Cross-party group calls for more tax-raising powers and control over North Sea oil for Scotland
The prospects of Scotland gaining hefty new tax-raising powers and control over North Sea oil as an alternative to independence have increased after a new “devo plus” campaign was launched by senior Scottish political figures.
The cross-party devo plus group, which includes the former Scottish Liberal Democrat leader Tavish Scott, the senior Labour MSP Duncan McNeil and the Conservative former Holyrood presiding officer Alex Fergusson, argues that the Scottish parliament should take direct responsibility for raising nearly all of the £35bn it spends each year. That would include control over all Scotland’s income tax, its corporation tax and more than 80% of North Sea oil revenues, but would still leave the UK government collecting national insurance, VAT and other taxes for defence and foreign affairs.
These measures, so named because they amount to greater devolution of powers to Scotland short of the full financial independence option known as “devo max”, are being touted as the most rational and popular alternative to Alex Salmond’s independence proposals. Jeremy Purvis, the group’s leader and a former Lib Dem finance spokesman at Holyrood, implied that pressure from Salmond to include devo plus as an option in the referendum would be resisted.
Supported by Fergusson and Scott, Purvis said that implementing the final devo plus proposals would be a matter for their party leaders and both the UK and Scottish parliaments. He said the group would be commissioning detailed studies on taxation and policy-making to share with all the parties.
Devo plus would make the future of the UK sustainable, he said, and deal with the “moral hazard” of running a parliament which was not answerable or responsible for the taxes it spent. It was “a reasoned and reasonable change in the powers of the Scottish parliament and the accountability of the parliament to the people of Scotland”, Purvis said. “With devo plus therefore we move to a situation where the Scottish parliament is predominantly responsible for raising the revenue that it spends.”
This was fundamentally different, he said, to far more far-reaching “devo max” proposals, where Scotland would raise all its own taxes and pay a fee to the UK for just defence and foreign affairs. That would cause “constant friction” between Edinburgh and London over debts, taxation rates and foreign policy.
Under the present system Holyrood raises just 11% of its spending. It will get new powers later this year under the Scotland bill to increase that to 24% with controls over some income tax rates and minor taxes from 2015. Those new powers would form the basis for devo plus, Purvis said.
Scott said Salmond’s offer to put a devo plus option on the ballot paper was “a nationalist distraction. I believe we should put the question of Scotland separating from the rest of the UK to the people of Scotland in a straight yes/no question.”
Fergusson admitted that the group’s devo plus proposals would cause friction within the Scottish Tories, who have not formally endorsed further powers. His leader, Ruth Davidson, has been openly hostile to greater powers for Holyrood. But he said: “We believe very strongly that there’s an absolute requirement to have a single question on the ballot paper.”
The group’s formation, which is being initially bankrolled by wealthy Scottish businessmen behind the Reform Scotland thinktank who favour a low-tax regime in Scotland, is expected to greatly bolster proposals from within all three pro-UK parties for a new series of extra powers for Holyrood. The Lib Dems are expected to campaign at the 2015 general election for devo plus.
The prospects of greater taxation and policy-making powers for Scotland, potentially including greater control over welfare and social security benefits, increased sharply after David Cameron, the prime minister, said he was open to the idea on a visit to Scotland earlier this month. That contradicted previous statements by senior UK government ministers, including Danny Alexander, the UK chief secretary to the Treasury, that further powers would not be considered for some years.
Cameron’s concession for the first time brought the Tories closer to the Scottish Lib Dems and Labour leaders, who are discussing their own enhanced devolution proposals. Alistair Darling, the former Labour chancellor, said earlier this month he believed greater tax powers were necessary. The Scottish Lib Dems have launched a new “home rule” commission, under the party’s former UK leader Sir Menzies Campbell, which is expected to endorse greater tax-raising and law-making powers for Holyrood. Talks are also underway involving senior Tory, Lib Dem and Labour figures, including Darling and Sir Malcolm Rifkind, a former Tory Scottish secretary, on a cross-party alliance to combat independence. Ben Thomson, chairman of the devo plus group and of Reform Scotland, said: “We need to have a system that is flexible and recognises that different parts of the UK have different economies and social environments. [Devo plus] is based on the simple philosophy that each level of government should broadly be responsible for raising the revenues to cover its own expenditure.”
Purvis also signalled that the group would propose reforming Westminster, a measure which would limit the voting powers and roles of Scottish MPs in the Commons and could give the Lords a role over Scottish affairs. The UK government has set up a commission to investigate new rules on how English-only measures are voted on at the Commons, in answer to the so-called West Lothian question, which criticises the current practice of giving non-English MPs full voting rights even though there is devolution in Scotland, Wales and Northern Ireland.