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| Scottish independence: PM backs giving Holyrood income tax power | |
| (about 2 hours later) | |
| Proposals for Scotland to cut income tax rates lower than the rest of the UK have the backing of David Cameron and George Osborne, the Scottish Conservative leader Ruth Davidson has disclosed. | |
| Davidson said giving the Scottish parliament complete control over tax rates on personal income would be in the party's manifesto for the 2015 general election in the event of a no vote in September's independence referendum. | |
| The prime minister "stands foursquare behind the income tax proposals", Davidson said. "I have spoken directly to the prime minister and the chancellor of the exchequer and there is political will for this to happen." | The prime minister "stands foursquare behind the income tax proposals", Davidson said. "I have spoken directly to the prime minister and the chancellor of the exchequer and there is political will for this to happen." |
| Davidson said she would immediately propose cutting Scottish income tax rates by one penny at the next Scottish election in 2016, using more limited tax varying powers due to come into force in 2016 to amend UK income tax rates by up to 10p in the pound. | Davidson said she would immediately propose cutting Scottish income tax rates by one penny at the next Scottish election in 2016, using more limited tax varying powers due to come into force in 2016 to amend UK income tax rates by up to 10p in the pound. |
| Davidson added that Cameron also backed proposals to consider handing Holyrood control over housing benefit and attendance allowance if that could be done without undermining the new universal credit system for social security. | Davidson added that Cameron also backed proposals to consider handing Holyrood control over housing benefit and attendance allowance if that could be done without undermining the new universal credit system for social security. |
| She said that would also allow Scotland to abolish the bedroom tax – a tax introduced by the Tory-led coalition government in London. | She said that would also allow Scotland to abolish the bedroom tax – a tax introduced by the Tory-led coalition government in London. |
| Cameron gave his blessing in a formal statement issued by Number 10, saying the Strathclyde commission had produced clear and coherent plans. Davidson wanted them implemented, he said, adding: "I agree with her." | |
| "We want to make the Scottish parliament more responsible for the money it spends – these are real powers with real consequences. | |
| "We can now say clearly that, with a no vote this September, Scotland can have the best of both worlds; a strong and responsible Scottish parliament underpinned by the security of the whole United Kingdom." | |
| Giving Scotland full control over raising rates and setting bands for income tax, on personal income but not on share dividends and savings, would allow Holyrood the power to raise 40% of its spending. | Giving Scotland full control over raising rates and setting bands for income tax, on personal income but not on share dividends and savings, would allow Holyrood the power to raise 40% of its spending. |
| The measures are at the centre of an 18-page report from a Scottish Tory commission on increasing devolution led by Lord Strathclyde, the former leader of the House of Lords, set up to counter first minister Alex Salmond's push for independence. | The measures are at the centre of an 18-page report from a Scottish Tory commission on increasing devolution led by Lord Strathclyde, the former leader of the House of Lords, set up to counter first minister Alex Salmond's push for independence. |
| Strathclyde said: "If Scotland votes no in the forthcoming referendum, we believe that the UK and the countries and nations within it need to operate and be at ease with themselves. We therefore need to devolve in tune with the past, make the glue which binds the union stronger." | Strathclyde said: "If Scotland votes no in the forthcoming referendum, we believe that the UK and the countries and nations within it need to operate and be at ease with themselves. We therefore need to devolve in tune with the past, make the glue which binds the union stronger." |
| The report is the third and final devolution reform document from the three pro-UK parties as they seek to provide Scotland's voters with concrete alternatives to full independence. | The report is the third and final devolution reform document from the three pro-UK parties as they seek to provide Scotland's voters with concrete alternatives to full independence. |
| Labour, the Tories and Liberal Democrats have already passed limited powers for Holyrood to vary the UK rate of income tax by up to 10p in the pound, which come into force in 2016. However, Tory support for full devolution of income tax – a measure already proposed by the Scottish Liberal Democrats – puts Scottish Labour on the defensive and raises the prospect of battles between the pro-UK parties over how far devolution can go if Salmond loses the referendum. | Labour, the Tories and Liberal Democrats have already passed limited powers for Holyrood to vary the UK rate of income tax by up to 10p in the pound, which come into force in 2016. However, Tory support for full devolution of income tax – a measure already proposed by the Scottish Liberal Democrats – puts Scottish Labour on the defensive and raises the prospect of battles between the pro-UK parties over how far devolution can go if Salmond loses the referendum. |
| After first floating full income tax devolution, Labour's final proposals rejected it, claiming that it would promote cross-border tax competition, allow taxes to be cut and cause too many technical difficulties for pensions, savings and share income. | After first floating full income tax devolution, Labour's final proposals rejected it, claiming that it would promote cross-border tax competition, allow taxes to be cut and cause too many technical difficulties for pensions, savings and share income. |
| Lord Strathclyde said his commission had recognised the problem with pensions, savings and share income and so had excluded them from his proposals. Holyrood, he said, should simply control income tax on salaries and wages, using the new tax system which would be run by the new tax agency Revenue Scotland. | Lord Strathclyde said his commission had recognised the problem with pensions, savings and share income and so had excluded them from his proposals. Holyrood, he said, should simply control income tax on salaries and wages, using the new tax system which would be run by the new tax agency Revenue Scotland. |
| Strathclyde and Davidson said these proposals would allow the Treasury's controversial Barnett formula for setting UK government funding of Scottish spending to remain intact, since it would just mean the Treasury grant would be cut in line with the income tax raised in Scotland. Many Labour, Tory and business leaders in England and Wales want the Barnett formula scrapped or wholly reformed. | Strathclyde and Davidson said these proposals would allow the Treasury's controversial Barnett formula for setting UK government funding of Scottish spending to remain intact, since it would just mean the Treasury grant would be cut in line with the income tax raised in Scotland. Many Labour, Tory and business leaders in England and Wales want the Barnett formula scrapped or wholly reformed. |
| Davidson admitted she and the commission had failed to persuade Downing Street to allow Scotland to take control over air passenger duty: she said she wanted it abolished, but that was rejected by her colleagues in Westminster and the Treasury. | Davidson admitted she and the commission had failed to persuade Downing Street to allow Scotland to take control over air passenger duty: she said she wanted it abolished, but that was rejected by her colleagues in Westminster and the Treasury. |
| Speaking at a Newark byelection rally on Monday, Cameron also insisted an independent Scotland would need to join the back of the EU queue behind western Balkans applicants like Macedonia and Serbia – a claim many EU experts dispute. | |
| Cameron told a Scotland-born worker at the electrical goods warehouse it had become "clearer and clearer" since the referendum campaign began that they would need to reapply to join the EU. | |
| "And as such, as an independent country, they would have to queue up as it were behind other countries, for instance those in the western Balkans, that are already on the path towards membership," he said. |