Q&A: Scotland Bill

Scottish Parliament building The Calman Commission was set up to review Scottish devolution 10 years on

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The UK government is planning a major transfer of new powers to the Scottish Parliament under a new Scotland Bill.

But how did it come about and what does Holyrood stand to gain from the move? Here are answers to some of the main issues surrounding the legislation.

What is the Scotland Bill?

Described by the UK government as the "biggest transfer of fiscal power to Scotland since the creation of the United Kingdom", the legislation will hand control of some taxes and other powers from Westminster to the Scottish Parliament.

What has prompted this?

The content of the Scotland Bill closely follows the final recommendations of the review of Scottish devolution, which became known as the Calman Commission, after its chairman Sir Kenneth Calman.

The review was established by a vote in the Scottish Parliament amid a feeling that, after being around for 10 years, Holyrood had established a central role in political life north of the border, but was lacking in accountability - especially in terms of revenue-raising powers.

There was another motive. The commission was backed by the pro-Union parties, at a time when the SNP government was promoting its plans for an independence referendum, under its own review of Scotland's constitutional future - the National Conversation.

The Calman Commission specifically ruled out looking at the option of independence, instead concentrating on a vision to strengthen devolution.

Which revenue powers are being transferred?

In line with the Calman recommendations, published in June 2009, Holyrood will take charge of half the income tax raised in Scotland.

The UK Treasury would deduct 10p from standard and upper rates of income tax in Scotland and give MSPs the power to decide how to raise cash.

The new powers would be combined with a cut in the block grant, currently about £32bn, which Scotland gets from the UK government.

MSPs are also set to gain control over stamp duty and landfill tax.

However, devolution of two other powers - aggregates levy and aviation tax - have been put on hold for now.

UK ministers say the former is currently subject to a European court challenge, while the latter is under review at Westminster.

Are there any non-tax powers being given to Scotland?

Yes. Holyrood would also gain the power to set national speed limits, drink-driving laws and legislation on the control of airguns.

The SNP's call for airgun controls, previously ruled out by the Home Office, began while the party was still in opposition.

The Calman report also said powers to run Scottish parliamentary elections - which are still controlled by Westminster - should be handed over.

How and when will the powers be handed over?

As the Scottish Parliament was established by an Act of the UK government, any new powers given to Holyrood also need to use that route.

The Scotland Bill is a piece of UK government legislation which would need to be passed at Westminster, although, in this case, MSPs will also play a key role in debating the package of powers at Holyrood.

The Scotland Office, led by Scottish Secretary Michael Moore, is not expecting the new powers to be in place until about 2015, saying plenty of time has to be taken to get it right.

The Scottish parties must be pretty happy this is all happening?

Not all of them. The SNP, which very grudgingly took part in the Calman review, say the new tax powers are meaningless and may actually cost Scotland money.

They point out that the Scottish Parliament has always had the power to vary the rate of income tax by 3p in the pound, but the so-called tartan tax has never been used.

In a similar vein, MSPs could choose to levy 10p under the new income tax powers, and the amount of cash Scotland will get would stay the same, through the combination of Treasury grant, UK tax and Scottish tax.

They could increase the levy and people's taxes as a result, or cut it, meaning public service reductions, but, in the current financial climate, there's not much of an appetite to go down either of those two routes.

Alex Salmond has also argued the tax proposals have been overtaken by the UK government's plan to pay for a rise in income tax allowance thresholds by increasing personal National Insurance contributions, under which money would go straight to the Treasury.

The nature of the Scottish budget's funding, through the UK Treasury block grant, has led Nationalists to describe Holyrood as a "pocket money parliament" and, short of independence, have repeatedly called for full fiscal autonomy.

Labour, the Tories and the Lib Dems argue that parties which rejected independence won 80% of the vote in the 2007 Scottish election.

Why is the Scotland Bill being launched now?

UK ministers have chosen to launch the legislation on St Andrew's Day - Scotland's national day, named after its patron saint.

They say this is the perfect time to mark the "beginning of a new phase" in Scotland's devolved government.

It is also worth bearing in mind that November 30, 2010, was the planned date for the SNP's independence referendum, but the slot became vacant after the Scottish government dropped the plan because of a lack of support.

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