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Nicola Sturgeon asks Cameron to meet over funding deadlock Nicola Sturgeon asks Cameron to meet over fiscal deadlock
(35 minutes later)
Nicola Sturgeon has called on David Cameron to meet her for 11th-hour talks to rescue the Scottish government funding negotiations as the Treasury tabled a fresh offer aimed at breaking the current deadlock.Nicola Sturgeon has called on David Cameron to meet her for 11th-hour talks to rescue the Scottish government funding negotiations as the Treasury tabled a fresh offer aimed at breaking the current deadlock.
In a statement to Holyrood on Tuesday afternoon, the first minister insisted that the powers promised to Scotland following the no vote in the independence referendum of 2014 “did not come with a price tag” and accused the Treasury of proposing what amounts to a systematic cut in the country’s budget. But she added: “Within the last hour we have received further proposals from the Treasury which we will now take time to consider.”In a statement to Holyrood on Tuesday afternoon, the first minister insisted that the powers promised to Scotland following the no vote in the independence referendum of 2014 “did not come with a price tag” and accused the Treasury of proposing what amounts to a systematic cut in the country’s budget. But she added: “Within the last hour we have received further proposals from the Treasury which we will now take time to consider.”
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Earlier on Tuesday, deputy first minister, John Swinney, told the Scottish parliament’s devolution committee that agreement on the fiscal framework – a formula setting out how Holyrood would be funded by UK taxpayers following further devolution of tax and welfare powers agreed by the Smith commission – had foundered on the issue of how the block grant to Scotland should be adjusted. Earlier on Tuesday, the deputy first minister, John Swinney, told the Scottish parliament’s devolution committee that agreement on the fiscal framework – a formula setting out how Holyrood would be funded by UK taxpayers following further devolution of tax and welfare powers agreed by the Smith commission – had foundered on the issue of how the block grant to Scotland should be adjusted.
Sturgeon told the Holyrood chamber that the method of adjustment proposed by her government – per capita indexed deduction – would deliver no detriment to taxpayers north or south of the border, while every option proposed by the Westminster government so far would do so. No detriment was the principle contained in the Smith commission agreement that neither the UK nor Scottish governments should suffer financially from policy decisions made by the other once the new powers come into force. Sturgeon told the Holyrood chamber that the method of adjustment proposed by her government – per capita indexed deduction – would deliver no detriment to taxpayers north or south of the border, while every option proposed by Westminster so far would do so. No detriment was the principle contained in the Smith commission agreement that neither the UK nor Scottish governments should suffer financially from policy decisions made by the other once the new powers come into force.
Sturgeon argued that if the government was to agree to the Treasury’s preferred approach, then over the 10 years from the end of the transitional period in 2022, Scotland’s budget would be reduced systematically – compared to the Barnett formula, which divvies up public funds between the home nations – by a cumulative total of £2.5bn. She said: “This reduction would happen even if Scotland’s tax rates and economic performance matched the UK’s 100%.” Sturgeon argued that if the Treasury’s preferred approach is adopted, over the 10 years from the end of the transitional period in 2022, Scotland’s budget would be reduced systematically by a cumulative total of £2.5bn. She said: “This reduction would happen even if Scotland’s tax rates and economic performance matched the UK’s 100%.”
Sturgeon added that, although the Treasury had now offered to deliver – on a transitional basis – a no-detriment outcome for the period up to 2021-22, the question remained what would happen at the end of this five-year period. She said: “I will not sign up to a systematic cut in Scotland’s budget whether that cut is being applied today or by a pre-judged review in five years’ time. Sturgeon added that, although the Treasury had now offered to deliver – on a transitional basis – a no-detriment outcome for the period up to 2021-22, the question remained of what would happen after that. She said: “I will not sign up to a systematic cut in Scotland’s budget, whether that cut is being applied today or by a pre-judged review in five years’ time.
“That would not live up to Smith because it would not protect Barnett and therefore it would be a clear breach of the Vow,” she said, referring to the commitment made by the three main party leaders ahead of the independence referendum promising to give Scotland more powers. “That would not live up to Smith because it would not protect Barnett [the formula that divvies up public funds between the home nations] and therefore it would be a clear breach of the Vow,” she said, referring to the commitment made by the three main party leaders ahead of the independence referendum promising to give Scotland more powers.
Related: Nicola Sturgeon says Treasury is misleading media over Scottish fundingRelated: Nicola Sturgeon says Treasury is misleading media over Scottish funding
Concern is mounting about the likelihood of an agreement being signed and having time to be afforded proper scrutiny by MSPs before the current Scottish parliament is dissolved on 24 March for elections in May. Sturgeon said talks should continue “as long as necessary”, telling MSPs that she was “seeking to secure, even at this 11th hour, a deal that is fair to Scotland and that lives up to the promise that was made to the Scottish people”. Concern is mounting about the likelihood of an agreement being signed and whether MSPs will have time to properly scrutinise it before the current Scottish parliament is dissolved on 24 March for elections in May. Sturgeon said talks should continue “as long as necessary”, telling MSPs that she was “seeking to secure, even at this 11th hour, a deal that is fair to Scotland and that lives up to the promise that was made to the Scottish people”.
The Treasury, which had been sounding more confident over the weekend that a deal could be reached, insisted on Tuesday morning that it would “continue to go the extra mile to land a deal that is fair for Scotland and fair for the rest of the UK”. The Scottish secretary, David Mundell, was due to appear before the Holyrood devolution committee on Tuesday afternoon. The Treasury, which had been sounding more confident over the weekend that a deal could be reached, insisted on Tuesday morning that it would “continue to go the extra mile to land a deal that is fair for Scotland and fair for the rest of the UK”. The Scotland secretary, David Mundell, was due to appear before the Holyrood devolution committee on Tuesday afternoon.
In new analysis published on Tuesday, the Institute for Fiscal Studies concluded that a fundamental difference in interpretation of what the Smith commission meant by “fairness” and “no detriment” meant that the current deadlock could only be broken by further compromise in the negotiations which have been ongoing for almost a year.In new analysis published on Tuesday, the Institute for Fiscal Studies concluded that a fundamental difference in interpretation of what the Smith commission meant by “fairness” and “no detriment” meant that the current deadlock could only be broken by further compromise in the negotiations which have been ongoing for almost a year.
The IFS stated: “There are no right or wrong answers here; just differences in interpretations of the Smith commission’s principles and differences in priorities when they clash. Perhaps it’s not surprising that a deal is still elusive. Reaching one will take goodwill and further compromises by someone.”The IFS stated: “There are no right or wrong answers here; just differences in interpretations of the Smith commission’s principles and differences in priorities when they clash. Perhaps it’s not surprising that a deal is still elusive. Reaching one will take goodwill and further compromises by someone.”