Fiscal deal costs to be revealed
Mundell vow on framework but refuses to comment on £900m tag
THE true cost to English taxpayers of the fiscal framework deal between London and Edinburgh will be made public, David Mundell has confirmed – but failed to say when.
And the Scottish Secretary repeatedly refused to say if the £900 million price-tag, to be picked up by taxpayers south of the Border and as calculated by economic think-tank the Institute for Fiscal Studies (IFS), is accurate.
On February 23, after months of wrangling, the two governments struck a deal on the framework that will underpin the introduction of Holyrood’s new tax and welfare powers.
For most of that time, the UK Government argued that, because of the new powers, the Scottish Government would have to bear the cost of lower population growth, which would mean lower revenue expected for Scotland in the coming years.
But the Scottish Government said this was unfair and complained that, if Whitehall’s model were adopted, Scotland would be out of pocket by as much as £7 billion.
As talks stalled Treasury Minister Greg Hands said the Scottish Government’s proposal – to continue receiving billions of tax revenue even after securing extra powers – was “not logical and does not meet Lord Smith’s taxpayer fairness principle”.
But that was what was finally agreed, leading the IFS to conclude the deal was unfair to the rest of the UK. It suggested one interpretation of the outcome was the UK Government “effectively threw in the towel”.
In its analysis, the think-tank dismissed the UK Government’s notion it had put forward a “compromise”, saying the model to be used for the framework meant “in effect, the Scottish Government has got its preferred approach, at least for the first five years of devolution”.
This means as tax revenues grow south of the Border, some of the money will continue to go north; by 2020/21, the IFS calculated this would be “around £900m”.
Asked about the cost of the fiscal deal to English, Welsh and Northern Irish taxpayers, a Treasury source said: “I’m afraid we are unable to share figures.”
Mr Mundell, asked about the think-tank’s £900m price-tag, noted: “If the IFS had wanted to make a contribution to the debate, they might have done so before now.”
Mr Mundell insisted the deal had been scrutinised by MPs, MSPs and peers. However, when he was asked for a fifth time what Whitehall’s estimated cost would be to taxpayers south of the Border, he said: “The numbers are going to be made public over the period of the deal, so we will know what the arrangements are. There will be an independent report by the end of 2021.”