Further evidence of the underlying robustness of Scotland’s economy (at the very sharpest end ie Decrees issued) indicated in the latest figures from the Scottish Registry Trust. Noticed these highly encouragingf figures carried on the Scottish legal site but have seen no mention in any other news outlet as yet. Link and snippets below:
According to figures released by Registry Trust, the number of decrees against Scottish businesses dropped by 28 per cent in the first six months of 2019 (compared to HY1 2018 figures) – totalling 1,140, the lowest of any first half-year on record.
The total number of decrees against incorporated businesses dropped by 29 per cent from the previous year’s figures, to 850.
The total number of decrees against the generally smaller unincorporated businesses fell 23 per cent on HY1 2018 figures, to 290 – a record first half-year low.
During the first half of 2019, 9,310 debt decrees were registered against consumers, 29 per cent lower than HY1 2018.
The number of small claims against consumers fell by 29 per cent in HY1 2019 to 8,498, with the total value down to £13.1m, a 28 per cent drop on HY1 2018’s record high figure of £18.1m.
Ordinary cause decrees against consumers in the first six months of 2019 dropped by 33 per cent to 812, compared to the same period the previous year.
The total value fell by 39 per cent to an all time first half-year low of £10.5m.
Scotland chairman Malcolm Hurlston CBE added: “The decree stats for both businesses and consumers are positive over this half year and give hope for a strengthening economy.”
Noticed this link over on Wings – Could have knocked me down with a feather when I saw that the Fraser of Allander Institute is actually doing a piece to try and clear up some of the confusion the Westminster govt and its media chums have been creating around the reconciliation of the Scottish income tax receipts and the block grant (Barnett) adjustments. (To me it is interesting how close FoA come to calling out UK govt for being deliberately misleading on this matter. Well Done FoA – keep up the good work! – Plenty more of it to be done!). Link and snippets below (worth read of the (short) full article):
Last week, we had the first set of income tax reconciliations for Scotland’s new fiscal framework.
For the coming year, that reconciliation figure will be around £200m.
In the aftermath of the publication of these figures, there were reports that Scotland was also in receipt of a £700m ‘bail-out’ from Westminster.
Is this accurate? In a word, no.
To be fair, it’s not hard to see how such a conclusion could be made.
A Treasury press release made clear that – in their eyes – the shortfall in Scottish income tax revenues was being offset by higher UK Government funding.
Now from a strictly spreadsheet perspective, this may be one very roundabout way of trying to explain how the fiscal framework works. But –
1. There is no actual ‘increase in funding’. Instead, it’s an ex-post accounting adjustment within how the framework operates.
2. This £737m figure has nothing to do with the Scottish Government’s relative tax shortfall – it is down to i) better HMRC tax data and, ii) weaker rUK NOT Scottish income tax receipts compared to forecast.
3. The use of the phrase ‘additional UK Government funding’ has clearly created confusion. What is being talked about here is the block grant adjustment (BGA) – i.e. how much the UK Government is to be compensated for as a result of Scottish income tax revenues no longer flowing to the Treasury.
In essence, there was an overestimate of what should have been deducted for this purpose, whilst protecting the integrity of the Barnett formula. This has been amended. We’re puzzled why the UKG chose such language, particularly given the way it has been subsequently interpreted.
So to argue that Scotland has been ‘bailed out’ to the tune of over £700m because of a slump in the Scottish economy is clearly wrong.
And the use of the phrase ‘additional funding’ is odd.
If the exact opposite scenario was to occur next year – i.e. outturn data for both Scotland and the rUK happened to turn out ahead of forecast – can we expect a similar press release titled ‘Pick-up in Scottish income tax revenues offset by UK Government funding cut’?
Yes, there is a reconciliation gap to the tune of £204m that Scottish Government now needs to manage (not to mention potential further negative reconciliations in the future), but that’s it.
One of the key challenges with the new fiscal framework is its complexity.
The onus must be on both governments to articulate how the framework is operating, the various changes from year-to-year and any risks, in a straightforward and transparent manner.
The risk of not doing so – and seeking to score political points at every turn – is that confidence in the underlying process of fiscal devolution could be eroded.
There are legitimate issues to be discussed about the Scottish budget, including the performance of Scotland’s tax base; the Scottish Government’s long-term fiscal strategy; and the adequacy of its tools to manage fiscal risks.
Searching for phantom ‘bail-outs’ is not one of them.
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