Scotland needs new powers and improved accountability for devolution to work

06-11-2014

Following on from CIPFA’s significant report ‘Scotland’s future in the balance’, which addressed tough questions around the future financing of Scotland ahead of the Scottish referendum, the Chartered Institute of Public Finance and Accountancy (CIPFA) has submitted evidence to the Smith Commission on Further Devolution of Powers to the Scottish Parliament.

The Institute argues that Scotland requires new powers and improved accountability in order to succeed as a modern devolved state. These should include giving the Scottish Government the ability to hold reserves, and an enhanced ability to borrow for capital purposes based on affordability.

CIPFA argues that an enhanced financial control framework would provide a sound basis on which to assess the future affordability and sustainability of Scotland’s public services. 

The Institute’s submission also calls for a principled approach to devolved taxation, identifying a number of “tax principles” which would enable the Commission to test any taxation proposals in an objective and transparent manner.

CIPFA also described how these new powers could contribute tor stronger financial accountability. It suggests the introduction of a Scottish balance sheet, which would allow the people of Scotland to see a report of their country’s assets and liabilities.

Don Peebles, Head of CIPFA Scotland, commented:

“The present control framework does not provide the devolved Scottish government with all the necessary financial levers for optimum financial management and accountability. Any new powers should include powers to enable the Scottish Government to hold reserves and with an enhanced ability to borrow for capital purposes, based on affordability.

ENDS

Notes to editors

CIPFA’s report released in June during the Scottish referendum debate, ‘The Scottish Referendum: Scotland’s future in the balance’, recognised three main points on constitutional change:

  • The Scottish Government is responsible for approximately 60% of all public spending in Scotland, most of which is financed by a block grant system which was designed some twenty years prior to devolution.
  • The wider present control framework does not provide the devolved Scottish Government with all the necessary financial levers for optimum financial management.
  • Despite significant policy divergence, the current financial framework does not require the financial position of a devolved Scotland to be separately reported to the people of Scotland.

A copy of the report can be found here.