This article is from the source 'bbc' and was first published or seen on . It last changed over 40 days ago and won't be checked again for changes.

You can find the current article at its original source at http://www.bbc.co.uk/news/uk-scotland-scotland-politics-35364890

The article has changed 2 times. There is an RSS feed of changes available.

Version 0 Version 1
Fresh talks over Scotland Bill fiscal framework Scotland Bill: No detriment principle 'is unworkable'
(about 13 hours later)
Fresh talks aimed at reaching an agreement on the financial implications of further devolution to Scotland will be held in London later. The principle of "no detriment" contained in the Smith Commision devolution agreement is unworkable in practice, a leading economist has said.
Scottish Finance Secretary John Swinney will meet UK government counterparts at the Treasury. The agreement states that neither the UK or Scottish governments should suffer financially from policy decisions made by the other once the new powers come into force.
The new devolved powers set out in the Scotland Bill cannot go ahead without an agreement being reached. But Prof David Bell said it had "huge potential for dispute".
Mr Swinney has previously said he would veto any deal that was unfair. And he said no similar principle was in place anywhere else in the world.
The Smith Commission recommended that more powers be devolved to the Scottish Parliament. Prof Bell was speaking to MSPs on Holyrood's Devolution (Further Powers) Committee as representatives of the two governments met in London for further talks on the fiscal framework that will underpin the Scotland Bill.
While many of these are set out in the Scotland Bill that is currently before Westminster, the financial mechanism that will underpin the transfer of responsibilities is being negotiated separately by the UK and Scottish Governments. He used the example of the Scottish government potentially cutting or scrapping air passenger duty once the tax is devolved to highlight the difficulties that the no detriment principle would bring.
Known as the 'fiscal framework', it will determine how much the block grant, Scotland's primary source of funding, will be affected by the revenue and spending powers that are being devolved. The move would leave economists "tying themselves in knots" trying to figure out what impact the move would have on the rest of the UK, he said.
It will also set out the borrowing limits for the Scottish government and ensure that the actions of one government will not cause financial detriment to the other. Prof Bell added: "You have got to try to imagine what would have happened had Scotland not taken that decision. It is around that question, that we call a counter-factual, that all of the uncertainty arises because it didn't happen.
Both governments insist they want to strike a deal before the middle of next month, ahead of elections to the Scottish parliament in May. "How could you know what would have happened had Scotland not taken the policy decision that it has taken? You end up in a situation of mainly economists arguing with each other about what the impact might have been had the decision gone a different way."
Prof Bell said Carlo Cottarelli of the International Monetary Fund had told a House of Lords committee looking at the issue that were was no similar principle in place anywhere else in the world.
He added: "That is the basis for my argument that I think it is unworkable".
Prof Bell is an economics professor at Stirling University who has acted as an adviser to both the Scottish and UK governments.
The Scotland Bill will hand Holyrood new powers over areas including income tax, VAT, air passenger duty and some areas of welfare and benefits policy.
Block grant
But it cannot go ahead until an agreement is reached on the fiscal framework, which will determine how much Scotland's block grant is affected by the new powers that are being devolved.
It will also set out the borrowing limits for the Scottish government and attempt to ensure that the actions of one government will not cause financial detriment to the other.
Both sides have said they are hopeful an agreement will be reached by the middle of next month - but the Scottish government has said it will veto any deal that is "unfair" for Scotland.
Scottish Finance Secretary John Swinney was due to meet UK government counterparts at the Treasury in London on Thursday for the latest round of talks
The two governments have said they will not provide any details of the talks until an agreement is reached.