a need to re-consider the use of the Barnett Formula as the basis for determining the block grant to Scotland.
- Developing mechanisms to regulate the relationships between the Scottish and UK Governments – The scale of the complexity and challenge associated with negotiating a fiscal framework for Scotland reflects the need for a system of much closer cooperation between the Scottish and UK Governments.
- The provision of fiscal data within an appropriate fiscal reporting framework.
- Establishing fiscal institutions that can provide independent and rigorous analysis and review – There is a need to establish in Scotland an independent fiscal body to provide authoritative forecasts of the future fiscal revenues and budget position. In order to enable longer-term prioritisation of spend, the RSE suggests that consideration should be given to whether the body would provide analysis on strategically important forward-looking issues and commitments. This could include, for example, the fiscal implications of demographic change.