Policy paper

Terms of Reference for the Finance Interministerial Standing Committee

Updated 25 September 2023

Attendance

1) The Finance Interministerial Standing Committee (F:ISC) will be led by the relevant finance ministers from the UK Government and the Devolved Governments.

2) Attendance will ordinarily include all finance ministers, however where appropriate may include bilateral engagement.

3) When portfolio-level expertise is deemed beneficial to the particular conversation at hand, ministers from other departments and ministries can be invited to attend.

Function

4) The aim of the F:ISC is to consider the impact of economic and finance matters affecting the UK.

5) The F:ISC will therefore cover the following:

a) Consideration of UK-wide and nation-specific macroeconomic and fiscal positions;

b) Consideration of emerging economy and finance issues and longer-term challenges that affect all governments, where collaboration and sharing of information supports planning, policy development and decision-making;

c) Other ad hoc economic/finance issues affecting all governments;

d) Resolution of financial disputes.

Operation

6) The F:ISC should typically take place each quarter, however meetings may take place less or more frequently if agreed unanimously. Meetings should take place around key fiscal milestones.

7) The F:ISC will be chaired by the UK Government or a Devolved Government finance minister on a rotating basis.

8) The agenda will be determined by the Secretariat. Any government would have the right to submit an item to the Secretariat to request it be considered at the relevant F:ISC meeting. The Secretariat would be responsible for comparing the item against the above functions and considering the appropriate timings for the item to be considered.

9) Agenda items can be introduced and led by any of the attendees, as determined by the Secretariat in line with the function of F:ISC. However, when portfolio-level expertise is deemed beneficial to the particular discussion, other ministers from UKG and/or devolved governments should be invited to attend.

10) HM Treasury and the Devolved Governments will publish joint communiques setting out the meeting date, meeting attendees, and the high-level meeting agenda.

11) The F:ISC Secretariat will be led collectively by officials from the members of the F:ISC. In the case of a dispute, the F:ISC Secretariat will be comprised of officials from the disputing parties for the purposes of the dispute resolution process.

12) The F:ISC Secretariat will adhere to the Operating Protocol.

Disputes

13) The UK Government and Devolved Governments will seek to maintain positive and constructive relations, based on mutual respect for the responsibilities of the UK Government and Devolved Governments and their shared role in the governance of the UK.

14) All governments are committed to promoting collaboration and the avoidance of disagreements, facilitated by the new intergovernmental machinery in which discussions will take place at the lowest level possible. The escalation of a disagreement between governments as a dispute will be considered only where due and full consideration has been given at portfolio-level. In this context, the following model should be seen as part of a much wider system of active intergovernmental relations (IGR) and dispute management, and as a process of last resort.

15) Any disagreements shall ordinarily be managed through continued official led engagement.

16) Any finance minister can escalate a disagreement as a dispute by notifying the IGR Secretariat and F:ISC Secretariat by writing, if there is a disagreement between members of the F:ISC which cannot be resolved through normal channels or regular F:ISC discussions.

17) The IGR Secretariat will consider whether a disagreement should be classified as a dispute according to the following criteria:

a) Has the disagreement been discussed extensively at senior civil servant level for the relevant portfolio?

b) Was a solution proposed at the senior civil servants discussion (that was not satisfactory to all parties to the disagreement)?

c) Has the disagreement been discussed extensively by the relevant portfolio ministers?

d) Does the disagreement have implications beyond its policy area, impacting the wider relationships between the parties involved?

18) No member of the F:ISC can reject the decision of another to raise a dispute on any economic or finance issue or refuse to engage on its substance if the IGR secretariat recommends a disagreement be escalated as a formal dispute. However, all parties acknowledge that policy decisions on funding are strictly reserved to Treasury ministers, with engagement with the Devolved Governments as appropriate. As outlined in the Statement of Funding Policy, funding disputes may be raised where there is reason to believe a principle of the Statement of Funding Policy may have been breached. 19) The process for resolving a dispute will follow the steps agreed between the UK Government and the Devolved Governments through the Intergovernmental Relations Review as closely as possible, recognising specific differences outlined in these Terms of Reference.

20) On escalation of a disagreement to a dispute, the F:ISC Secretariat will coordinate and implement the process by convening a meeting of Senior Officials within 10 working days, unless all parties agree to an extension, which will consider collective recommendations to ministers for resolving the dispute, including options for appointment of an Independent Chair in the event the dispute is recommended for further consideration by Ministers. Portfolio Senior Officials will also be invited to attend if appropriate.

21) If Senior Officials request that the dispute be further considered by Ministers, they will recommend an appointment for Independent Chair and the Secretariat will convene a meeting of the F:ISC in dispute formation. Ministers should meet within 10 working days unless they agree to an extension, for example to secure the availability of an independent chair.

22) The F:ISC will seek to agree to resolve the dispute, either by agreeing Senior Officials’ recommendations or through discussion. If ministers are unable to resolve the dispute, any of the disputing parties will have the right to request non-binding third-party evidence or advice to inform subsequent discussion. The scope of this evidence or advice, as well as the body nominated to carry it out, must be agreed by all parties to the dispute.

23) A F:ISC in a dispute setting will be chaired by an independent chairperson. All parties to the dispute must agree the appointment of the independent chairperson. The role of the chair will be to ensure that the discussion proceeds efficiently, positively and keeps to time. The chair will not have a decision-making role but will record any consensus which is reached or, alternatively, outline the next steps under the dispute resolution process if an agreement is not reached.

24) If no resolution is found at the F:ISC, the matter will be referred back to the IGR Secretariat to be considered by the Prime Minister and Heads of Devolved Governments in the Council. This process is set out in the terms of reference for the Council.

25) Disputes raised in relation to the Welsh and Scottish Governments’ fiscal frameworks will continue to be managed through the arrangements set out in their respective fiscal framework agreements.

26) The F:ISC Secretariat will provide minutes of the meeting of the F:ISC in dispute formatting.

27) Any concerns with the conduct of the disputing governments can be referred to the IGR Secretariat.