Chancellor George Osborne: ‘Strong fiscal deal reached’

The UK and Scottish governments have struck a key deal over future funding which will ensure “not a single penny” is cut from Scotland’s budget in the next six years, the First Minister has said.

With that in place, the fiscal framework was sealed, the Scotland Bill was saved and Scotland was then poised to get all those new powers, including complete control over income tax.

First Minister Nicola Sturgeon wanted any agreement to reflect that Scotland’s population was growing at a slower rate than the rest of the UK.

The deal allows for a five-year transition period before a longer-term deal is negotiated after the 2020 and 2021 elections in Scotland and across the UK.

Scottish Tory leader Ruth Davidson said this afternoon that Chancellor George Osborne – who became involved in the talks last week – was “hoping to speak to the First Minister directly as soon as possible”.

For the last eight months, the Scottish and United Kingdom governments have been trying to secure agreement over the financial settlement which will underpin the new tranche of powers to come to Holyrood – the so-called “fiscal framework”.

“If the arrangements are available shortly after the Scottish Parliament election we would be able to transfer them”.

Scottish Secretary David Mundell said afterwards: ” I am very pleased that we have agreed a deal on the fiscal framework with the Scottish Government. The Scottish Government had to give up on its preferred model to work out Scotland’s future funding – something it insisted it would never do. “It protects the Barnett formula and it allows the powers in the Scotland Bill to be delivered”.

Whitehall insiders acknowledged that the SNP’s intransigence, which saw them reject a series of increasingly generous funding offers, had paid off as the UK Government was under pressure to deliver powers promised during the aftermath of the independence referendum.

“This clears the way for the debate in Scotland to move on to how these tax and spending powers should be used”.

“I welcome this agreement, which shows that Scotland’s two governments can work constructively together for the benefit of Scottish people”. “Grudge and grievance will no longer wash – on tax, on welfare, and on our public services, the buck stops with them”.

But Scottish Liberal Democrat leader Willie Rennie said the two governments ” have not agreed a good long-term deal for Scotland”.

The draft agreement will be published by the end of this week for MSPs to scrutinise.