DAVID Cameron yesterday gave his backing for sweeping new powers for the Scottish Parliament including granting full control over income tax if voters reject independence.
Speaking after Scots Tory leader Ruth Davidson laid out Lord Strathclyde’s report on further devolution, the Prime Minister said the proposals had his full support.
Mr Cameron has already stated that Scotland would have more powers in the event of a No vote, but this is the furthest he has gone to detail what those powers would be.
The Strathclyde Commission proposes new powers which would see Holyrood granted control over air passenger duty. Edinburgh would also be given powers to “supplement” benefits in a move that would effectively create a Scottish welfare state, as part of the reforms set-out by Ms Davidson in Glasgow yesterday.
Mr Cameron declared his support for what will be seen as the most significant policy initiative of Ms Davidson’s leadership.
He stated he agreed with the report by Lord Strathclyde and described the plan as “a clear, coherent and Conservative blueprint for the next stage of Scotland’s devolution journey”.
The new Conservative vision on devolution represents a major shift by Ms Davidson. She has previously said that the Scotland Bill to increase Holyrood’s financial responsibility was “a line in the sand” and strongly opposed calls for full fiscal autonomy during the party’s leadership election in 2011.
Ms Davidson also yesterday suggested that a share of VAT revenues raised in Scotland could be assigned to Holyrood.
She said the current Scottish Parliament was like “a tricycle” where politicians can spend without any accountability for their actions in the tax system. She pledged to “take the stabilisers off” and give Holyrood full control over income tax with the parliament responsible for raising 40 per cent of the revenue it spends.
Air passenger duty would be transferred to Scotland, which has a “relatively small number of airports [that] would be better able to manage this tax locally”.
The Prime Minister said there was “no reason why these changes shouldn’t happen early in the next parliament” if the Tories win next year’s general election and Scots reject independence.
However, the plan was attacked by SNP deputy leader Nicola Sturgeon, who said the Conservatives were involved in a “desperate bidding war” with Labour and the Lib Dems, who have published their own proposals to extend devolution in the event of a No vote.
Ms Davidson said the plan to extend devolution would be part of the UK Conservative manifesto for the 2015 General Election. She said: “I have spoken directly to the Prime Minister and the Chancellor of the Exchequer and there is political will for this to happen.”
The Prime Minister has used a series of interventions in the referendum to pledge a new deal on devolution for Scots in the event of a No vote. However,his backing for the Strathclyde commission’s plan represents his most detailed commitment yet to extend it.
Mr Cameron said: “They have produced a clear, coherent and Conservative blueprint for the next stage of Scotland’s devolution journey. Ruth supports the commission’s key recommendations and wants to see them implemented. I agree with her.
“All the mainstream pro-UK parties believe in further devolution, so whilst we would want to build consensus for a set of measures and legislation, there is no reason why these changes shouldn’t happen early in the next parliament.
“We want to make the Scottish Parliament more responsible for the money it spends – these are real powers with real consequences.
“We can now say clearly that, with a No vote this September, Scotland can have the best of both worlds; a strong and responsible Scottish Parliament underpinned by the security of the whole United Kingdom.”
The Scottish Conservative leadership has insisted that Holyrood – currently funded by a UK Treasury block grant – must be accountable for raising the money it spends.
Under the Strathclyde proposals, there would be no change to the Barnett Formula, the system that gives Scotland more per head of UK funds than it does to England and Wales.
Deputy First Minister Ms Sturgeon last night said: “With their package of proposals today, the Tories have demolished a central pillar of the No campaign by recommending ending uniform tax and benefits across the UK.”
A Scottish Labour spokesman said: “It is now clear that if Scotland votes no then Holyrood will be guaranteed more powers.”
Scottish Lib Dem peer Lord Jeremy Purvis said: “All parties are clearly and unequivocally supporting a stronger Scotland.”
Meanwhile, a new poll suggests support for independence has grown. Of those certain to vote in the referendum, 36 per cent back a Yes vote, an increase of four percentage points from the last Ipsos MORI poll for STV News, published in March.
The percentage of those intending to vote No is down three points at 54 per cent.
AT A GLANCE
The Strathclyde commission on the future governance of Scotland
Income Tax: The tax-free personal allowance would remain reserved to Westminster, but, after that, the Scottish Parliament would decide on rates and bands.
Holyrood would effectively assume full responsibility for income tax and be able to make the key decision on whether to increase or cut the basic rates paid by Scots.
VAT: A “serious examination of the case” for a share of Scottish VAT receipts being assigned to the Scottish Parliament. The additional responsibility would mean that all revenues generated from VAT levied in Scotland would then be earmarked for Holyrood’s budget, whether that was for spending on public services or tax policy.
Housing benefit: There is a “case” for the Scottish Parliament having responsibility on welfare issues which relate to devolved areas, such as housing benefit, and attendance allowance paid to disabled people aged 65 or over who need help with personal care.
The party says that if a “particular cash benefit is closely related to a devolved policy area, there is a stronger case for Scotland having more control”.
Welfare supplement: Holyrood should have the power to “supplement” welfare benefits legislated for by Westminster.
The change would allow MSPs to preside over what is in affect a Scottish welfare state, with powers to block or mitigate unpopular Westminster polices.
The proposal is arguably one of the most significant recommendations from Strathclyde as it appears to concede that Holyrood needs powers to block policies from Westminster governments that the majority of Scots did not vote for.
Tax statements: There would be Scottish versions of the personal tax statements sent from HMRC, highlighting the taxes under the control of the Scottish Parliament.
The Scottish taxpayer would see in print the amount of tax they are being billed for by the Scottish Parliament and its public bodies.
Fiscal commission: A new independent Scottish Fiscal Commission, which would be responsible for producing official macro-economic and fiscal forecasts in Scotland – leading to more Scotland-specific economic forecasts.
Committee of UK legislatures:
Strathclyde suggests an active UK-wide body with representatives from the Westminster and Scottish parliaments as well as the Welsh and Northern Ireland assemblies could regularly review the devolution settlement.
Air passenger duty: Air passenger duty should be devolved. Strathclyde said that the power would be more efficiently managed by Holyrood, which would be better placed to make judgments over the needs of Scotland’s “relatively small number of airports” than Westminster.
Tory vision follows plans by Lib Dems and Labour
Conservative plans to extend devolution come after Labour and the Lib Dems set out their own blueprints for Scotland’s place within the UK in the event of a No vote.
Scottish Labour’s devolution commission backed handing the bulk of powers over income tax to Holyrood, with a specific emphasis on using the responsibilities to pursue higher rates of taxation for the wealthy.
MSPs should be able to vary tax by up to 15p, giving them the option of restoring the 50p rate for top earners.
But there would be no power to cut the upper income tax rate, which currently sits at 45p.
The plan would go further than 2012’s Scotland Act, a piece of UK government legislation giving Holyrood the power to vary income tax by 10p from 2016.
However, Labour has said top rates may only be cut if all rates are cut, to prevent Scotland launching a tax competition with Westminster.
Under Labour’s plans, the Scottish Parliament should raise about 40 per cent of its own revenues, approximately £2 billion more than under the Scotland Act 2012.
Labour also wants to see housing benefit devolved to permit MSPs to abolish the UK government’s controversial Bedroom Tax.
Under the Lib Dems’ “Home Rule” vision, MSPs would raise and spend most of its own taxes and borrow on its own terms.
Their commission, chaired by Sir Menzies Campbell, said the Barnett Formula – used to work out Treasury funding to the UK’s devolved areas – should be replaced with a “needs-based” arrangement.
Lib Dem leader Nick Clegg has said that under Sir Menzies’ proposals the Scottish Parliament would be able to raise about 50 per cent of its income. Oil would continue to be managed at a UK level, as would welfare, pensions and defence.