Treasury minister attacks Scottish plans as ‘inadequate’

The Scottish Government has not been “honest or straightforward” in its demands for Holyrood to be handed control of corporation tax, MSPs were told yesterday.

Treasury minister David Gauke insisted that the SNP’s case did not set out the full impact on the Scottish economy, as he appeared before a committee MSPs yesterday.

He also refused to rule out pushing through controversial proposals to hand sweeping new tax-raising powers to the Scottish Parliament even if these are voted against by MSPs, amid concerns over the impact they would have on the country’s Budget.

First Minister Alex Salmond wants to see control over corporation tax added to the Scotland Bill, which is currently going through the Westminster parliament. The SNP government believes that lowering this will stimulate economic growth north of the Border.

But Mr Gauke insisted yesterday that two separate analysis of its impact on the Scottish budget was “inadequate”.

He said: “They don’t address some of the fundamental questions. I’ve asked for a number of points with regard to cost assessment. There’s nothing on tax-motivated corporation, there’s nothing on profit shifting.

“There’s no recognition that if Scotland were to have corporation tax, and this were to be cut, that would involve a reduction in block grant.”

He added: “They’re not there as an open, straightforward, honest assessment of the pros and cons of devolving corporation tax to Scotland. “I think that’s a great pity and I do think its disappointing.”

The key element of the bill will see income tax cut by 10p with MSPs at Holyrood then responsible for raising it back up to the level required in line with need.

SNP MSP Stewart Maxwell asked the Conservative MP: “If the Scottish Parliament … decides on a vote of the democratically elected members that it does not wish to implement the income tax powers because it believes it would be damaging to Scotland’s interests, would you then, the UK government, go ahead and force those powers on us?”

Mr Gauke said it was “a very hypothetical question”, adding: “The intention of the UK government is that we do not find ourselves in that position.

“We will be working very hard to develop the proposals and work with the Scottish Government.”

MSPs at Holyrood can still vote down the Scotland Bill when it comes back before them later this year, but only on an all-or-nothing basis. They can’t amend an individual sections.

Mr Maxwell, a former minister, later slammed Mr Gauke’s evidence. “You have no evidence on the 10p tax rate; no explanation for the revenue compensation process, no rationale for the flat-rate tax, no mechanism for making the adjustment to the block grant,” he said.

“And you refuse to accept a democratic vote of the Scottish Parliament as being an acceptable part of the process in terms of implementing the income tax proposal. Why would we accept any of this?”

Businessman Jim McColl, who recently sold Clyde Union Pumps for £750 million, said lower corporation tax would attract companies north of the Border and attacked the current set-up. He said: “To say to someone else how much are you going to give us, and then work out how you’re going to spend it, I think is ridiculous.”