Labour to back more Holyrood tax powers

The party’s Devolution Commission is about to publish an interim report which will look at extending Holyrood’s influence over income tax beyond the extra powers already on their way to the Scottish Parliament.

The Scotland Act passed at Westminster will already give the Scottish Government the power to determine its own income tax rate relative to the rest of the UK.

But it is understood that Labour’s commission, which will report to the Scottish party’s spring conference in Inverness later this month, is examining an extension of those powers.

Another important theme of the commission’s report, which has yet to be signed off by the party leadership, will be the empowerment of councils.

The 11-strong Devolution Commission was established by Labour leader Johann Lamont to present a firm vision of what new powers the Scottish Parliament should adopt if voters reject outright independence in 2014.

The wide-ranging report has also examined the possibility of devolving corporation tax and inheritance tax, though much depends on the outcome of uncompleted work looking at the cost of administering those levies north of the Border.

Devolution of the Crown Estate, which owns half of Scotland’s coast and almost all of the country’s seabed and provides millions of pounds of revenue for the Treasury, is also under consideration.

The commission has no intention of devolving national insurance to Holyrood, arguing that its association with the UK benefits system makes such a move undesirable. Similarly, there are no plans to devolve VAT.

The interim report will recommend that the vast majority of welfare payments remain under Westminster control, though the possibility of devolving housing benefit is being tentatively explored.

The hope is that any devolution of benefits would be directly from the UK to Scottish local authorities, bypassing Holyrood.

A Labour source said: “Part of our programme next year will be looking at more devolution to local government.”

Following the publication of its interim report, the commission will produce a final report in time for the 2014 referendum. The work is being carried out amid signs that the three main pro-Union parties might come together to create a UK-wide constitutional convention to examine the distribution of powers across all four countries of the United Kingdom.

Politicians from the Tories, Labour and the Lib Dems have indicated they want to look at the strength of the devolved governments in Scotland, Wales and Northern Ireland in the event of a No vote in the Scottish referendum.

Members of the commission include the MSP Duncan MacNeil, Anas Sarwar, the deputy leader of the Scottish Labour Party and the chief co-ordinator of Labour’s 2014 Scottish referendum campaign, shadow Scottish secretary Margaret Curran, Holyrood finance spokesman Ken McIntosh MSP and MP Gregg McClymont, a former Oxford University don.