Scotland stands to lose more as a result of controversial plans to bring in English votes for English legislation, experts have warned.
A new paper from the National Institute of Economic and Social Research (NIESR) argued that while new powers over income tax are to be devolved to Scotland, decisions about tax and spending in England would have a “much larger” impact on monetary policy decisions, such as the level of interest rates.
Scotland stands to lose more by Evel than England”Angus Armstrong
This gives a “rationale for allowing Scottish MPs to continue to vote on English fiscal policy”, it added, even though English MPs will in the future have no say over income tax rates in Scotland.
The paper by Angus Armstrong, director of macroeconomics at the independent think tank, and research fellow Monique Ebell looked at the impact of English votes for English legislation - known as Evel - on monetary policy.
They stated: “Scotland stands to lose more by Evel than England.
“The reason is that the monetary policy chosen by the central bank will be much more strongly influenced by economic conditions in England than by those in Scotland.
“As a result, the impact of English fiscal policy decisions on overall monetary policy - and hence on Scotland - will be much larger than vice versa.
“In our view, this gives a rationale for allowing Scottish MPs to continue to vote on English fiscal policy, even when the issues at hand are only directly relevant under English jurisdiction.”
While the paper added it would “be better if English MPs retained a vote on Scottish fiscal policy”, it stated: “Because Scotland’s impact on the central bank’s monetary policy is so small, the losses to England from having a Scottish parliament with sovereignty over Scottish fiscal policy are also very small.”
The UK Government has set out plans for Evel after new powers for Holyrood were recommended in the wake of last year’s independence referendum.
Commons Leader Chris Grayling has set out proposals which would give English MPs, or English and Welsh MPs, a veto on measures which would not apply in Scotland.
Last week he brought forward amendments in a bid to provide reassurance over the right of all MPs to vote on the Budget and finance matters.
But his plans were rejected wholesale by opposition MPs in the House of Commons while some Tories continued to express unease.