Labour v Labour as MPs and MSPs clash over tax plan

SENIOR Labour MPs have called on party leader Ed Miliband to block proposals to give MSPs full control over the income tax rates paid by people living in Scotland.

Jim Murphy is one of the senior Labour MPs against the Scottish Labour group's plan. Picture: Ian Rutherford

The policy suggestion is contained in an interim report of a devolution commission led by Scottish Labour leader Johann Lamont.

But last night sources said several leading Labour MPs, including shadow defence secretary Jim Murphy, have called on Mr Miliband to block the plans.

The report will be presented to the party’s conference in Inverness this weekend amid private concerns from some Labour MPs that the proposals go too far in extending the powers of a devolved government.

Some MPs are understood to have been taken by surprise when the proposal was unveiled to the Parliamentary Labour Party (PLP) earlier this week.

One party source said: “Nobody had been aware that the idea was even on the table.”

Another added: “It is fair to say that the opposition from Scottish MPs was reflected across the PLP.”

Some had objected because they believed Ms Lamont had said she and the Scottish leadership were “minded to” accept the complete devolution of income tax before discussing it with MPs or the UK party.

A Labour source said: “This issue was raised in shadow cabinet with Ed [Miliband] and there was a lengthy discussion afterwards involving Ed, Margaret [Curran] and Jim [Murphy].”

It is understood MPs have demanded a change of language over the proposals to emphasise that it is “only a consultation and not a done deal”.

But unveiling the devolution commission proposals yesterday, Scottish Labour leader Ms Lamont appeared to rein back on the income tax plans, insisting the paper is the “beginning of a conversation” in the party.

She went on: “Now that the devolution commission has set out its findings, we need to open up this debate to the people of Scotland so that Scottish Labour can reflect the views of the majority of Scots who want to stay within the United Kingdom.

“The interim report sets out a range of ideas and options that will allow businesses, the third sector, trade unions and communities to have a real debate about how we strengthen devolution if the people of Scotland reject independence. We want this to be a genuine dialogue that will inform our views as we move forward.”

She insisted: “This will be a real debate about where power should lie to best serve the people of Scotland, so we will also look at devolving power to local government and our communities.

“I want to know where power can be best used to help create a better Scotland.”

Former Labour First Minister Henry McLeish said that Scottish Labour MPs “need to start singing from the same hymn sheet” as the Scottish party leadership in Holyrood.

He said: “I am very pleased about the progressive direction of travel and it is important that an alternative is set out to independence. The Labour Party should be leading this debate, unfortunately until now it hasn’t.

“I understand the concerns of MPs but they need to recognise the way things are going and that decisions about Scotland should be taken in Scotland.”

The SNP said that the row showed London Labour is still running the party in Scotland. SNP MSP Annabelle Ewing – who sits on the referendum bill committee – said: “This is very embarrassing for Johann Lamont. She was supposed to be the first leader of the whole Labour Party in Scotland, but she clearly is not leading Labour’s Scottish MPs.

“Since Johann Lamont announced this devolution commission, very little has been heard about it, and it is clear that Labour MPs – like most others in the Labour Party – have not been offered any chance to contribute.

“Ultimately, if Scots did vote No in the referendum, we would be relying on MPs such as these to devolve powers to Scotland – which they evidently have no intention of doing. This is typical Westminster control-freakery.

“This just underlines once again why only a Yes vote in next year’s independence referendum can secure Scotland the economic levers we need to build a fairer and more prosperous Scotland.”