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Chamber and committees

Official Report: search what was said in Parliament

The Official Report is a written record of public meetings of the Parliament and committees.  

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Dates of parliamentary sessions
  1. Session 1: 12 May 1999 to 31 March 2003
  2. Session 2: 7 May 2003 to 2 April 2007
  3. Session 3: 9 May 2007 to 22 March 2011
  4. Session 4: 11 May 2011 to 23 March 2016
  5. Session 5: 12 May 2016 to 5 May 2021
  6. Current session: 12 May 2021 to 9 July 2025
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Displaying 3539 contributions

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Finance and Public Administration Committee

Scottish Fiscal Framework: Independent Report and Review

Meeting date: 21 November 2023

Kenneth Gibson

The next item is an evidence session with the Deputy First Minister and Cabinet Secretary for Finance on the Scottish fiscal framework independent report and review and VAT assignment in Scotland. Ms Robison is joined by Scottish Government officials: Matthew Elsby, deputy director of fiscal policy and constitution; and Niall Caldwell, corporate treasurer. I welcome all of you to the meeting and invite the cabinet secretary to make a short opening statement.

Finance and Public Administration Committee

Scottish Fiscal Framework: Independent Report and Review

Meeting date: 21 November 2023

Kenneth Gibson

I am just going to ask a couple more questions and then open it out to colleagues around the table. We have a summary of the changes to the fiscal framework. They are all pretty straightforward and I think that the committee has a good grasp of most of them—no doubt my colleagues will ask for further clarification. However, I am a bit vague about the coastal communities fund. It says in the table of changes that

“A baseline addition was made equal to the UK government spending on CCF in the year immediately prior to devolution.”

The next column says that the CCF is now going to be absorbed into the Barnett formula, with

“no immediate impact on funding.”

The important word there is “immediate”. What will that really mean as we move forward? I ask that as someone who represents a coastal and island constituency.

Finance and Public Administration Committee

Scottish Fiscal Framework: Independent Report and Review

Meeting date: 21 November 2023

Kenneth Gibson

The indexed per capita methodology was crucial to securing the deal in 2016. Because it came out at the last minute, it is important that it has been consolidated, so I think that that is a significant gain. Inflation linking capital borrowing is also important. When I looked at the projected increase in capital available as a result over the next four years, I was concerned that it seems to be tied to the gross domestic product deflator, which bears no resemblance whatsoever to inflation in the capital sector. So, even if those limits go up by the amounts that are predicted, will it not still mean that there is a real terms reduction in the capital that is available to the Scottish Government?

Finance and Public Administration Committee

Scottish Fiscal Framework: Independent Report and Review

Meeting date: 21 November 2023

Kenneth Gibson

Yes, indeed.

We are in a state of flux, in a way. There has been a settlement that consideration of the fiscal framework will come only once in every five-year term but, as John Mason pointed out, that five-year term could be upon us relatively soon—in a year, or 18 months at the most, I think. That is why I wonder whether the Scottish Government is looking at those issues now, whether it is looking to the next stage of a fiscal framework and whether it is looking at other devolved administrations around the world.

A previous committee that I served on visited the Basque Country. Only about 6.29 per cent of its revenue is handed back to the Spanish Government; all the rest is devolved. Pensions and social security are devolved, and only the monarchy, civil guard and defence are reserved. Everything else is dealt with locally, so there are other models for us to look at.

What modus vivendi do you think we might be able to reach in the future, and are you in contact with political parties that could potentially form a future UK Government?

Finance and Public Administration Committee

Scottish Fiscal Framework: Independent Report and Review

Meeting date: 14 November 2023

Kenneth Gibson

Lastly from me before I open it to colleagues, I understand that the figure for fines, forfeitures and fixed penalties is at approximately £30 million at the moment but that there will be a flat deduction of £25 million from the block grant going forward. Is that linked to inflation at all and are those figures accurate? We have two sets of figures—£30 million for this year and £25 million from now on, which seems to be a reduction.

Finance and Public Administration Committee

Scottish Fiscal Framework: Independent Report and Review

Meeting date: 14 November 2023

Kenneth Gibson

I am sure that a future UK Government could easily reopen those negotiations if it wanted to be more generous to Scotland.

Finance and Public Administration Committee

Scottish Fiscal Framework: Independent Report and Review

Meeting date: 14 November 2023

Kenneth Gibson

We have covered all the changes that are mentioned in the summary of changes to the fiscal framework, except one. It is a fairly minor one, but it would be remiss of us not to touch on it. What will happen to the coastal communities fund? What will that mean for Scotland? We understand from the agreement that that fund will be absorbed into Barnett, and that there will be no immediate impact on funding. What are the long-term implications?

11:00  

Finance and Public Administration Committee

Scottish Fiscal Framework: Independent Report and Review

Meeting date: 14 November 2023

Kenneth Gibson

On that positive note, we will end the session. I thank our witnesses—both of whom will be involved in the next session—very much for their contributions. I will call a wee break until five past 11 so that our new witnesses can be brought in.

11:01 Meeting suspended.  

11:07&Բ;&Բ;ܳԲ—&Բ;&Բ;

Finance and Public Administration Committee

Scottish Fiscal Framework: Value Added Tax Assignment

Meeting date: 14 November 2023

Kenneth Gibson

As a result, assignment was the only way in which VAT could be considered.

Finance and Public Administration Committee

Scottish Fiscal Framework: Value Added Tax Assignment

Meeting date: 14 November 2023

Kenneth Gibson

One of the things that you have suggested in your paper is a sales tax rather than VAT. Can you talk to us about that?