Jim Murphy backs full devolution of income tax

Scottish Labour leadership candidates Sarah Boyack, Neil Findlay and Jim Murphy, from left. Picture: PA

Frontrunner Jim Murphy indicated that he would accept the proposal but Sarah Boyack expressed “reservations”.

The other challenger for the post, Neil Findlay, said care must be taken to ensure Scotland does not end up worse off as a result of any changes.

The Labour Party is expected to abandon its opposition to handing full control over income tax to the Scottish Parliament.

The Smith Commission, the body looking at more powers for Holyrood in the wake of the independence referendum, is expected to publish its recommendations this week.

In a televised debate yesterday with the three candidates to take over as Scottish leader from Johann Lamont, Mr Murphy refused to rule out supporting the devolution of all of income tax, which is strongly opposed by many within the party, including former prime minister Gordon Brown who described it as a “Tory trap”.

Mr Murphy, previously seen as the most sceptical about further devolution, insisted that the “only test” of the Smith Commission recommendations expected on Thursday after five-party negotiations with the SNP, Labour, Liberal Democrats, the Conservatives and the Greens, was “is it good or bad for Scotland”?

He said: “We have to understand the anger of many of the Yes voters who were desperate for change.

“Not all the Yes voters want independence.

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“A lot of them were just scunnered, frustrated, with the status quo and wanted change, so we have to deliver the change.”

A source close to Mr Murphy said that the Smith negotiations had “left him with no choice” but to accept full devolution of income tax.

Under Ms Lamont’s leadership a Labour commission had earlier this year backed giving the Scottish Parliament control of three-quarters of the basic rate of income tax amid concern that full tax powers could weaken Scottish MPs at Westminster and pave the way for the UK government to cut the Scottish Government’s budget.

Sources said that with the Conservatives, Liberal Democrats, Greens and SNP favouring more far-reaching reform on the issue, Labour’s negotiators are conceding that they will have to go further.

The commission is expected to recommend full devolution of income tax rates and bands.

Ms Boyack said: “I, amongst many others, have got reservations about the full devolution of income tax. I think we need to look at a wide range of taxes.” She insisted that her reservations centred around the “pooling and sharing of resources”.

The Lothian MSP said: “There’s a whole raft of different tax policies. The Scottish Parliament needs to become more accountable for the money we raise, as well as how we spend that money. I think at this point I would far rather let the Smith Commission work their way through the whole range of issues they’ve got to look at.”

Mr Findlay, Labour’s Holyrood health spokesman, also urged caution, saying: “I think we have to be careful because what we don’t want is a deal that ends up with Scotland being worse off. That’s the principle that I would apply to the whole negotiations in the Smith Commission.”

Meanwhile, Professor Sir Donald Mackay, a former chairman of Scottish Enterprise who backed independence, said in an article that tax autonomy is “now paramount” if the aspirations of Scotland are to be realised following the referendum and the Westminster party leaders’ vow of extensive new powers to the Scottish Parliament.

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