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Chamber and committees

Finance and Public Administration Committee

Fiscal Framework Review - UK Government Response

Letter from the Chief Secretary to the Treasury to the Convener and the Convener of the Social Justice and Social Security Committee of 2 November 2021

Dear Kenneth, Neil,

1. Thank you for your letters on 7 and 8 October 2021 in relation to the review of the Scottish Government’s Fiscal Framework.

2. As you are aware, I recently met the Cabinet Secretary for Finance and the Economy, to discuss the arrangements for the independent report that will inform the Fiscal Framework Review.

3. I am pleased to confirm that we reached agreement on the following key issues:

a. To jointly commission an independent report that will cover the Block Grant Adjustment arrangements. This independent report will not make recommendations, but will involve a call for evidence from stakeholders.

b. The independent report will inform a broader review of the Fiscal Framework. The review will therefore not be constrained by the scope of the independent report.

c. A shared ambition for swift progress and best endeavors to meet the timeframes set out in the Fiscal Framework, such that the independent report can be presented to both governments by the end of 2021 (or as soon as possible thereafter). This will hopefully enable us to begin the review proper in early 2022.

4. I have now asked my officials to work with their counterparts in the Scottish Government to consider the potential authorship for the independent report, and to finalise the Terms of Reference for publication. I am hopeful that this will enable us to formally commission the independent report very soon.

5. I also wecome the report you have produced jointly with the Scottish Government on the Fiscal Framework, which is a valuable contribution to the discussions that we are having in preparation for the report and review.

6. I look forward to continuing working with the Scottish Government as we prepare to review the Fiscal Framework to ensure fair and sustainable funding for Scotland's future.

7. I am copying the Secretary of State for Scotland.

Best wishes

Rt Hon Simon Clarke MP
Chief Secretary to the Treasury