Westminster warns of Scottish fiscal autonomy “shambles”

15 Jun 15

Scottish Secretary David Mundell has claimed that Scottish National Party demands for Holyrood to take over full responsibility for Scotland’s public finances would be a “shambles” that would cost every family in Scotland around £5,000 a year.

It came as MPs were expected later today to reject an SNP amendment to the 2015 Scotland Bill, seeking to go beyond the Smith Commission devolution plans and cede to the Scottish Parliament what the SNP calls Full Fiscal Responsibility and its detractors call Full Fiscal Autonomy.

Mundell said: “The prime minister has made it clear that the government will carefully consider any changes to the Bill that are sensible. An amendment that kills off the Barnett formula and ends the sharing of resources across the UK is about as far away from sensible as one can get.

“It would be a full fiscal shambles that would cost every family in Scotland around £5,000,” Mundell claimed.

“The government will not accept amendments that are not good for Scotland.”

His comments were echoed by his Labour shadow, Ian Murray, who said the Office for Budget Responsibility had reduced its forecasts for North Sea revenues over the next 20 years from £34.5bn to just £2.1bn. Murray had previously suggested that the SNP had quietly shelved FFR/A. 

But Scottish Finance Secretary John Swinney, in a letter today to Mundell, said: “The Scottish Government believes we should move towards Full Fiscal Autonomy as the best route to fulfil Scotland’s potential.”

Swinney listed the powers the SNP wants devolved, which included corporation tax, capital gains tax, the minimum wage, National Insurance, employment law, employment support programmes, laws on trade unions and health & safety, benefits for working age people and children, and equality legislation.

The SNP amendment was lodged in defiance of earlier claims by the unionist parties that the party was running scared of FFR/A because falling oil prices and other factors are projected to reduce the revenue flow that a fiscally self-standing Scotland could expect over the next few years.

FFR/A is seen as the financial expression of “devo-max”, the policy of maximising Scottish devolution within the UK short of full independence. It would give Holyrood would full control over Scotland’s public finances, handing back a negotiated sum to Westminster to pay for its share of remaining UK-wide functions, such as diplomatic representation and possibly defence.

David Cameron refused to allow the devo-max option on last September’s referendum ballot paper, believing that it would amount to conceding independence “by the back door”. The option has consistently shown up in opinion polls as favourite with Scottish voters, and the SNP has been under pressure to push afresh for it in the wake of its landslide Scottish win at the UK general election.

Some of Cameron’s supporters want him to call the SNP’s bluff, by offering FFR/A now when Scottish revenues look uncertain. Conservative backbencher Sir Edward Leigh tabled an amendment today to that effect but, while the SNP may support him, it is unlikely to pass.

The Scotland Bill begins its committee stage today, and is being processed by a committee of the whole House. The committee stage is scheduled to take four days of debate.

Meanwhile, the Commission for Competitive and Fair Taxation in Scotland, chaired by former CBI Scotland chief executive Sir Iain McMillan, has issued a call for submissions by 31 July. 

The commission was set up by the Scottish Conservatives, after they refused to join the other parties in a commission on a replacement for the council tax initiated by the Scottish Government.

  • Keith Aitken
    Keith Aitken

    covers Scottish affairs for Public Finance from Edinburgh. He was formerly economics editor and chief leader writer on The Scotsman and now has a busy freelance career as a writer, broadcaster and event chair.

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