Explainers
Funding for the Scottish Budget
The Scottish Budget became more complex when tax and social security powers were devolved to the Scottish Parliament following the 2012 and 2016 Scotland Acts.
The Scottish Government gets its funding from a range of sources. Most if it is still from the UK Government, but since 2012 there are also revenues from devolved taxes and Scottish Government borrowing. Each type of funding has distinct arrangements which are set out in HM Treasury’s Statement of Funding Policy and the fiscal framework agreed between the UK and Scottish Governments.
The fiscal framework sets out the funding arrangements and borrowing powers for the Scottish Government. It was published alongside the Scotland Act 2016 and was updated in August 2023 following a review by both governments. The latest version can be found here. We explain how the framework operates in our video.
Our role includes forecasting revenue from Scottish taxes and presenting a picture of the overall Scottish Budget – how much funding comes from each source, whether it has moved up or down between years, and how spending has evolved based on Scottish Government decisions. We use this to assess the reasonableness of the Scottish Government’s borrowing plans and other funding assumptions.