New Holyrood powers could create more instability

Sweeping new powers for Holyrood are being rushed through and could even lead to more constitutional instability, leading economists have warned.

It is also calling for an overhaul of the Barnett formal which determines Scotland’s funding from the UK, despite fears this could see Scotland lose out to the tune of billions of pounds.

David Cameron has already pledged to push through the Smith Commission proposals on further devolution which were promised in the event of a referendum No vote and sees Holyrood gaining control over income tax rates and bands, as well as some welfare.

But a submission to Holyrood’s finance committee from the expert group raises concern over the speed of change.

“The accelerated timetable for implementing the Smith Commission recommendations risks undermining the aim of achieving `an enduring settlement’,” it warns.

The “partial” devolution of tax and welfare powers will result in “significant complexities in responsibility, the sharing of risk and the application of the `no detriment’ principle.”

The economists point to the “proposed mix” of housing provisions.

“The delivery of social housing (and planning for housing in general) would rest with the Scottish government while housing benefit provision would remain a reserved issue.

“Universal credit is enshrined in the proposals as a reserved issue. However, it is difficult to determine on what principle all aspects of this current policy must remain reserved.”

And while the Smith Commission called for the Barnett formula to remain in place, the Royal Society report says there is a “need to reconsider the Barnett Formula as the basis for determining the fiscal relationships.”

It also calls for an economic watchdog to be set up by the Scottish Parliament to issue economic forecasts. The current Scottish Fiscal Commission only reviews Scottish Government forecasts.

The RSe working group was chaired by Emeritus economic Professor John Beath of St Andrews University and included Prof Jo Armstrong, Prof Brian Ashcroft, Prof David Bell, Dr Bob Black, Prof Michael Keating and Prof Mark Schaffer.