SNP may seek delay to devolution of VAT revenues to Scotland

The handover to Scotland of flagship new budget measures could be delayed by the Scottish Government amid concerns of a multi-million pound cash shortfall.
Nicola Sturgeon says VAT devolution may be delayedNicola Sturgeon says VAT devolution may be delayed
Nicola Sturgeon says VAT devolution may be delayed

It prompted fresh criticism that the SNP Government was "sending back" powers to Westminster, after demanding their handover, following the recent delay to new welfare controls by three years.

The assignment of half of VAT revenues to Scotland was at the heart of the Smith Commission proposals on greater devolution to the Scottish Parliament in the aftermath of the 2014 independence referendum.
It was scheduled to be introduced next April, but it was confirmed today that the Scottish Government may seek to delay this amid a lack of clarity over estimates on how much VAT is raised in Scotland - and the knock-on this could have on Holyrood's annual £33 billion budget.
Nicola Sturgeon told MSPs that the method being used to calculate VAT "has enormous risk attached to it."
She added: "The concern here comes from the methodology that's being proposed for that. There was never intended to be any real out-turn data that will guide the decision - it's based on estimates.
"While that in normal times would give rise to concerns anyway, in a time where there is such instability at the moment, largely because of Brexit, then proceeding on that basis could - in the Scottish government's judgement - absolutely - result in a significant hit to the Scottish budget."

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Nicola Sturgeon says VAT devolution may be delayedNicola Sturgeon says VAT devolution may be delayed
Nicola Sturgeon says VAT devolution may be delayed
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"We want as many powers as possible to lie with this parliament - on VAT in particular, the current proposal doesn't devolve any power over VAT to the Scottish Parliament - the decisions around the rates and levels and VAT remain reserved.


"This is simply about assigning a proportion of the revenues from VAT to the Scottish Government budget with consequent reductions in the block grant funding."


Estimates for the VAT raised in Scotland vary from £9.9 billion and £10.4 billion which would be used to work out the share handed to Scotland. But the £450 million gap in what is eventually raised in reality would have a knock-on in the Scottish budget.


Tory MSP Murdo Fraser branded the SNP a "return to sender" Government over the looming delay.


"This is a government which said it could have an entire separate country up-and-running within just 18 months," he said


“Yet when powers begin to arrive at Holyrood, instead of embracing them and making them work for Scotland, the nationalists hand them straight back.


“That’s the hallmark of a grievance-driven, incompetent administration whose time has long been up.”

Social security secretary Shirley-Anne Somerville told MSPs in February that Scotland's new benefits agency Social Security Scotland would not be able to fully administer the 11 benefits until 2024 - not 2021 as planned.