Kate Forbes accused of delaying review of Scotland's financial framework with UK Government

Scotland’s finance secretary has been blamed for a delay to an independent review of the fiscal framework as a war of words erupted around the agreement guiding the allocation of monies from the UK Government to Scotland.

Former Chief Secretary to the Treasury Steve Barclay, who was reshuffled to the Cabinet Office on Wednesday, wrote to Kate Forbes in August seeking a meeting to discuss the joint commissioning of an independent report to inform the review of the financial arrangement.

However, Ms Forbes has been accused of not yet replying – an assessment directly contradicted by the Scottish Government.

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Treasury sources said they believe Ms Forbes is “dragging her heels” to broaden the scope of what is a narrowly-defined review as set out in the agreement signed by both governments in the wake of the Smith Commission, which gave more income tax powers to the Scottish Government.

Kate Forbes has been accused of delaying a review of the fiscal framework.

Contradicting the claims, Ms Forbes told MSPs she had been “actively engaging” with the UK Government since December “on options for the scope of the review as well as the independent report which precedes it”.

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A review of the framework is required by the end of this year under an agreement signed by both governments in the wake of the Smith Commission, which gave more tax raising and social security powers to the Scottish Government in a bid to ensure it remains “fair, transparent and effective”.

In his letter, Mr Barclay said he wanted to agree the “scope of independent report” and added: “I do not believe either government should seek to depart from the Fiscal Framework agreement.

"To do so simply risks a delay to our two governments being able to commence the report and the subsequent review. I would welcome a Joint Exchequer Committee meeting to discuss how we can proceed to jointly commission this independent report on the block grant adjustment arrangements.”

The fiscal framework agreement was published alongside the Scotland Act 2016 and set out new funding arrangements, fiscal rules and borrowing powers for the Scottish Government, including how the Barnett formula- determined block grant is adjusted to reflect Scotland’s tax and social security powers.

The agreement included a promise to review the “effective operation” of the framework after the 2021 Holyrood election to allow for “an assessment in the light of a Parliament's worth of experience”.

As a result, an independent report should be commissioned, with its recommendations presented to both governments by the end of this year.

A Treasury source said: “Despite the tight timetable we have not received a response and it appears the finance secretary is dragging her heels in the hope of broadening the scope of the review to look at more tax and borrowing powers, when the agreement states it should be focused on the block grant adjustment agreement.”

Asked for an update on the framework review in Holyrood on Wednesday, Ms Forbes said: “I personally believe the review and the report should be broad in scope to give full consideration to how the framework has performed and to assess how Brexit and the pandemic have impacted funding arrangements.

"I’ve been pushing for a meeting with the Chief Secretary to the Treasury to take place as quickly as possible to progress that."

Ms Forbes added it was “critical” the Parliament and government “had in place appropriate powers and flexibilities” to manage financial “risks”.

A Scottish Government spokesperson said: “The suggestion the Scottish Government hasn’t responded to this letter simply isn’t true – the Scottish Government contacted the office of the Chief Secretary to the Treasury in response to the letter on September 2 to offer a meeting on the fiscal framework review.

“The Scottish Government, supported by the Scottish Parliament’s finance and social security committees, believe that the review and preceding report should be broad in scope, to give full consideration to how the framework has performed, and to assess how Brexit and the pandemic have impacted funding arrangements.

“The Scottish Government has also been clear that the review must take place as quickly as possible and has been actively engaging with the UK Government since December last year to make progress, including looking to arrange a meeting between the Cabinet secretary for finance and Chief Secretary to the Treasury.”

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