05 December 2008
By David Scott in Edinburgh The independent body set up to examine the future of devolution is to investigate the possibility of giving the Scottish Government powers to borrow as well as control over certain taxes. But the commission, headed by Sir Kenneth Calman, has firmly ruled out full fiscal autonomy. It stressed that a system in which spending is wholly financed by taxation raised in Scotland would be inconsistent with the concept of the United Kingdom. Following the publication of his interim report on December 2, Calman said: ‘Full fiscal autonomy is inconsistent with the Union and we do not consider it further.’ Opposition parties generally welcomed the report, which set out a number of options without making any recommendations. But it was dismissed by First Minister Alex Salmond, leader of the Scottish National Party, as a ‘constitutional mouse’. The commission was set up with the backing of Labour, Liberal Democrats and the Tories – but without the support of the SNP, which is conducting its own consultation on its independence ambitions. Among the issues raised was the possibility of giving the Scottish Government the power to borrow, which it does not have at present. In its 120-page report, the commission said evidence had already been drawn together by an independent group of economists. Calman said the issue of borrowing was ‘on the agenda’ of the financial aspect of the commission’s review. In its submission to the commission, CIPFA in Scotland argued that borrowing powers, which would enable the Scottish Government to directly finance capital projects, should be considered. It pointed out that local government could borrow but the Scottish Government could not. While ruling out full fiscal autonomy, the commission will look further at the devolution of certain tax powers. These include VAT, corporation tax, excise duties and income tax. While not making specific recommendations, the report said there appeared to be a ‘plausible case’ for giving Holyrood more control over areas such as broadcasting, energy policy, firearms, the misuse of drugs and the regulation of health care professionals.
PFdec2008
