John Swinney’s tax and benefit demands branded illogical

Finance Secretary John Swinney is aiming to reach an agreement on the finanial rules in the Scotland Bill  Picture: Neil Hanna
Finance Secretary John Swinney is aiming to reach an agreement on the finanial rules in the Scotland Bill Picture: Neil Hanna
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THE UK government has claimed John Swinney’s demands for a new powers settlement are “not logical” and would see Scotland benefit from billions of pounds elsewhere in the UK.

Greg Hands has criticised the proposal being put forward by the Scottish Government during talks to secure more tax and benefits powers for Holyrood.

The UK minister, who is negotiating the more powers deal with Swinney, has also warned the Scottish Government that walking away from an agreement will let down the Scottish people.

In an article published today on this newspaper’s website, Hands says negotiators are experiencing an “obstacle” as talks reach the final hurdle.

Discussions between Hands and Swinney have been in deadlock while the two governments argue over the terms of the fiscal framework, the financial arrangements that determine how much of its block grant Scotland will lose as a result of gaining more power over tax.

The transfer of powers was brokered in the cross-party Smith Commission, set up to deliver the “Vow” made by the pro-Union parties at the height of the independence referendum campaign.

Swinney is proposing a model that aims to mitigate against Scotland losing out if its tax take reduces as a result of having slower population growth than that south of the Border.

The Scottish Government has objected to the deal being proposed by the UK government on the grounds that it will cost Scotland around £3 billion over the next decade.

In his article, Hands says the UK government is “absolutely committed” to securing a deal, but indicates that the UK government intends to stick by its firm stance.

He also calls on the Scottish Government to cease using its own economic forecasts to make tax and spend decisions, contrasting that with the independent predictions used by the UK government.

“The Scottish Government’s deal would mean the Scottish Government benefiting from billions of pounds from the growth in income and other taxes in the rest of the UK, long after these taxes have been devolved, whilst keeping all devolved taxes in Scotland to themselves,” says Hands.

“This is not logical and does not meet Smith’s taxpayer fairness principle.”

Last week Nicola Sturgeon rejected an offer that the Treasury said would be worth £4.5 billion of English income tax over the next decade.

The First Minister claimed the proposal was not new or “serious” and did not satisfy the key recommendation by the Smith Commission that Scotland should suffer “no ­detriment”.

Meanwhile yesterday Swinney suggested that a deal could be forged this week, adding that the Scottish Government had put a revised offer on the table.

Swinney said: “This week I will discuss our revised offer, which addresses every point the Chief Secretary has raised.

“It ensures that the Scottish budget will bear financial responsibility for the exercise of the proposed powers, and that taxpayers in the rest of the UK are no better or worse off as a result of the new powers being devolved.

“No-one should be in any doubt that there remain very significant issues that are yet to be resolved. These issues are integral to the Smith Commission agreement and must be fulfilled.

“Our proposal is with the Treasury and I hope and believe we can now agree this issue, and the remaining outstanding issues, this week.”

The SNP administration says Scotland stands to lose about £3 billion over 10 years under plans put forward by the Treasury.

The party said that was the equivalent of the salaries of 8,000 nurses or 6,000 police officers each year.