Finance and Public Administration Committee
Medium Term Financial Strategy Review
Background
A key part of the Scottish Budget process is the Medium Term Financial Strategy (MTFS).
The MTFS is published annually and its purpose is to provide a medium-term perspective on the sustainability of Scotland’s public finances, supporting a broad approach to budget evaluation and formation. It is intended to ensure that both Parliament and Government have foresight of the financial challenges and broad financial plans for the next five years.
The MTFS also sets out how the Scottish Government proposes to exercise its borrowing powers and the Scotland Reserve within the constraints of the Fiscal Framework.
About the review
The Scottish Government’s MTFS is a new addition to the Parliament’s budget process with the first MTFS being published in 2018. The most recent (and fourth) MTFS was published in December 2021.
The Committee is undertaking a focussed review of how well the MTFS delivers on its purpose. At the end of this review the Committee intends to provide the Scottish Government with its views to inform the next MTFS.
The Parliament and Scottish Government agreed that the types of information the MTFS should include are:
- forecasts of taxes and estimates of demand led spending (i.e. social security)
- how different economic scenarios impact on the budget in future
- the Scottish Government’s broad financial plans for the next five years
- policies that explain how Scotland’s more recent financial powers (such as Income Tax or Landfill tax) will be used or managed
The strategy is also informed by the latest Scottish Fiscal Commission forecasts for the economy and public finances which are published on the same day as the MTFS.
The Committee has written to relevant Scottish Parliament Committees, members of the Budget Process Review Group (who created the new Scottish Parliament Budget Process) and experts asking for their views by 4 February:
Email to Stakeholders of 12 December 2021
Written submissions
The following written submissions have been received:
Written submission from the Education, Children and Young People Committee
Written submission from the Social Justice and Social Security Committee
Written submission from the Local Government, Housing and Planning Committee
Written submission from the Auditor General for Scotland
Written submission from the Health, Social Care and Sport Committee
Committee Response
The Convener wrote to the Cabinet Secretary for Finance and the Economy on 23 February 2022 setting out the Committee's findings and recommendations arising from its review of the content of the MTFS:
Letter from the Convener to the Cabinet Secretary for Finance and the Economy of 23 February 2022
The Cabinet Secretary for Finance and the Economy replied to the Convener's letter on 4 March 2022:
Letter from the Cabinet Secretary for Finance and the Economy to the Convener of 4 March 2022