As someone who congratulated the Scottish Government at First Minister’s question time last week on its part in the agreement, I thank the UK Government for being willing to move from some of its original positions and for being party to a document that is, in many ways, very impressive.
I want to home in on an area that might benefit from more clarity and less ambiguity, which is the spillover effects. Professor Muscatelli said:
“The main issue will be whether the two governments will always agree what a direct effect is and what a behavioural effect is, or what ‘material’ represents in the context of behavioural effects.”
David Phillips, who, as you know, is from the Institute for Fiscal Studies, along with the two Davids—Bell and Eiser—who are professors at Stirling, say in their submission:
“The Agreement provides no indication as to what level of financial spillover effect might be considered ‘material’, so this will be entirely a matter for each Government to decide on a case-by-case basis. This could open the door to further dispute”.
The issue of spillover effects seems to be the area where there is the most likelihood of disagreement in the next five years. Will you provide more detail about the terms “direct”, “behavioural” and “material”? Indeed, there is also reference in the fiscal framework to “Other ... second-round effects”.