Holyrood to be given new income tax and borrowing powers

A new Scottish rate of income tax is part of the package of measures

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Holyrood will be given new income tax and borrowing powers as part of a deal struck between the Scottish and UK governments.

The measures are part of the Scotland Bill which is nearing its final stages.

It has also been agreed that the role of the UK Supreme Court in Scots law will be reviewed.

Both administrations have confirmed they will recommend that MSPs and MPs support the bill when it comes before Holyrood and the Commons.

To secure the deal, UK ministers dropped plans to return certain powers to Westminster.

It was also agreed that the package would only be implemented with the agreement of Holyrood.

The financial measures include:

So what was the fuss all about? Over the Scotland Bill, that is. From apocalyptic conflict, we have arrived at a late night deal to implement the provisions to enhance Holyrood's powers, including tax powers.

Politically, two interpretations are simultaneously available. The Scottish Secretary Michael Moore needed this Bill to reinforce his clout within the UK coalition.

If it had failed, he would have looked weak; unable to advance negotiations with the Scottish Government, unable to contain the challenge mounted by Alex Salmond and his Ministers.

Now his status is enhanced. He has secured the Bill with relatively few concessions - and none of the big ticket demands pressed by the Scottish Government such as the devolution of corporation tax.

He is entitled to feel quietly pleased with his endeavours and those of his team. Meanwhile, it is left to Willie Rennie, the Scottish Liberal Democrat leader, to lampoon the SNP approach to the Bill, to say that their demands simply crumpled under scrutiny.

Equally, however, the political ground has shifted. The Calman Commission report, the progenitor of this Bill, is no longer the prime Unionist offer as it was at the time of publication. The talk now is of further powers, possibly Devo Plus or Max.

The SNP calculation, thereby, is that the real fight is now on that new ground. It is independence versus the new Unionist position. If they can contrive it, it will be independence versus Westminster Conservative rule.

  • a new Scottish rate of income tax
  • the devolution of stamp duty land tax
  • the devolution of landfill tax
  • the power to create new taxes
  • new borrowing powers of about £5bn of its budget

In addition, Holyrood will have:

  • legislative powers over air weapons in Scotland
  • responsibility for drink driving and speed limits on Scotland's roads
  • a role in appointments in broadcasting and the Crown Estate
  • a new procedure for Scottish criminal cases that go to the UK Supreme Court

The UK government said the new borrowing limits would be reviewed regularly and a consultation would be launched soon into the possibility of the Scottish government being able to issue its own bonds.

Scottish Secretary Michael Moore, who released details of the deal in a written statement to the Commons, said: "Today marks a major step forward for devolution and I am glad Scotland's two governments have reached agreement over the Scotland Bill.

"The UK government has been clear from the outset we believe it is the right package of new powers for Scotland.

"We have also been clear that we wanted the Scottish Parliament to support the measures contained in the Scotland Bill.

"It will strengthen devolution and the cross-government support for the bill is good news for Scotland."

Start Quote

The Scotland Bill falls way short in terms of delivering the economic levers to stimulate the economy and create jobs.”

End Quote Bruce Crawford Cabinet Secretary for Parliamentary Business and Government Strategy

He added: "There has been a great deal of debate around the bill and we have worked closely and flexibly with the Scottish government to make the changes required to secure an agreement.

"The bill also remains faithful to the work of the Calman Commission which received such overwhelming support at the last general election."

The Scottish government's Bruce Crawford said that although the Holyrood administration had secured some important changes, the bill represented a "missed opportunity" for Scotland.

He said: "We fought hard to get more powers in the Scotland Bill, and succeeded in removing the harmful elements, but the UK government resisted more significant changes.

"We know the people of Scotland want significantly more powers for the Scottish Parliament - the debate around the independence referendum has shown that - and I believe the Scotland Bill will be out of date before reaching the statute book.

"It represents a real missed opportunity.

"To stimulate the economy we need much greater financial responsibility that will allow us to boost our recovery, invest in our public services and support long-term sustainable growth.

"The Scotland Bill falls way short in terms of delivering the economic levers to stimulate the economy and create jobs."

'Dropped opposition'

Scottish Labour leader Johann Lamont welcomed the deal on the Scotland Bill and added that it was an "important development of devolution".

She said: "The Scotland Bill is evidence of Scottish Labour's radical approach to the constitution.

Holyrood chamber The issue will be brought back to Holyrood

"This is an important development of devolution and I am glad that the SNP government has dropped its opposition to this progressive move.

"We can and will develop devolution further but this is a significant moment for those of us who believe in a stronger Scottish Parliament and a strong Scotland within the UK."

Scottish Tory leader Ruth Davidson also welcomed the deal, saying it heralded a "new era of devolution in Scotland".

She added: "The real fiscal accountability offered in the Scotland Bill will mean that this Parliament will now have to think about how it raises money, rather than just how it spends it.

"Now that we have provided an enhanced devolution package, it is now time that we sorted the issue of Scotland's future once and for all."

Scottish Lib Dem leader Willie Rennie said the package of powers was "radical and extensive".

He added: "Now is the time to start debating how they might be used. The power to set a Scottish rate of income tax and control stamp duty, and the potential to create new taxes and to borrow capital for investment will give MSPs the power to make real changes in Scotland, for the people of Scotland.

"The strength of this package comes from the cross-party and expert work that went into it over a long period of time."

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