By Keith Aitken in Edinburgh | 18 November 2011
The Scottish Government is threatening to block the Westminster legislation giving it more tax raising powers unless it is given a veto over the long-term implications, Finance Minister John Swinney has said.
The confrontation arose yesterday as a committee of MSPs considered the Scotland Bill, which gives the Scottish Parliament the right to set its own basic rate of income tax in return for a reduced block grant from Westminster. However, the grant changes are to be phased in from 2016 and the amounts have not yet been calculated.
Scotland fears that it could lose millions and wants a final right of veto once these details are clear. Scotland Secretary Michael Moore has said the Bill will not be implemented without the Scottish Parliament’s consent.
But Swinney said that without a veto clause, the SNP – which has an overall majority at Holyrood – would find it hard to recommend the legislation to MSPs or voters.
‘We need a proper and necessary ability to protect the Scottish public interest,’ Swinney told MSPs. ‘As of today, I could not tell the Scottish public that the Bill might not be to their detriment.’ Scottish Government business minister Bruce Crawford said the Scottish Parliament was being asked to endorse a blank cheque.
But Moore resisted the idea of the special clause – known as a ‘joint commencement order’ when he appeared later before the same committee. ‘We don’t think it is necessary to have the joint commencement order,’ he said. ‘I am not persuaded that it’s the right way forward.’ He said he also doubted that it was technically possible.
The Bill would cut income tax in Scotland by 10p in the pound, leaving Holyrood to levy its own taxes to make up the shortfall, which would be reflected in a proportionate cut in Westminster’s block grant – currently around £30bn – to Scotland.
But the detail of how the cut would be calculated is unclear. The legislation envisages a three-year ‘bedding-in’ period after 2016 for the Treasury to amass evidence for setting the adjustment. The expectation in Scottish Government is of a cut in the region of 35%, which critics say could leave Scotland some £500m worse off.
The row reflects the ever-deepening complexities of the Bill. It was based on the report of the Calman Commission onScottish Devolution, endorsed by Labour, the Conservatives and the Liberal Democrats. But it has aroused little evident enthusiasm in Scotland, where attention is mostly focused on the SNP’s plans for a referendum on independence and/or full fiscal devolution.
