The UK and Scottish governments have reached a deal on the fiscal framework for Holyrood’s finances.
The deal takes into account the new powers being transferred from Westminster as part of the Scotland Bill.
Nicola Sturgeon said Scotland’s budget would lose “not a single penny” as a result of the new arrangements, while David Cameron hailed the agreement as a “major milestone”.
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Negotiations between Scottish finance secretary John Swinney and chief secretary to the Treasury Greg Hands had been ongoing for many months without being able to finalise a deal.
The agreement, however, sees the overall block grant at least as high as it would have been under the Barnett Formula, the previous way of calculating the transfer, for six years.
The Scottish Government also gets new borrowing powers and £200m to implement its additional responsibilities. There will be a review of the arrangements in the next parliament.
David Cameron said: “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.”
Sturgeon told the Scottish Parliament: “There is now an agreement in principle that we can recommend to parliament.
"There will be not a single penny of detriment to the Scottish government's budget as a result of the devolution of powers during the transition period, for the next six years to March 2022."