Scotland politics

Scotland Bill: Further talks over fiscal framework

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Further talks over the financial rules that will underpin Holyrood's new tax and welfare powers have been held in London.

Deputy first minister John Swinney and the chief secretary to the Treasury, Greg Hands, met for the fifth time to discuss the fiscal framework.

The new devolved powers set out in the Scotland Bill cannot go ahead without an agreement being reached.

Mr Swinney has previously said he would veto any deal that was unfair.

At the moment, Holyrood is largely funded by a grant from the Treasury, which will be reduced when the Scottish government is given responsibility for income tax rates and bands.

Financial scrutiny

The talks between Mr Swinney and Mr Hands aim to reach an agreement on the fairest way to calculate the reduction in future years.

Other issues that will need to be resolved include the scope of Holyrood's borrowing powers, as well as who pays the set-up costs for the new powers and how financial scrutiny should work.

What is the fiscal framework?

The Scottish and UK governments had hoped to reach a deal by the end of the autumn, but haggling over the details looks set to continue into the New Year.

Both sides have agreed not to provide a "running commentary" on the negotiations until they have been completed.

But Scotland Office minister Lord Dunlop told the House of Lords last month that the UK government hoped to have the Scotland Bill enacted ahead of May's Holyrood election.

'Good faith'

And he said details of the fiscal framework would be available before the bill completes its passage.

Lord Dunlop also said he believed the Scottish government was negotiating on the fiscal framework "in good faith".

He added: "We are committed to reaching an agreement as soon as we can. We cannot guarantee when the negotiations will end.

"Both governments need time and space to reach an agreement that is right for Scotland, right for the UK as a whole, and built to last."

Lord Dunlop was responding to calls from peers for the Scotland Bill to be delayed until the fiscal framework had been published, with concerns being raised that the framework could become a recipe for disharmony between the two governments.