By David Scott in Edinburgh
1 December 2010
Plans hailed as the biggest transfer of financial powers to Scotland since the Act of Union have been set out by the coalition government in Westminster.
The Scotland Bill, published yesterday – St Andrew’s Day – will give the Scottish Parliament a new power to set its income tax rate, the ability to borrow and control over a new range of devolved functions.
Scottish Secretary Michael Moore said the Bill marked the beginning of a new phase in Scotland’s devolved government.
He added: ‘It will make the Scottish Parliament both more powerful and more accountable. What we propose is the biggest transfer of fiscal power to Scotland since the creation of the United Kingdom.’
However, the Scottish National Party, which forms the minority government at Holyrood, said the proposals failed to provide the full fiscal autonomy that Scotland needed.
The Bill, Strengthening Scotland’s future, encompasses many of the recommendations made by Sir Kenneth Calman’s Commission on Scottish Devolution, which reported in June 2009.
The Scotland Office said the new tax and borrowing powers would give the Scottish Parliament control over a sum of around £12bn. It described the proposals on borrowing – worth £2.7bn – as going further than Calman suggested.
Scotland’s Westminster-determined block grant – currently almost £30bn – would be reduced to compensate for the new income tax power. Under the proposals, the UK Treasury would deduct 10p from the standard and upper rates of income tax in Scotland. It would then be up to MSPs at Holyrood to decide whether to raise the tax to a level that made up for the shortfall in block grant. Alternatively, they could levy a higher or a lower rate.
While Scotland currently has a power to vary the rate of tax by up to 3p in the pound - the so-called ‘tartan tax’ – this has never been used.
Under the plans, stamp duty and landfill tax will also be devolved while other new powers include control over speed limits and drink-driving laws.
Opposition parties in Scotland – Labour, Conservative and Liberal Democrats – welcomed the Bill. ‘They are no fiscal fantasy, but practical plans,’ the three parties said.
The think-tank Reform Scotland said the measures stopped some way short of the change it believed was necessary because two thirds of the Scottish budget would still come in the form of a block grant from Westminster.
