Boost for Holyrood financial powers under Scotland Bill

Published on Monday 13 June 2011 13:40

THE UK Government has announced that the Scottish Parliament will get more financial powers under the Scotland Bill.

New powers offer greater responsibility for the taxes needed to fund spending decisions and would help improve the Scottish Government's accountability to voters.

Scottish ministers will be able to borrow more money, issue bonds to access cash from capital markets and protect itself from sudden changes in spending levels.

However, the SNP Government still wants control over corporation tax and Crown Estate revenues.

In the longer term, the measures would allow Holyrood to issue bonds without needing more legislation.

According to the Treasury and Scotland Office, the Scotland Bill, together with existing devolved powers, would give ministers 12 billion-worth of spending power.

Chancellor of the Exchequer George Osborne said: "The Scotland Bill represents a major devolution of responsibility to the Scottish people for raising taxes. It is proof that this Government is delivering on the promises we made to the Scottish people.

"I always said that if ideas were put forward by the Scottish Parliament to improve the way the new fiscal powers will work, I would listen carefully and treat them with respect. So today, I am very willing to offer these important changes.

"They will give the Scottish Parliament and Scottish Government much greater flexibility in the use of their new tax and borrowing powers. I have always believed that devolution brings rights but also responsibilities.

"The far-reaching changes we are introducing means that the Scottish people and their elected representatives will be much more responsible not just for decisions on public spending in Scotland but also for the Scottish taxes needed to pay for those decisions."

Scottish Secretary Michael Moore said the Scotland Bill is the biggest transfer of fiscal power from London since the creation of the UK.

He insisted that by listening to the Scotland Bill Committee at Holyrood, and responding to its recommendations, the UK Government had built further consensus and strengthened the Scotland Bill package.

He said: "We are introducing a mechanism to protect the Scottish budget from sudden shocks. We are also opening up the possibility of future Scottish bonds and bringing forward partial borrowing powers so that work on a new Forth replacement crossing can begin in this financial year.

"Along with other measures in the Scotland Bill, these proposals will allow Scotland to shape the economy we want and generate the jobs we need. They will do so within the framework of strong and stable UK."

The Scotland Bill goes to its report stage and third reading in the House of Commons on Tuesday. After passing through the House of Lords the legislation will be subject to a further vote by MSPs.

Finance Secretary John Swinney said: "The Scottish Government has set out the additional powers required to promote sustainable economic growth and to create jobs in Scotland. We look forward to continuing our engagement with the UK Government to secure these additional powers, and we welcome Michael Moore's announcement which takes positive steps towards addressing our concerns with the Scotland Bill.

"There is clear agreement between the Scottish Parliament and (Scottish) Government that more can and must be done to boost economic activity, and that Scotland must have the levers to shape its future success.

"That is why we are open to technical discussions with the Treasury to agree a sustainable approach to capital borrowing that will command the support of Parliament, and will advance the interests of the people of Scotland.

"We will be providing the Secretary of State for Scotland with six papers outlining this Government's proposed changes to the Scotland Bill.

"We will be presenting the UK Government with our papers on borrowing powers, the Crown Estate, excise duty, an enhanced role in Europe, corporation tax and broadcasting in due course."

Labour finance spokesman Richard Baker said Labour had called for these changes during the debate on borrowing powers in the Scottish Parliament.

He added: "We welcome the UK Government's decision to improve the Scotland Bill. These are sensible measures that will be beneficial to the Scottish Government's budget."