Tax: Scottish Conservatives move beyond the lockstep

If you're fascinated by fiscal devolution - and who isn't? - there are some interesting developments in Scotland today.

The Scottish Conservatives appear prepared to go further than Labour in the taxation powers they would offer Holyrood in the event of a "no" vote in September's referendum. The Scottish government would be responsible for raising around 40 per cent of the money it spends - no more "a pocket money parliament" as Scottish Tory leader Ruth Davidson puts it.

According to the Scottish party's devolution commission tax allowances would remain at Westminster but "the Scottish Parliament should become responsible for setting rates and bands of income tax throughout Scotland."

Rates and bands? No lockstep? This is probably where Wales comes in. You may recall how the Wales Bill, with its lockstep restrictions on the Welsh government's ability to vary income tax bands, is currently on the road to the statute book.

It is unlikely to complete that journey before the Scots have voted in September and there are Conservative MPs who think a "no" vote would not only prompt an offer of more powers from Westminster but also a rethink of the policy for Wales - and that lockstep in the Wales Bill.

That view is shared by Plaid Cymru's Jonathan Edwards, who said: "During the deliberations on the recent Wales Bill in the House of Commons I predicted that events in Scotland would supersede the Bill. The Tory proposals for Scotland are for full income tax devolution for Scotland and go way beyond the tax sharing arrangement between the Welsh and UK Governments proposed in the Wales Bill.

"Full income tax devolution would give the Scottish government maximum flexibility to boost their economy and achieve their social justice objectives. It would also increase borrowing capacity to invest in infrastructure creating jobs and growth.

"In Wales the debate currently is based on a debate between Plaid Cymru who want the Welsh government to vary income tax bands set within the framework of UK policy - and the Westminster parties who are doing their best to make any devolved income tax powers unusable.

"The Tories via their 'lockstep' model which means that individual tax bands can't be varied individually making it impossible to introduce innovative tax measures, and Labour with their 'lockstep plus' model which means bands can only move in unison upwards.

"Whatever the result of the independence referendum in Scotland it seems that the Scottish government will have far more job creating powers at their disposal. Wales must not be left behind and a first step would be for the Wales Bill to be amended in the House of Lords to remove the lockstep mechanism currently included in the Bill."

The Scottish commission's proposals are not yet UK party policy although we're told they have the support of David Cameron and George Osborne. They are a clear sign of the direction of travel for a party that has promised Scotland more devolved powers if it rejects independence.

The Welsh lockstep is not universally popular among Conservatives in the National Assembly for Wales. Will they now embrace the proposals from their Scottish cousins? There are clues here.