Scotland politics

Scottish devolution: SNP sends more powers letter to UK minister

Scottish Parliament building Image copyright Getty Images
Image caption The Scottish Parliament will receive new powers - but politicians disagree on what those powers should be

The SNP has sent a letter to the UK's Scottish Secretary David Mundell calling for more powers to be included in the Scotland Bill.

It wants Holyrood to have control of corporation tax, capital gains tax, the minimum wage and National Insurance.

The demand comes as the Scotland Bill is scrutinised by MPs.

An SNP amendment which would have seen full fiscal autonomy (FFA) implemented at a time of Holyrood's choosing was rejected on Monday by 249 votes.

An amendment put forward by the Conservative MP Sir Edward Leigh which called for FFA for Scotland was also rejected, with 298 MPs voting against it to 68 in favour.

The Queen's Speech said the new legislation would result in the Scottish Parliament having control over 40% of tax and 60% of borrowing.

However, the current SNP administration said that that and other promises in the Bill did not go far enough.

A letter from the SNP's Deputy First Minister John Swinney to Mr Mundell formally called for more powers, including;

  • corporation tax, capital gains tax, the minimum wage and National Insurance
  • employment policy and law, including the transfer of employment support programmes, Jobcentre Plus and laws on trades unions and health and safety
  • working age benefits and benefits relating to children
  • and equal opportunities and equality legislation.

Mr Swinney said he believed that full fiscal autonomy (FFA) was the best route to fulfilling Scotland's potential.

'Full fiscal shambles'

Conservative minister Mr Mundell claimed that the move would have cost every family in Scotland £5,000 and described the plan as a "full fiscal shambles".

The first day of the committee stage of the bill began on Monday afternoon from the floor of the House of Commons as MPs started scrutinising the legislation line by line.

The Scotland Bill would give the Scottish Parliament new powers including;

  • control over income tax rates and bands
  • a proportion of the VAT raised in Scotland
  • and full control of air passenger duty.

It would also allow Holyrood to create new benefits in devolved areas and to make discretionary welfare payments.

What is full fiscal autonomy (FFA)?

Holyrood would have control over all of taxation in Scotland, including oil and gas revenues.

It would pay Whitehall a portion of the takings for defence, the Foreign Office, the Treasury and shared regulators such as Ofcom and Ofgem.

Those in favour say it would provide real power to grow the economy faster.

Those against say it would leave a large gap in the nation's finances - a £7.6bn shortfall in the next financial year, over and above a share of the deficit that the UK is already running.

To find out more read Douglas Fraser's FFA explainer written during the election campaign.

The Scotland Bill was the first government bill to be introduced after the general election, and is now the first to reach the committee stage, with MPs beginning line-by-line scrutiny of it in the House of Commons on Monday.

Mr Mundell said: "The prime minister has made it clear that the government will carefully consider any changes to the bill that are sensible.

"An amendment that kills off the Barnett formula and ends the sharing of resources across the UK is about as far away from sensible as one can get. It would be a full fiscal shambles that would cost every family in Scotland around £5,000.

"The government will not accept amendments that are not good for Scotland. The Institute for Fiscal Studies has estimated that fiscal autonomy would mean Scotland having almost £10bn less to spend by the last year of this parliament."

Image copyright EPA
Image caption David Mundell said the UK government would reject calls for FFA
Image copyright PA
Image caption John Swinney has written a letter listing what more powers Holyrood should have

Ahead of the House of Commons scrutiny of the Bill, Mr Swinney said: "The Prime Minister said he would 'govern on the basis of respect'.

"He has to respect the outcome of the election in Scotland where 50% of those who vote, chose a party committed to fiscal autonomy and substantially greater powers than conceived of in the Smith Commission."

Scotland's finance secretary explained that if given the correct powers, the Scottish government would introduce business tax credits for research and development to "support innovation within Scotland".

He added that that would also involve a reduction in corporation tax and National Insurance for companies that were taking forward particular innovations that were "strengthening the research and development base of Scotland".

'Utterly confused'

Labour's only MP in Scotland, Ian Murray, said the Office for Budget Responsibility (OBR) "blew a further hole in the SNP's plans" when it cut its forecast for oil revenues in the next 20 years by £34.5bn to just £2.1bn in total.

Mr Murray added: "The SNP were once all for full fiscal autonomy, then they weren't so keen and now they say they want it but just not for a wee while yet.

"It's an utterly confused position. It's now make your mind up time for the SNP on whether they really want to deliver their manifesto commitment to full fiscal autonomy."

Labour, which abstained from the SNP's FFA amendment, had tabled its own amendments to the Scotland Bill.

One, which would prevent any UK-wide election or EU referendum being held on the same day as the Scottish Parliament elections, was rejected by 36 votes (305 votes to 269).

An amendment which would have seen the establishment of a Constitutional Convention to examine greater devolution to all parts of the UK was also rejected.

Another rejected SNP amendment proposed that the Scottish Parliament would only be able to be abolished with the consent of the Scottish Parliament and the Scottish people after a referendum. It was rejected by a majority of 31.

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