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No deal after latest UK-Scots fiscal framework talks Swinney: 'Progress made' but no deal in latest fiscal framework talks
(about 1 hour later)
The latest round of talks to establish a fiscal framework for devolved powers for Scotland has ended without a deal. The UK and Scottish governments have made "some progress" in talks to establish a fiscal framework for new devolved powers, but are yet to finalise a deal.
It was hoped a deal could be struck before representatives of the UK and Scottish governments are due to outline their positions at Holyrood on Tuesday. Finance Secretary John Swinney and his Treasury counterpart Greg Hands met for talks for the tenth time in London.
Finance Secretary John Swinney and his counterpart Greg Hands have held their tenth meeting on the matter in London. Mr Swinney said progress had been made on a number of issues, but said there was not yet an "overall agreement".
However, with the sides differing on key conditions of the settlement, no agreement has yet been reached. Mr Hands said the talks would now continue into the weekend.
Both Mr Swinney and Mr Hands had voiced hopes a deal could be struck, but both men also said the onus is on the other to give some ground. Both sides are expected to lay out their positions to MSPs on Tuesday.
BBC Scotland understands progress was made in Friday's talks, but they broke up without a final agreement. It was hoped a deal could be struck before representatives of the UK and Scottish governments are due to appear at Holyrood to give evidence about the deal, which will establish a financial basis for new powers to be devolved as part of the Scotland Bill.
'Significant issues'
However, Mr Swinney said there were "significant issues" still to be resolved.
He said: "We have not managed to reach an overall agreement today, but we have made progress on a number of issues that are relevant to the agreement.
"We don't have a lot of time on our side because the parliamentary scrutiny of the Scotland Bill and the fiscal framework is due to commence in the Scottish Parliament on Tuesday, so it is important that we work with all speed to try to resolve the outstanding significant issues.
"We are committed to resolving those issues and to working with the UK government to enable that, and we will concentrate on that work in the course of the next few days to try to resolve these outstanding questions."
Mr Hands said there had been a "step forward" in the negotiations, with "progress being made in a number of important areas".
He said: "The UK government is absolutely committed to implementing the Smith agreement in full and willing to go the extra mile in order to secure an agreement.
"We've agreed that UK and Scottish government officials will continue discussions over the weekend and I remain confident that a deal can be reached that is fair to Scotland and fair to the rest of the UK, now and in the future."
Analysis by Glenn Campbell, BBC Scotland political correspondentAnalysis by Glenn Campbell, BBC Scotland political correspondent
No deal? No further devolution. Holyrood can't take on extra tax and welfare powers unless there's a fiscal framework to underpin them.No deal? No further devolution. Holyrood can't take on extra tax and welfare powers unless there's a fiscal framework to underpin them.
Any framework will include a system to reduce the grant Holyrood gets from the Treasury, to reflect its growing ability to raise its own revenue.Any framework will include a system to reduce the grant Holyrood gets from the Treasury, to reflect its growing ability to raise its own revenue.
The two sides are struggling to agree the fairest way to achieve that. The Scottish government says the Treasury's current offer would leave it out of pocket. The Treasury disputes that and says SNP ministers can't expect taxpayers in the rest of the UK to underwrite all the risks that come with extra responsibilities.The two sides are struggling to agree the fairest way to achieve that. The Scottish government says the Treasury's current offer would leave it out of pocket. The Treasury disputes that and says SNP ministers can't expect taxpayers in the rest of the UK to underwrite all the risks that come with extra responsibilities.
The Scotland Office minister, Lord Dunlop, says the UK government is "committed to go the extra mile to get a deal". But First Minister Nicola Sturgeon says she "will not sign up to a deal that's unfair to Scotland".The Scotland Office minister, Lord Dunlop, says the UK government is "committed to go the extra mile to get a deal". But First Minister Nicola Sturgeon says she "will not sign up to a deal that's unfair to Scotland".
First Minister Nicola Sturgeon has previously written to Prime Minister David Cameron calling for him to step in over the matter.First Minister Nicola Sturgeon has previously written to Prime Minister David Cameron calling for him to step in over the matter.
He has said that "no one is keener" than he is to reach an agreement, but also warned the Scottish government would have to be ready to "move towards" his position. The prime minister has said that "no one is keener" than he is to reach an agreement, but also warned the Scottish government would have to be ready to "move towards" his position.
Despite months of talks, the deadline for agreement was pushed back earlier this month.Despite months of talks, the deadline for agreement was pushed back earlier this month.
On Wednesday, Scottish Conservative leader Ruth Davidson proposed a compromise that would see both sides give some ground to agree a shorter-term deal that would be reviewed in five years. Holyrood's devolution committee said there would be "very substantial impacts" on Holyrood's ability to scrutinise the deal if matters were delayed beyond Friday, and called for a "full explanation" of arguments by its next meeting on 23 February.
Earlier this week, Mr Hands was criticised for being on holiday with his family while negotiations were taking place.
A Treasury spokeswoman has said the UK government had shown it was willing to compromise and "go the extra mile" to secure an agreement.
The two sides differ on key parts of the deal, in particular their interpretation of the "no detriment" principle called for by the Smith Commission on further powers for Scotland.The two sides differ on key parts of the deal, in particular their interpretation of the "no detriment" principle called for by the Smith Commission on further powers for Scotland.
This means neither the Scottish or UK budgets should be left worse off in future by the finalised agreement, but the negotiating teams differ in their interpretations of this.This means neither the Scottish or UK budgets should be left worse off in future by the finalised agreement, but the negotiating teams differ in their interpretations of this.
'Not logical''Not logical'
The Scottish government claims the Treasury's latest offer would amount to an "almost £3bn cut", while Mr Hands insists an offer tabled by Mr Swinney is "not logical" and "not fair" to taxpayers across the rest of the UK.The Scottish government claims the Treasury's latest offer would amount to an "almost £3bn cut", while Mr Hands insists an offer tabled by Mr Swinney is "not logical" and "not fair" to taxpayers across the rest of the UK.
The key issue concerns population growth. With Scotland's population forecast to grow more slowly than that of the UK as a whole in coming years, the two sides differ on how compensation to cushion against the economic impact of this should be calculated. The key issue concerns population growth. With Scotland's population forecast to grow more slowly than that of the UK as a whole in coming years, the two sides differ on how Scotland's block grant should be altered to cushion against the economic impact of this.
The deal proposed by Ms Davidson would see both parties give some ground. Mr Swinney said the talks had been "productive" in some other areas.
She wants the Scottish government to agree to the UK government's new method of calculating the amount of money it receives each year from the Treasury. He said: "We have managed to resolve a number of the issues that were involved because the fiscal framework has been about a range of different issues, not just about the principle of no detriment in the block grant adjustment.
In return, she wants the UK government to guarantee the devolved administration would not receive "a penny less" than it would under its preferred mechanism, effectively insuring Holyrood against any budget shortfall. "So some progress has been made, but we have outstanding questions, significant questions, that have yet to be resolved.
This deal would then be reviewed in full after a five-year trial period. "There are very significant powers that are being transferred to the Scottish Parliament. So we are energetic and enthusiastic about securing those powers and being able to exercise those powers, but we have said all along we can only do that if we have a fair fiscal framework in place."