Avoiding this will require some combo of: 1⃣Greater central involvement in system sooner rather than later. 2⃣Partial but not full write-off of deficits, so councils still bear par of marginal costs. 3⃣Formula-based support to councils, so they still bear full marginal costs.

... what to do with the deficits councils will build up by March 2028. More info on these plans expected at the LG finance settlement next month. Just promising to write-off these deficits is RISKY - why would councils try to control spending if it won't be their problem? [2/3]

My @theIFS colleague Luke Sibieta highlights how there are no easy options for central government as it takes responsibility for 'fully funding' SEND costs in 2028-29. Some combo of reforms to ⬇️ costs & raids to other budgets are needed. But there's another tricky issue too..

💡Two solutions: a) Use the revenues to boost England-only spending (e.g. top-up English council funding). b) Introduce a "block grant adjustment" for this new tax, slightly reducing devolved govt funding. They could then spend less or impose similar tax in their countries.

🚨A question for @hmtreasury. The 'mansion tax' on £2m+ properties will apply only in England. BUT as it stands, it will reduce the UK-wide budget deficit - which also benefits residents of Scotland, Wales and NI due to lower debt servicing costs. This could be seen as unfair...

Band F to H together account for 10% of properties (the most valuable as of 1991). But only around 1% of properties are worth £2 million or more - so about 1-in-10 band F to H ones. That's why it's reported only a relatively small sum would be raised (£400- 500 million).

Seeing confused reporting (plus ca change) on potential new tax on properties worth over £2 million. IF this is what is planned, that's NOT the same as a tax on all band F, G, H properties. Instead band F, G & H props. would be valued and those worth >£2 million would be taxed.

The @mhclg has confirmed fairly big changes to #localgov reform plans: 📈Big winners look to be concentrated in outer London (already expected to do well, on average) 📉Losers look to be shire districts (already expected to lose) and rural areas (due to less weight on remoteness)

So in sum, a cut in @scotgov funding if rUK income tax is increased would be the fiscal framework working as intended - ensuring Scotland still shares in UK-wide fiscal tightenings (and loosenings!). But I do sympathise with the tricky position this puts @scotgov in. [15/15]

..with an election looming and the Scottish Govt having previously pledged no further income tax rises. BUT like at UK level with weaker economic outlook, IF income tax is increased in rUK, circumstances would have changed - so past pledges would need to be reconsidered. [14/15]

Opposition parties in Holyrood could legitimately critique the precise decisions taken if this comes to pass - but not the need to make some form of cut or tax rise. Because that wouldn't be a choice under @scotgov control. And I recognise the political issues posed.. [13/15]

.. It is true that an increase in rUK income tax and cut in funding for Scotland would force @scotgov to either cut spending or put up its own taxes (as its contribution to UK-wide deficit reduction). Shona would have no choice but to make such difficult decisions... [12/15]

So I disagree with @ShonaRobisonMSP that the fiscal framework rules should be changed to allow Scotland to avoid its share of deficit reduction. Nor should it gain twice from NICs cuts by giving @scotgov extra funding too (on top of cuts to Scots NICs). BUT... [11/15]

So the fiscal framework means Scotland has to make its contribution to the overall UK fiscal stance (determined by UK govt) but gives @scotgov some choice over how to do so - via tax or via spending. That's more flexibility than NI + Wales get - for whom UK govt decides. [10/15]

... so rather than income tax changes directly applying in Scotland, the @scotgov would have a choice over Scotland's contribution to deficit reduction (or lower taxes or higher spending). Raise its own devolved taxes? Cut spending? Or some combo. [9/15]

But the tax rises wouldn't apply to Scots & it would be unfair to get the benefits without helping pay for them. Linking the BGA to rUK income tax revenues solves this problem. It means if income tax paid in rUK goes up, the BGA goes up too - reducing @scotgov funding... [8/15]

... Which Scots would also benefit from. 🪙If National Insurance was cut, Scots would pay less too. 🏥If it allows more spending (or avoiding cutting spending), Scots get their share (either directly or via Barnett). 📊And lower borrowing means less interest costs! [7/15]

To see this go back to an increase in UK income tax rates. This will allow some combo of: 📉Cuts to other (mostly UK wide) taxes 📈Increases in public spending 💷Lower government borrowing. English, N Irish and Welsh would pay income tax to fund these other things... [6/15]

..and less if its revenues ⬆️by less. This approach means @scotgov bears the effect its own tax policy changes. Also means risk & reward - providing incentive to grow the underlying tax base (i.e. people's incomes). AND it helps ensure fairness when UK policy changes. [5/15]

When income tax was first devolved to Scotland the BGA was set as the amount of revenue @scotgov would now keep for itself. Since then the BGA has increased in line with income tax revenues in rest of UK. Scotland gets more net funding if its revenues ⬆️faster than rUK... [4/15]