New Scottish powers 'not enough' say business chiefs and academics

The letter published in The Scotsman calls for politicians to look at giving the Scottish Parliament greater financial powers.

It comes as Scottish Secretary Michael Moore admitted that the more limited proposals of the Calman Commission will be watered down in the new Scotland Bill he is due to unveiled tomorrow.

The bill - described by Mr Moore as the "biggest transfer of fiscal power to Scotland since the creation of the United Kingdom" - will take forward the findings of the Calman Commission, which looked into the future of devolution.

It called for Holyrood to get greater control over income tax and borrowing, and recommended that control over the drink-driving limit, speed limits and air guns should also be devolved to Scotland.

The signatories of the letter in today's Scotsman include Ben Thomson, chairman of the influential think-tank Reform Scotland and a former merchant banker; Jim McColl, chief executive of Clyde Blowers and one of Scotland's richest men; Dan Macdonald, the chief executive of Macdonald Estates; and Crawford Beveridge, the chairman of Autodesk and former chief executive of Scottish Enterprise.

They write: "The bill will, and must, be judged on whether it contains the real economic levers to help sustain recovery and grow the economy. We do not believe that the limited recommendations of the Calman Commission provide genuine fiscal responsibility since the range of taxes devolved is too narrow and would only enable the Scottish Parliament to raise around a third of its own revenue.

"The best way forward would be to devolve most current taxes to the Scottish Parliament, since this would make politicians more accountable for the financial decisions they take, while giving them both the incentive and the fiscal tools necessary to achieve improved public services and faster economic growth."

Among the academics pressing the case for fiscal autonomy in the letter are the economists Professor Sir Donald MacKay, Professor Drew Scott, Professor David Simpson and Professor Andrew Hughes Hallett.

Yesterday, Mr Moore confirmed that two new taxes that were set to be devolved, aggregates tax and aviation tax, would now be put out for further consultation instead. Borrowing powers for Holyrood will remain, as will an expansion of the 3p variable rate to allowing Holyrood to control the first 10p of income tax.

Mr Moore said: "These two taxes will not be devolved at this stage, primarily because in the instance of the aggregates tax, there's actually a dispute in the European Courts. It would simply be folly to try to start devolving a power that was under challenge.On the aviation tax, as is well known, the UK government is reviewing that taxation."

But he insisted: "Calman will be honoured in spirit and in letter. We're talking about the fundamental shift to give the Scottish Parliament the powers over raising income tax."

First minister Alex Salmond said: "This is a very welcome and well-informed intervention by some of Scotland's most distinguished business people and academics. It stands in stark contrast to the remarks of Michael Moore, who seems worryingly ill-informed about the cost to Scotland of the Tory Treasury's financial proposals."

TAXING ISSUE

THE centrepiece of the Scotland Bill will be new tax powers designed to make MSPs more accountable for raising money they spend.

The proposal will mean the Scottish Government is responsible for the first 10p of income tax raised on the basic rate, currently at 20p. It will be able to reduce income tax by as much as 10p and increase it as far as it likes.

Critics argue that it is just a glorified version of the current 3p variable rate, which has never been used and was secretly dropped by the SNP. They also fear Scotland would lose almost 1 billion because it would only get income tax raised in Scotland.