New powers for Parliament 'not the answer' to financial problems

A CENTRE-RIGHT think-tank today claimed devolution had failed to address Scotland's social and economic problems and said new powers for Holyrood were not the answer.

The Policy Exchange - which has been dubbed David Cameron's favourite think-tank - argued Scotland already had enough powers, but had failed to use them in the right way. It said the Calman Commission proposals should be implemented, because they "have the merit of emphasising Scotland's existing powers rather than extending them significantly" - but there should then be a "generational truce" on constitutional matters.

It branded calls for fiscal autonomy - where Scotland would raise all or most of the money it spends - "a red herring".

The report, The Devolution Distraction, written by Tom Miers, a public policy consultant, said Scotland's problems were political, not constitutional.

It said: "Public services such as education and health have declined in performance relative to other countries despite big increases in funding.

"The economy has languished behind the rest of the UK and Europe, and the cultural opportunities on offer have not been seized."

It dismissed the argument that having responsibility for raising the money it spends would make Holyrood dramatically more accountable.

"If the huge increase in 'accountability' that took place with devolution in 1999 did not improve matters, there is no reason to suppose that further constitutional change will help."

The report said Scotland already had a range of tax powers "much greater than usually assumed". As well as council tax, business rates and the unused 3p "Tartan tax", it claimed that although the Scottish Government has now power to cut corporation tax, it could achieve the same result by giving rebates to businesses.

The report said setting up the cross-party Calman Commission was a mistake because it placed too much importance on extra powers. But it argued the proposed shift of responsibility to Holyrood for setting 10p of the existing tax rate would make little difference.

It warned however that the Tory-Lib Dem coalition at Westminster should be careful to respect and encourage "a distinctive devolved approach".