Historic new Scotland funding deal agreed

29 February 2016

A new funding deal has been agreed following ten rounds of negotiations, involving the Prime Minister, Chancellor and Chief Secretary to the Treasury, the UK and Scottish Governments. It means that the UK Government is implementing the recommendations of the Smith Commission in full, delivering the cross-party ‘Vow’ which will mean unprecedented new powers for Scotland.

This historic deal means that:

  • the Scottish Government will fund more than half of its spending from Scottish taxes, so its funding will be more closely linked to its policy decisions and Scottish economic performance
  • Scotland will not receive a penny less than Barnett as a result of population change
  • the Scottish Government will get £200 million to implement the new powers
  • a review in the next Parliament will make ensure the deal agreed is still delivering against all the Smith principles.

The details underpinning the deal are set out in the Agreement which has been confirmed by the UK and Scottish Governments.

The final step will come once the Scotland Bill passes through Parliament later in the spring.

The agreement confirms that when the Scottish Rate of Income Tax comes into effect from April 2016, it will operate for one transitional year. Full devolution of income tax rates and thresholds for non-savings and non-dividend income will therefore commence in April 2017 where the Scottish Parliament will be given the power to set their own rates and bands.