Tax fear over Scottish devolution

Prime Minister David Cameron
Prime Minister David Cameron
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TAX and spend powers revealed for Scotland have prompted as furious reaction from north MPs fearing devolution north of the border is now set to hand the Scottish an unfair economic advantage.

The Smith Commission, set up by David Cameron to look at what powers can be devolved to Scotland, has recommended handing over control of how some £14bn worth of Income Tax and welfare benefits are spent, alongside powers over air passenger duty.

Other recommendations include having a set 10% share of UK VAT, the ability to nationalise railways and for the Scottish parliament to decided if 16 and 17-year-olds can vote.

The Prime Minister’s spokesman yesterday indicated the PM would seek to block moves to let Scottish MPs vote on UK Income Tax levels as a result of the devolution of rates and bands for Income Tax.

Leader of the House William Hague later added that the Government would publish in the next few weeks a paper setting out what the Government proposes for English devolution, a comment which did little to offset back bench concerns over the breadth of the Scottish offer.

The sheer scale of the devolution on offer, without details of corresponding English changes, last night united the main political parties in raising concerns.

Back bench Shipley Tory Philip Davies said: “In the Scottish referendum, if people voted yes they were voting for full independence, but it now seems that if people voted no they were voting for more independence

He added that “it is unacceptable and unjustifiable for Members of Parliament from Scotland to continue to vote on issues that affect only England”.

Skipton MP Julian Smith added that with “an already a tough market for north of England and Yorkshire airports” there was an argument that “if Scotland is going to get flexibility on air passenger duty, north of England and Yorkshire airports have to get it.”

That line was repeated by shadow chancellor Ed Balls , who in a letter to George Osborne, reminded him of the agreed principle that implementation of devolution should “not cause detriment to the UK as a whole nor to any of its constituent parts” and “cause neither the UK Government nor the Scottish Government to gain or lose financially simply as a consequence of devolving a specific power.

He added: “This means ensuring that English regional airports are not disadvantaged,”

“English regional airports cannot be faced with continuing uncertainty and risk through not knowing whether they will be significantly disadvantaged should a future Scottish Government introduce changes to Air Passenger Duty.

“It is therefore imperative that the UK Treasury leads work across Government - and working with the Scottish Government - on a mechanism to ensure that English airports, particularly in the North of England, are not disadvantaged.

“We would be grateful for confirmation that this work is under way.”