Tories plan to give Holyrood greater power over taxation

Published on 05/10/2006 00:35

Key quote "The party is split on the tartan tax; some want us to cut it and others are worried that it will cut across Cameron's approach if we do." - A Tory insider

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POWERS to cut excise, stamp and fuel duty would be transferred to Scotland under Conservative proposals to give Holyrood more control over tax.

A final decision has not yet been made on the plans but senior sources have revealed the Tories are close to agreeing a new approach of "partial fiscal autonomy". However the party is backing away from the idea of cutting income tax.

The aim of the plans, being considered as the party prepares for next year's Holyrood election, is for the various taxes to be devolved, with the assumption that they would then be cut in Scotland - stimulating growth, attracting business investment and giving Scots more money of their own to spend.

But the party is less committed to reducing income tax than it was 12 months ago. Some senior figures want to press ahead with plans to cut the so-called Tartan Tax by the full 3p in the pound available to the Scottish Parliament. But others are worried that such an approach will clash with Tory leader David Cameron's recent high-profile commitment not to offer tax cuts at this time.

The likely compromise would see the Tories call for more tax powers to be handed over to Holyrood from Westminster but refuse to advocate cuts in the Tartan Tax itself.

The Scotsman understands that a policy advisory forum, which was set up to suggest innovative policy ideas from outside the party, has recommended "fiscal autonomy" from Westminster as a key Tory policy for the elections in May 2007.

The party is not bound by the recommendations of the advisory forum but it would be surprising if the Scottish Tories decided to ignore its central recommendation completely.

The forum, made up of senior figures from outside politics, is expected to give the party the chance to adopt a compromise deal, offering a radical policy by advocating new tax powers but not clashing with Mr Cameron's UK approach of no tax cuts.

The three main taxes which could come north under the fiscal autonomy plans would be excise duty, fuel duty and stamp duty. These are easy to identify, they are paid by individuals and companies at specific geographic locations and are relatively uncomplicated to collect.

The Tories are still considering whether corporation tax could be devolved to Scotland as well. There are worries within the business community that Scotland's politicians might be just as likely to raise corporation tax as to cut it, and the Tories do not want to drive ahead with the policy unless it has solid business support.

A senior Tory insider said: "The party is split on the tartan tax; some want us to cut it and others are worried that it will cut across Cameron's approach if we do." The source revealed that although Annabel Goldie, the Scottish Tory leader, has not made up her mind yet, it appeared as if the party was moving against a policy of income tax cuts.

"If I was a betting man I would bet against it," he said. The source added that party leaders knew they had to offer something different on tax from the other parties next May and the partial fiscal autonomy route appeared to give them the best chance of doing that.

Some figures in the party, including Murdo Fraser, the deputy leader, and Brian Monteith, the former Tory MSP, have backed fiscal autonomy in the past but it has never been Tory policy. This is because activists have been worried that fiscal autonomy will threaten the Union and push Scotland further down the road to independence.

However, the biggest problem for the Tories is that such a radical change to the devolution settlement could only be sanctioned by Westminster, so the Scottish Tories would likely have to wait for the election of a Conservative government in Westminster before the changes could take place.

However, even a manifesto aspiration to fiscal autonomy would represent a major change for the Tories, putting distance between themselves and Labour and helping focus attention on the key issue next May: the powers of the parliament.

Tory leader's reprieve for Boris Johnson

DAVID Cameron and the Conservative Party yesterday embraced Boris Johnson, even after the wayward front-bencher refused to withdraw controversial remarks about Scotland.

Mr Johnson insisted yesterday that he had done nothing wrong in suggesting that a Scottish MP, such as Gordon Brown, would be unacceptable as prime minister among English voters.

His remarks triggered fury among Scottish Tories, who have been working to repair the party's image north of the Border and suppress the Conservatives' "little Englander" faction.

But at the Conservative conference in Bournemouth yesterday, Mr Johnson insisted he had nothing to apologise for. He had simply been discussing the West Lothian question and the political issues arising from devolution, he said.

Mr Cameron disagreed with Mr Johnson on Tuesday night, insisting Scots MPs were perfectly entitled to seek the premiership.

But despite that rebuke and the anger among Scottish Tories, Mr Cameron yesterday began his keynote speech with an affectionate tribute to Mr Johnson.

"I know Boris has been saying things we often don't agree with," he told delegates. "But this is the Conservative Party. We don't mind if people go off message. We love it actually - just don't do it all the time."

Alex Salmond, the SNP leader, said last night: "All Boris Johnson has done is blurt out what the rest of them are thinking."

JAMES KIRKUP

Devolved duties

A POLICY advisory forum set up by the Tories to encourage innovative ideas from outside the party has suggested fiscal autonomy from Westminster should be a central policy for next year's Holyrood elections.

Excise duty, fuel duty and stamp duty would be devolved to Scotland.

These are relatively easy to identify, are paid by individuals and companies at specific locations and are relatively simple to collect.

The Tories are considering whether corporation tax could also be devolved.

Leader looks to Blair as he turns back on tradition

DAVID Cameron yesterday told the Conservatives they can never go back to their traditional policies, challenging his party to embrace gay marriage, single mothers and much of what Tony Blair has done in government.

Determined to claim the departing Mr Blair's place in the political centre-ground, the Tory leader repeatedly told the Conservative party conference that not everything the Labour government has done is wrong.

Pointedly wearing a red tie, he even adopted for himself the Prime Minister's "tough on crime, tough on the causes of crime" slogan and finished with a Blairite promise: "For Britain, the best is yet to come."

While Mr Cameron received a three-minute standing ovation, some delegates were clearly uncomfortable with some of his points, and his delivery was sometimes flat.

Privately, Tory officials said the reception in the audience mattered much less than how the speech was received in the country beyond.

The Bournemouth conference has seen Mr Cameron face down right-wingers calling on him to promise big tax cuts at the next election as proof that there is substance behind his undoubted presentational skills.

Mr Cameron insisted again that he will not be pushed into tax pledges, or any other firm commitments.

"When some people talk about substance, what they mean is they want the old policies back," he said. "Well they're not coming back and we're not going back."

Instead of setting out Tory policies, he praised several Labour initiatives.

He insisted civil partnerships between gay couples were as deserving of Tories' respect as any other marriage.

And he said Labour was right to spend money providing childcare, especially for single parents: "Those of us who don't live the life of a single parent, just try and imagine what it's like."

Not all of his speech was uncomfortable listening for his party faithful. There were traditional paeans of praise to Britain's armed forces and a defence of their mission in Afghanistan.

And there was a renewed commitment to scrap Labour's Human Rights Act and replace it with a "British bill of rights".

And there was a strong attack on Mr Blair's "arrogant and unaccountable style of government" where, he said, key decisions were made not in Cabinet, but in unminuted meetings of unelected advisers.

"I will restore the proper processes of government. That means building a strong team, and leading them," Mr Cameron said to warm applause.

"I don't want to be president of this country; I want to be prime minister."

An unfortunate lack of ambition

AT THE end of what has been an almost obsessively well-managed conference, David Cameron's well-oiled and well-groomed press officers came a cropper yesterday.

Their downfall was down to a small, but deadly typing error.

The team enthusiastically distributed copies of the leader's conference speech. However, in the haste to spread the word, no-one managed to correctly proof-read some last-minute changes made by the leader.

As a result, several hundred copies of the speech were handed out, all of them containing the striking line: "I don't want to be prime minister of this country."