Meeting of the Parliament 14 December 2016
No. I need to make some progress. I will give way later, if I have time.
Let us look ahead to the Scottish Government’s budget. Roughly half the total funds that are available to the finance secretary will come from taxes that are derived in Scotland: the land and buildings transaction tax, the aggregates levy, income tax, an assignation of partial proceeds from VAT and business rates. If the economy does not grow, the tax revenues do not grow, either.
The remainder of the Scottish Government’s budget—the other 50 per cent—comes in the form of the block grant from Westminster, which is now determined by the fiscal framework that has been negotiated between the UK and Scottish Governments. In that fiscal framework the performance of the Scottish economy relative to that of the UK as a whole is used to calculate the total sum. Therefore, if the Scottish economy continues to underperform against the UK economy, we in Scotland face a double whammy: we will raise less funds in taxes from within Scotland, and the fiscal framework means that the block grant adjustment will reduce the amount of money coming from Westminster. The consequence of economic underperformance is less tax revenue to fund our vital public services.