OECD publishes independent review of the Scottish Fiscal Commission

OECD publishes independent review of the Scottish Fiscal Commission

An independent report on the Scottish Fiscal Commission (SFC), Scotland’s official economic forecaster, was published today by the Organisation for Economic Co‑operation and Development (OECD). 

The OECD reported: “The SFC has quickly developed a reputation for delivering independent and credible forecasts”. The OECD reflected that the SFC’s independence was underpinned by strong enabling legislation and the institutional culture of independence instilled by its chair. Stakeholders across the board praise the clarity and accessibility of its reports, and appreciate how the SFC has helped to improve economic statistics for Scotland.

The technical assessment concluded that the SFC’s methodological approaches were appropriate and matched the standards accepted by other independent fiscal institutions. It said: “The SFC’s income tax model meets or exceeds the best-practices of other independent fiscal institutions. The extensive use of open source software is well ahead of the curve of the SFC’s peers placing them in an excellent position to lead by example on transparency.” 

Dame Susan Rice, the Commission’s Chair, said:   “I’m very pleased by the conclusions of the OECD’s review. Independence, transparency and openness are critical to the way in which the Commission works. I look forward to reflecting on the report with those involved in and interested in Scotland’s fiscal landscape, as we look to build on our strengths as an independent fiscal institution.”   The SFC began producing the official, independent forecasts of Scotland’s devolved tax receipts and social security spending in 2017. This review was required by the Scottish Fiscal Commission Act 2016 and reflects internationally agreed best practice for independent fiscal institutions.

The OECD has made a number of recommendations that will be discussed with the Scottish Parliament and Government over the next few months as the Commission develops its next corporate plan. 

Notes

1. The review is published by the OECD and is also available on the SFC website alongside the OECD’s Technical Assessment and a brief highlights report.

2. In addition to OECD staff, the review team included three international experts:

  • Mostafa Askari, Chief Economist at the Institute of Fiscal Studies and Democracy and former Deputy Parliamentary Budget Officer at the Canadian Parliamentary Budget Office.
  • Carlos Marinheiro, member of the Board for the Portuguese Public Finance Council and Assistant Professor at the Department of Economics of University of Coimbra. 
  • Scott Cameron, (technical reviewer), Parliamentary Budget Office Training Program Manager (Cambodia) and former Fiscal Manager at the Canadian Parliamentary Budget Office.

3. The review took place over the summer of 2019. It assessed the Commission’s analytical capacity, independence, accountability and visibility, measuring it against the OECD Principles for Independent Fiscal Institutions. It used an evaluation framework developed by the OECD Network of Parliamentary Budget Officials and Independent Fiscal Institutions and included a specific technical review of the Commission’s analytical models.

4. The Scottish Fiscal Commission Act 2016 requires that the SFC’s operation be reviewed within two years of the Act coming into force, and every five years thereafter. Such independent reviews reflect internationally-agreed best practice for independent fiscal institutions.

5. The Scottish Fiscal Commission is the independent fiscal institution for Scotland, established by the Scottish Fiscal Commission Act 2016. The Commission’s statutory duty is to provide the independent and official forecasts of Scottish GDP, devolved tax receipts and devolved social security expenditure for the Scottish Government to use in its budget and financial planning. Its forecasts also assist Parliament’s scrutiny of the Scottish Budget and Budget Bill.