The financing of the Scottish Government

Scottish Affairs Committee Closed Inquiry
Opened: 21 Nov 2024 Closed: 20 Oct 2025 Parliament page
This inquiry is examining the framework for fiscal devolution in Scotland. The Committee is evaluating the effectiveness of the Barnett formula and the fiscal framework in calculating the amount of money available for providing devolved services in Scotland. As part of this, the Committee is examining the interaction between UK … Read more
7 Recommendations
12 Conclusions
1 Report
1 Oral session
2 Letters
2 Events
Activity timeline 7 events
17 Oct
2025
Report published
16 Jul
2025
Report published
9 Jul
2025
Formal meeting (private meeting) · Room 15, Palace of Westminster
5 Feb
2025
Correspondence
29 Jan
2025
Oral evidence
29 Jan
2025
Formal meeting (oral evidence session) · Room 15, Palace of Westminster
22 Jan
2025
Correspondence
Oral evidence sessions 1 session
29 Jan 2025
View on parliament.uk
Claire Murdoch · NHS England David Phillips · Institute for Fiscal Studies Dr João Sousa · Fraser of Allander Institute
Title HC No. Published Items Response
1st report – The financing of the Scottish Government HC 456 16 Jul 2025 19 Responded
Recommendations & Conclusions
4 results
Clear
9 Recommendation Acknowledged
1st report – The financing of the …
Formalising Barnett formula or dedicated dispute process would not improve effectiveness
We are not convinced that putting the Barnett formula on a statutory footing, or otherwise formalising it, would significantly improve its effectiveness. The use of the Barnett formula is already a well-established practice, not unlike other features of the UK’s … Read more
Government Response
The government repeats the committee's conclusion verbatim.
Scotland Office
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10 Conclusion Acknowledged
1st report – The financing of the …
Significant Block Grant changes necessitate urgent Scottish Government spending plan adjustments
The Committee notes that the Block Grant is the single largest source of Scottish Government funding, and that tight rules on borrowing and fiscal reserves mean that significant changes to the block grant will almost always require significant, urgent changes … Read more
Government Response
The government provided an update on the Scottish Government's block grant, stating it has received the largest real terms settlement since devolution and additional funding, contrasting this with the Scottish Government's stance on the Barnett Formula.
Scotland Office
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13 Conclusion Acknowledged
1st report – The financing of the …
Capped Scotland Reserve limits fiscal flexibility, risking surrender of Scottish Government funds
Given the challenges the Scottish Government faces, we recognise its need for fiscal flexibility. The Scotland Reserve is a key tool that enables the Scottish Government to carry funds from one year to another, and there seems little benefit in … Read more
Government Response
The government explained the Scotland Reserve limit was mutually agreed and is uprated annually, with consideration of any changes deferred to the next Fiscal Framework review expected in 2028.
Scotland Office
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16 Conclusion Acknowledged
1st report – The financing of the …
Limited Scottish Government borrowing powers constrain ability to manage fiscal shocks
At present, the Scottish Government’s limited borrowing powers constrain its ability to manage fiscal shocks, as it is only able to borrow for resource purposes to cover forecast errors. Capital borrowing limits are currently linked to and grow in line … Read more
Government Response
The government acknowledges the conclusion by explaining that borrowing powers and limits were jointly agreed in the 2023 Fiscal Framework and are uprated annually by the GDP deflator to maintain real value, committing to consider these arrangements at the next Fiscal Framework review.
Scotland Office
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Government Response AI assessment · 19 of 7 classified
Accepted 6
Accepted in Part 1
Acknowledged 4
Deferred 6
Not Addressed 2
Total 7 recs + 12 conclusions
Correspondence 2 letters
5 Feb 2025 Correspondence from David Phillips, Associate Director, Institute for Fiscal Studies, regarding the financing of the Scottish Government, dated 30 January 2025
Parliament page
22 Jan 2025 Correspondence from Shona Robison MSP, Scottish Government, regarding the financing of the Scottish Government inquiry, dated 16 January 2025
Parliament page