[Updated below, 10.30 24th February] The UK and Scottish governments have finally agreed a six year beginning for the fiscal framework which will detemine the adjustments to the annual Scottish block grant to take account of the revenue outcomes from the major fiscal powers to be devolved to Scotland.
What has been agreed looks very like the deadlock breaker proposed by Scottish Conservative Leader, Ruth Davidson who, on 17th February, proposed that the governments agree to use a recently revised model for the fiscal framework for an initial period.
In return for agreement, the UK Government would guarantee that whatever happened with Scottish revenue raising or not over that period, the UK would make up any shortfall so that Scotland would receive, in Ms Davidon’s words, ‘not a penny less’ in its block grant – a phrase which First Minister, Nicola Sturgeon, repeated today in her briefing of MSPs on the development.
Ms Davidson proposed that the performance of the this trial framework would be reviewed by both governments after a five year period. This has seen a further concession from the UK Government – with a six year and totally risk free period for Scotland to settle in using the new powers, before the Review which will be in March 2022.
The agreement made sounds, in total, very like the Davidson formula.
Chancellor George Osborne has said that the agreement will see the intentions of the Smith Commission delivered in full.
Ruth Davidson says: ‘Today’s agreement delivers the stronger, more responsible Scottish Parliament that the people of Scotland were promised.
‘It is devolution delivered.
‘It delivers on exactly the kind of Scotland that most people want – not separated from our neighbours, but a Scotland with more power and control over its own affairs, still backed up by the strength and security of the United Kingdom.
‘I am very proud of the role my party has played in making this vision a reality.
‘It was the Scottish Conservatives who set out the plan for devolution – now it’s a Conservative government at Westminster which has acted on that.
‘I congratulate both our governments for reaching this deal today.
‘It has not been easy and compromises have been required by both sides but today’s deal shows that our two governments can work together for the good of Scotland.
‘In the longer term, it now throws a major challenge to the SNP.
‘Grudge and grievance will no longer wash.
‘On tax, on welfare, and on our public services, the buck stops with them.
‘For my part, I stand ready to provide the strong, principled opposition to the SNP that is now required more than ever as these new powers come to Holyrood.
‘We will protect family finances and we will demand that the SNP uses these powers to take Scotland forward – not back to yet another referendum.’
Update 24th February: There has been another concession from the UK Government in the final agreement made. The UK is to contribute £200 million to the set up costs of administering the new powers. Our information was that the last offer from the Treasury had been £100 million, so the final £200 million is another major concession.
The UK taxpayer is effectively paying for Scotland to have six years, risk free, with no accountability, to learn to manage its own income tax and welfare; and is paying heavily towards the set up costs of the Scottish systems.
The question has to be asked, what, in the end, is the overall advantage to the rest of the UK?