Holyrood funding deal a significant day for devolution, insists David Cameron


A key deal over Scotland's future funding marks a "major milestone in delivering a powerhouse parliament", the Prime Minister has said.

David Cameron said the agreement, reached after months of talks between the UK and Scottish governments, marks a "significant day for devolution".

He was speaking after Scottish First Minister Nicola Sturgeon confirmed to Holyrood there is now an agreement in principal over how Scotland will be funded when new powers over tax and welfare are transferred to MSPs.

Crucially, she said it "allows the powers in the Scotland Bill to be delivered".

Negotiations between the Treasury and the SNP administration in Edinburgh had appeared to be in deadlock, with both sides struggling on the key issue of how the block grant Holyrood receives from Westminster should be adjusted once new income tax powers are devolved as part of the Scotland Bill.

The Scottish Government had threatened to veto the Scotland Bill if it believed the fiscal framework - the financial arrangements underpinning the legislation - was not fair to Scotland.

But Ms Sturgeon announced that following a telephone conversation with Chancellor George Osborne, "there is now an agreement in place in principle that I believe we can recommend to Parliament".

She added that transitional arrangements mean "this deal will not allow a single pound or even a penny to be taken from the Scottish Government budget" up until March 2022, when the method for adjustments will be reviewed.

The agreement comes after 10 rounds of talks between the Scottish and UK governments involving Ms Sturgeon, Mr Cameron, Mr Osborne, Scottish Deputy First Minister John Swinney and Chief Secretary to the Treasury Greg Hands.

Mr Cameron said afterwards: "This is a significant day for devolution. The agreement is a major milestone in delivering a powerhouse parliament for Scotland and will enable us to meet our commitment to make Holyrood one of the most powerful devolved parliaments in the world.

"We have reached a deal which is fair to Scotland and fair to the whole of the UK. It delivers accountability to the Scottish Government and transforms politics in Scotland.

"It means May's Holyrood elections can be fought on the issues which matter most - how the Scottish Government should use these extensive new powers, rather than what they are."

The Treasury will give Scotland £200 million to help with set-up costs and the administration of new tax and welfare powers that are to be devolved to Holyrood.

Ms Sturgeon said there had been "give and take" between Holyrood and Westminster during the talks, telling MSPs: "We did not get everything we wanted.

"But when we began in June last year the Deputy First Minister faced a proposal from the Treasury which would have delivered £7 billion of detriment to the Scottish budget over the next 10 years."

She added: "This deal will ensure the funding for Scotland cannot be changed without the Scottish Government's agreement. It protects the Barnett formula and it allows the powers in the Scotland Bill to be delivered."