Ruth Davidson seeks radical Holyrood tax powers

Ruth Davidson is seeking a new direction for the Scottish Conservatives. Picture: TSPL

Writing in Scotland on Sunday, the Scottish Tory leader says the Conservatives will advocate a “new system” that will bring real accountability to Scotland’s politics, paving the way for the transfer of all income tax raising powers to the Scottish Parliament.

Davidson calls for an end to the “pocket money parliament” suggesting it is time for Holyrood to take responsibility for raising money as well as spending it.

Her article appears the day before the Conservative Party publishes the findings of its commission led by Lord Strathclyde, which has been examining how the devolution settlement can be altered after a No vote. Tomorrow the Strathclyde commission is expected to produce a report recommending that Holyrood is given power over all income tax – a measure that would make the Scottish Parliament responsible for raising 40 per cent of the revenue it spends.

That would enable MSPs to set higher or lower rates than the rest of the UK and offers the possibility of the Scottish Tories campaigning on a tax-cutting agenda in the 2016 Scottish elections. The new powers would be offset by a cut in the block grant which Holyrood receives from the Treasury.

The move will be in line with Davidson’s growing belief that Holyrood must become more accountable for the cash that MSPs spend.

“Every year, billions of pounds of taxpayers’ money is allocated by MSPs to spend in Scotland,” writes Davidson.

“Yet MSPs are responsible for raising only a fraction of that money. Holyrood is, in effect, a giant spending machine; ministers and MSPs the signatories of a vast cheque book. In modern day post devolution Scotland, the difficult business of raising public money from taxpayers continue to rest mostly with Westminster. The freedom to spend that money is enjoyed mostly by Holyrood.

“My belief is that system must end. And this week, the Scottish Conservatives will come forward with our proposals on how to reform it. Central to our plans is a commitment to give Holyrood more responsibility.

“We cannot continue with a pocket-money parliament, which gets its allowance from Westminster and then spends as it pleases. We must move to a new system that brings real accountability to Scotland’s politics. In short, the buck must stop at Holyrood.”

The new approach contrasts radically with past Tory policy. In 1997 the Conservatives opposed devolution and the formation of a Scottish Parliament. It also marks a departure for Davidson herself, who campaigned for the Scottish Conservative leadership on the basis that a constitutional “line in the sand” should be drawn.

Scotland on Sunday understands that Strathclyde will also look at devolution of some welfare payments. Holyrood being given greater over housing benefit is one example, which would allow a Scottish Parliament to abolish the bedroom tax – the UK Government-imposed cut in the spare room subsidy which has been opposed by the SNP and Labour.

The document will also recommend that important aspects of the UK’s uniform tax system – such as VAT and Corporation Tax – will remain under the control of Westminster.

Although Strathclyde has been chairing the commission, Davidson has taken a great personal interest in the work and has played the leading role in selling its recommendations to Downing Street.

In recent weeks she has met David Cameron and George Osborne to discuss the findings, which are likely to be included in the Tories’ 2015 General Election manifesto.

With the pro-Union parties struggling to coalesce behind a detailed blueprint of what powers should be offered in time for the September 18 referendum, the Conservatives could potentially produce a more radical vision than Labour.

Labour’s Devolution Commission, published in March, offered some control over income tax – including a progressive rate to tax high earners. Labour’s critics, however, claimed that Johann Lamont’s proposals would only result in Holyrood controlling 26 per cent of devolved expenditure.

Last night Derek MacKay, the SNP’s Business Convener, responded saying that only a Yes vote would deliver the powers Scotland requires.

“The only way to get the powers Scotland needs to build a fairer society and stronger economy is to vote Yes in September,” MacKay said.

“The Tories are more interested in outdoing Labour than in delivering jobs or opportunities for Scotland.”

He added: “Whenever the Tories have been in a position to prove their commitment to more powers they have been found wanting. People in Scotland won’t be fooled by the Tories’ empty promises.”