Scotland politics

Osborne: Holyrood 'would cut taxes'

George Osborne Image copyright Reuters

Scotland will use new devolved powers to cut, rather than increase, its taxes, the chancellor has predicted.

George Osborne also told the Conservative Party conference that commitments made to Scotland ahead of the independence referendum would be honoured in full.

The Tories have proposed fully devolving income tax to the Scottish Parliament.

But Labour only wants Holyrood to be responsible for a portion of the tax.

The two parties also disagree over whether Scottish MPs should continue to be allowed to vote on English matters at Westminster.

Meanwhile, addressing Scottish delegates at the conference on Monday evening, Prime Minister David Cameron said the Conservatives have a "huge political opportunity" in Scotland to win more seats at next year's general election, following the "No" vote in the referendum.

Earlier, Mr Osborne told delegates at the Tory conference in Birmingham: "When Scotland is rightly given greater control over its taxes, I suspect the people of Scotland will choose to put them down, not up. And let me be clear - we will honour in full our commitments to Scotland.

"We are also absolutely clear that as Scots get more control over their taxes, it is right that Northern Ireland, Wales and England should get more control over their taxes and their laws too.

Public consultation

Mr Osborne also pledged that the Conservatives would introduce a two-year freeze on benefits - excluding pensions, disability benefits and maternity pay - paid to people of working age if the party wins the next election.

And he said an extra £25bn of permanent savings would be needed to eliminate the UK's deficit.

The former Labour trade minister Lord Digby Jones had earlier told the conference it would be an "unacceptable farce" if Scottish MPs could vote on English taxation, but English MPs could not do the reverse.

Labour leader Ed Miliband has called for a public consultation on the issue, followed by a constitutional convention after next year's general election.

Tim Reid, BBC Scotland's political correspondent

Since 2001, the party has only had one Tory MP in Scotland after facing a wipe out in 1997 when Labour came to power.

Addressing a busy Scottish reception at the Birmingham conference, David Cameron said his party had an opportunity to win seats in the Lowlands, Highlands, Fife, Argyll, Aberdeenshire and Perthshire - where the SNP has strong support, but which voted "No" in the referendum.

He said: "We have got some targets in our sights."

Praising the Scottish leader Ruth Davidson for her part in the campaign, he added: "We have got the people, we have got the message, we have got the leader and now I think we can really turn the next 200 days into the opportunity to deliver more Conservative seats in the Westminster parliament for Scotland."

He also repeated the vow made by the leaders of the pro-Union parties before the referendum that the powers promised would go ahead.

"The vows that we made about further devolution to the Scottish Parliament will go ahead. A Conservative government will deliver those tax powers, those spending powers, those welfare powers," he said.

Mr Cameron, Mr Miliband and Lib Dem leader Nick Clegg all signed a pledge ahead of the referendum vowing to devolve more powers to Scotland if voters rejected independence.

The first part of the pledge, which was published in the Daily Record newspaper, promised "extensive new powers" for the Scottish Parliament "delivered by the process and to the timetable agreed" by the three parties.

The second said the leaders agreed that "the UK exists to ensure opportunity and security for all by sharing our resources equitably", while the third "categorically states" that the final say on funding for the NHS will lie with the Scottish government "because of the continuation of the Barnett allocation for resources, and the powers of the Scottish Parliament to raise revenue".

A cross-party commission headed by Lord Smith of Kelvin has subsequently been tasked with delivering new powers to the Scottish Parliament.

Image copyright Getty Images

The SNP has agreed to participate in the commission, with its deputy leader Nicola Sturgeon - who is expected to succeed Alex Salmond as party leader and first minister in November - saying the party would work with the other parties "in good faith".

Speaking on Saturday, she said: "Between the 45% who voted 'Yes' and a sizeable number who voted 'No' because they thought that was the route to more powers, there is a powerful public majority out there for change.

"In the few days before the referendum the language being used was the language of substantial radical change - devo max, something close to federalism, home rule. That is the expectation that has been generated.

"Unless we end up with a package that is substantial the backlash against the Westminster parties is going to be severe."