SCOTTISH Labour proposals to devolve welfare and income tax powers to Holyrood have provoked a backlash among Scottish MPs and could be blocked by the UK party.
A commission on devolution, chaired by Glasgow Central MP Anas Sarwar, is set to recommend that the Scottish Parliament takes full control of income tax raised north of the Border and is responsible for raising 40 per cent of its total income instead of the 12 per cent it has now.
Under proposals coming in next year, Holyrood will control 10p in the different income tax rates.
But the commission’s proposal would see Holyrood control all income tax rates in Scotland – 20p basic, 40p higher rate and 45p for those earning £150,000 or more a year. Currently, close to £4.25 billion is raised in Scotland but around £5bn of income tax cash goes to Scotland. The commission will also recommend handing over control on welfare issues, including housing benefit and employment law.
However, proposals on tax have already sparked anger among Scottish Labour MPs in Westminster, meaning there is a significant threat of deep divisions when the document is presented at the Scottish Labour conference on 21 March.
One senior MP told The Scotsman: “We were happy for it to go from 10p to 15p, but no more.” Another added: “There is no appetite for devolving more income tax powers.”
It was pointed out by another MP that the party’s UK Treasury team would have to agree to the proposals. “It’s just not going to happen,” said the MP.
Another MP warned that the proposals could see Scotland’s representation slashed in Westminster and end up with Scotland receiving less money.
“Potentially this could be a funding cut worth £800 for everyone in Scotland, which is not something to take into an election,” the MP said.
East Kilbride MP Michael McCann, who is due to become chairman of the Scottish parliamentary party in Westminster, warned that the devolution debate needs to be settled.
He said: “What does concerns me is that people speak about devolution as if it’s a monologue, simply in terms of what further powers can be devolved from the UK Parliament to the Scottish Parliament.
“It shouldn’t be about that. It should be about what’s best done where.
“But this debate also needs some deeper foundations, we need a settled system of governance across all three tiers of government. We can’t keep having the more powers debate every week.”
SNP Deputy First Minister Nicola Sturgeon is set to give a speech today on how the main UK parties are not offering enough in terms of more powers and cannot guarantee that a No vote will bring more devolution.
Highlighting the “civil war” in Labour, a spokesman for Ms Sturgeon said: “The reality is that Labour are split from top to bottom on the issue of more powers for Scotland. That leaves a Yes vote as the only option on the table.”