1. Managing risk and performance in an increasingly devolved Scotland
Caroline Gardner
Auditor General for Scotland

2. A brief history of devolution so far…
Devolution (Scotland Act 1998), Scottish Parliament established in 1999
New financial powers (Scotland Act 2012)
Scottish rate of income tax
Devolved taxes (Land & Buildings Transaction Tax and Landfill Tax)
Borrowing powers
Independence referendum – the Vow – the Smith Commission
Further financial devolution (Scotland Act 2016)

3. Scotland Act 2016 – new financial powers
Income tax
From April 2017
Estimated revenues of £11.2 billion
The power to set income tax rates and bands on earned income and to retain the tax collected from Scottish taxpayers
Social security
Date TBC
Estimated spending of £2.7 billion
Responsibility for some social security powers
Value Added Tax (VAT)
From April 2019
Estimated revenues of £5.4 billion
Assigning a share of the VAT collected in Scotland to the Scottish Government's budget
Devolved taxes
From April 2018
Devolution of two further taxes:
Air Passenger Duty (estimated revenues of £309 million)
Aggregates Levy (estimated revenues of £54 million)
Borrowing and reserve
Increased borrowing and reserve powers
Revenue (£1.75 billion) and capital investment (£3.0 billion)
Scottish Reserve (£700 million)

4. Taxation as share of devolved expenditure
Source: Scottish Parliament Information Centre Financial Scrutiny Unit

5. Financial devolution: opportunity and risk
Opportunities
More flexibility on policy choices and associated spending - more closely linked to Scottish priorities
Fiscal framework agreed, providing transparent set of fiscal rules
Development of wider system for Scottish public finances: longer- term planning, enhanced financial reporting and transparency
Risks
Fiscal risk – volatility of taxes and spending
Greater link between economic performance and public finances
Intergovernmental relationships

6. The role of audit and parliamentary scrutiny
Key priorities
Overall account of the revenues, expenditure, assets and liabilities of the whole Scottish public sector
Greater transparency
Stronger parliamentary scrutiny
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