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Getting on with it

Brian Taylor | 11:22 UK time, Wednesday, 25 November 2009

UPDATE: tax and timing.

On tax, the 10p plan gets the go-ahead from the UK government.

As billed here, they'd base it initially upon advance forecast tax revenues rather than actual revenues.

Controversial issue with the borrowing power. Calman said prudential capital borrowing should be permitted.

The Murphy statement says yes to that - but with the proviso that such borrowing should be funded by an increase in Scottish taxation.

The SNP say that's a "con": that such borrowing could, alternatively, be funded by paring costs from revenue expenditure.

They say it's a way of preventing implementation.

To be frank, there are voices here at Holyrood from other parties who are of a similar opinion. They wonder how workable such a scheme is.

Borrowing increase

From the Treasury perspective, this is a way of containing and constraining public borrowing overall.

The Treasury argues that any increase in borrowing must be matched by a palpable increase in revenue: not just by imprecise promises to vary existing spending.

On timing, the Calman Commission parties are now plainly diverging.

Labour says: act, but after the next election - when they may or may not be in power. The Liberal Democrats say: act now, produce a bill.

'Act now'

As for the Tories, it would appear - as forecast here earlier - that those who advocate sending a signal of early action on Calman have lost out.

David Cameron is backing the principle of devolving further taxation powers to Holyrood - but won't commit to early legislation.

The view of the leader and those around him is that there are other priorities.

Further, they won't commit to the white paper as set out today. They plan their own white paper which, self-evidently, opens the perspective of different decisions.

As for the Scottish government, they say: act now on the issues where there is agreement.

All up, this is largely turning into a dry run for the arguments which will be advanced at the forthcoming UK General election.

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So. This Calman business. What's occurring?

We're standing by for a Commons statement from the Scottish Secretary Jim Murphy - plus a slew of reaction.

But this much we know. Mr Murphy will publish a white paper endorsing most of the proposals drawn up by the Calman Commission on further powers for the Scottish Parliament.

On individual taxes, I expect him to support devolving stamp duty land tax, aggregates levy and landfill tax. Those taxes would fall under Holyrood control.

I expect him to oppose devolving air passenger duty. I expect him to support new powers for Holyrood to set the drink driving rules and the national speed limit. I expect him to back the devolution of control over air guns.

On income tax, I expect broad support for the Calman plan to oblige Holyrood to set a tax rate, varied according to MSPs spending wishes.

This scheme has been examined in close detail by the Treasury - and ultimately accepted.

Bock grant

Under the Calman plan, the Treasury would start by cutting the standard and upper rates of income tax in Scotland - and cutting the Scottish block grant accordingly.

MSPs would then decide. If they fix upon a 10p tax rate from Scotland, then the block grant would be restored in full.

If they levy less in tax, they get less from the Treasury. If they levy more upon Scottish taxpayers, then they have more to spend as a consequence.

They can't alter the gap between standard and upper rates.

Supporters say it increases the accountability of the Scottish Parliament, forcing MSPs to take decisions annually on tax.

I expect Nationalist critics to say that it would leave Scottish spending vulnerable to changes in, for example, tax allowances over which Holyrood would still have no control.

They'll advocate full fiscal autonomy.

Budget stability

To counter that, I wouldn't be at all surprised if today's announcement by Mr Murphy featured interim arrangements in order to ensure relative stability in the budget available to Scotland - especially in these recessionary times when tax receipts are likely to fluctuate.

I also expect Mr Murphy to endorse capital borrowing powers for the Scottish Government - although, once again, I wouldn't be surprised if there was a caveat in the shape of a control mechanism to ensure that the repayment of such borrowing is funded.

That could be controversial.

There will be more, much more: for example, on Calman's proposals for enhancing inter-Government and inter-parliamentary links.

Likely reaction? This will focus upon timing. Mike Russell, the SNP's constitutional affairs minister, will deride the decision by the UK government to defer any movement on Calman until after the General Election.

UK ministers say the election is due in the spring and it is unreasonable to expect the package to be implemented by then.

Mr Russell will say much of the content - such as parliamentary liaison and control over airguns - is uncontentious and could be enacted early.

Middle way

He will argue that, philosophically, Calman is now the status quo. Not, in short, worthy of submitting to the voters in a referendum.

The Liberal Democrats will say: get on with it. They will voice impatience at delay, arguing there should be a bill now, not solely a white paper.

And the Tories? They have been divided roughly in three: between those who want to signal early action as a sign of their commitment to Scotland, those who think it's a reasonable notion but not a priority after more than a decade in opposition at Westminster and those who think the entire plan is nonsense.

Expect the middle way. They'll say they back the concept of Calman - but would require to draft their own white paper.

In similar vein, they won't commit to a timetable.

More later.

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