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Scotland’s new financial powers: the opportunities and risks

This article explores the history of Scotland's devolution and the new financial powers it has gained. It examines the opportunities and risks that come with these powers, including fiscal volatility, intergovernmental relationships, and the potential for more strategic management of public finances. It also discusses the importance of parliamentary scrutiny and audit in ensuring fiscal sustainability.

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Scotland’s new financial powers: the opportunities and risks

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  1. Scotland’s new financial powers: the opportunities and risks Caroline Gardner Auditor General for Scotland

  2. A brief history of devolution so far… • Scottish Parliament established in 1999 (Scotland Act 1998) • New financial powers (Scotland Act 2012) • Scottish rate of income tax • Devolved taxes (Land & Buildings Transaction Tax and Landfill Tax) • Borrowing powers • Independence referendum – the Vow – the Smith Commission 2014 • Further financial devolution (Scotland Act 2016)

  3. Scotland Act 2016 – new financial powers

  4. Taxation as share of devolved expenditure Source: Scottish Parliament Information Centre Financial Scrutiny Unit

  5. Financial devolution: opportunity and risk • Risks • Fiscal risk – volatility of taxes and spending • Intergovernmental relationships • Direct link between economic performance and public finances • Opportunities • More flexibility on policy choices and associated tax and spend • Development of more strategic management of public finances

  6. Parliamentary scrutiny and audit • Priorities • Whole of Government Accounts • Greater transparency • Budget process • Fiscal framework • Fiscal sustainability Our reports

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