Deadlock over tax may scupper Scotland Bill

By Scott Macnab
Published on 18/11/2011 12:55

PLANS for sweeping new powers to be handed to Holyrood could collapse amid deadlock over controversial tax-raising proposals contained in the Scotland Bill.

The bill has been described as the biggest handover of power since the Act of Union in 1707. But the SNP government is demanding a veto over planned new powers to set the rate of income tax, warning they could leave Scotland with a budget shortfall of hundreds of millions of pounds.

But the idea of a veto was ruled out by Scottish Secretary Michael Moore yesterday, who told MSPs it would not be “technically possible” to have a “joint commencement order” that would allow Holyrood to block the tax measures.

Income tax would effectively be cut in Scotland by 10p under the bill’s provisions, with Scottish ministers then free to raise this back up to the level required in line with need. Scotland’s block grant of £30 billion from Westminster would be cut by about 35 per cent to even this up. But the SNP has warned such a move could leave Scotland with a shortfall of up to £500 million.

The Nationalists, with their overall majority at Holyrood, are now poised to vote down the entire bill, finance secretary John Swinney told MSPs yesterday.

“I do not believe, as things stand today, that I have a basis of being able to provide the public with an assurance that the implementation of the Scotland Bill will not be to Scotland’s detriment,” he said.

“On that basis, that makes it very difficult for the government to recommend the bill, because we can see that there are inherent dangers that need to be addressed.”

The Scottish Government’s parliamentary business secretary, Bruce Crawford, told a committee of MSPs scrutinising the bill that Holyrood was being asked to sign a “blank cheque”.

He said it was “vital” that Westminster and Holyrood resolved the issue, or the Scottish Government would have to recommend that MSPs rejected the bill when it came before them. The SNP’s majority at Holyrood would then ensure that the bill fell.

The SNP’s suggestion of a “joint commencement order” being inserted into the bill would mean that the income tax powers could not be enacted until Scottish ministers endorsed them.

But Mr Moore said: “We don’t think it is necessary to have the joint commencement order – I’m not persuaded it’s the right way forward.”

Under the bill, the income tax powers would be introduced in 2016, but a three-year bedding-in period would follow to allow Treasury chiefs to establish a “body of evidence” setting out the level of income tax in Scotland and what the cut to Scotland’s grant should be.

“On a technical basis, it’s not possible to postpone commencement,” the Scottish Secretary said.

“You have to get the tax system up and running and have receipts in place for two or three years and have that body of evidence, have the forecasting mechanism in place, before we can make an informed, fair adjustment.”

However, he accepted the need for the Scottish Parliament to be “brought into” the process.

Former SNP minister Adam Ingram told Mr Moore that the bill faced being rejected by MSPs unless the deadlock could be broken.

“There’s work to do in terms of your dialogue, in terms of trying to get your agreement, because it faces the possibility of not having the approval of the Scottish Parliament,” he said

If the bill is approved, the Scottish Government would get a raft of new responsibilities, including borrowing powers, worth £2.7 billion.

The bill is Westminster legislation and the coalition government has the ability to push it through the Commons, but Mr Moore, a Liberal Democrat, has previously said it would not be passed without the agreement of the Scottish Parliament.

He said yesterday: “I have no reason to change that opinion.”

The Scottish Secretary was also questioned on whether the UK government would insert a so-called clarity clause in the Scotland Bill that could take control of the independence referendum from the SNP. Concerns have been raised that an exact date has not been set and that the question, or questions, on the ballot paper have not been confirmed.

Committee convener Linda Fabiani, an SNP MSP, told Mr Moore: “You won’t give us a guarantee that there will be no fixing on the time and question.”

Mr Moore replied: “These are not part of my bill. They are not something I intend to bring forward.”

Related Articles

• SNP move to block income tax powers ‘beggars belief’

  The SNP government is threatening to block the transfer of sweeping new tax-raising powers to Holyrood, amid concerns that the measures could see Scotland’s budget cut by hundreds of millions of pounds.

  4 Comments