Holyrood budget process to be reviewed in light of new powers

A 'fundamental review' of Holyrood's budget process has been launched in light of Scotland's new fiscal powers.

The Scottish Parliament has been given further control over tax, spending and borrowing in recent years. Picture: Jayne Wright.

The Scottish Parliament has been given further control over tax, spending and borrowing in recent years.

A review group involving the Parliament, Scottish Government, public finance experts and academics is to look at what changes to the budget process will be required to ensure proper scrutiny.

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The group will consider a range of issues including the forecasting of tax receipts, the calculation of adjustments to Scotland’s budget allocation from the UK, and the UK Government’s Autumn Statement.

It will report to the Parliament’s Finance Committee before summer recess next year.

Holyrood’s raft of new fiscal powers include, from April 2017, control over income-tax rates and bands, assignment of half the share of VAT receipts in Scotland and power over air passenger duty.

A Scottish Fiscal Commission has been set up to carry out forecasts of tax revenues and GDP.

Finance Secretary Derek Mackay said the budget process needed to “evolve to take account of the complexities and opportunities” associated with the new powers.

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He came under fire from members of the Finance Committee earlier this week after he told them his budget proposals for 2017/18 would not be published until shortly before Christmas.

He pointed to the need to wait for the UK Government’s Autumn Statement and uncertainty caused by the Brexit vote as an explanation for the delay.

Commenting on the review, he said: “It is important to ensure that we develop a process that balances the time required for proportionate and effective parliamentary scrutiny with the need to ensure that the information being scrutinised is as accurate as possible and based on the most up-to-date forecast information.”

Finance Committee convener Bruce Crawford said: “Holyrood’s budget process was designed nearly 20 years ago at a time when the Scottish Government’s budget was largely determined by Westminster through the Barnett formula.

“With Scotland’s new tax powers, the Scottish Government is about to become responsible for raising much more of what it spends and will rely on tax forecasting in order to set out its draft budget before Parliament each year.

“Understandably, the Government will want to rely on the most accurate forecasts of tax revenue possible in order to ensure confidence and credibility in its budget.

“Equally, however, the Finance Committee will want to ensure that any new budget process still includes sufficient time for proper parliamentary scrutiny.”

The external experts who will help with the review are Auditor General Caroline Gardner; Don Peebles, head of the Chartered Institute of Public Finance and Accountancy Scotland; Sean Neill, chief executive of the Scottish Fiscal Commission; Elaine Lorimer, chief executive of Revenue Scotland; Professor James Mitchell; Dame Sue Bruce; Dr Angela O’Hagan and Professor Mike Danson.