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Scotland will be able to control a third of its budget, set up a Scottish income tax rate, and receive borrowing powers worth £2.7 billion under major new financial powers announced today.

Scottish Secretary Michael Moore announced the £12 billion financial powers this afternoon, as he published the Scotland Bill.

Mr Moore described the package of measures as “the biggest transfer of fiscal power to Scotland since the creation of the United Kingdom”.

But SNP external affairs minister, Fiona Hyslop, expressed concern the bill was a “Tory Plan that will sell Scotland short”.

She told the BBC this afternoon she was concerned about some of the funding proposals, including the reduction of  35% in the Scottish budget Treasury grant, worth about £30bn a year.

The bill adopts most of the recommendations of the Calman Commission, set up in 2008 by pro-Union parties to examine how to strengthen devolution.

Holyrood Palace

Scottish Parliament at Holyrood

Under the legislation, Scotland will set an income tax rate each year from 2015. Scotland already has the ability to vary income tax by 3p in the pound, although this “Tartan tax” has never been used.

The new legislation would require MSPs to set an annual income tax rate, and would allow Holyrood to introduce new Scotland-specific taxes, subject to Westminster approval. Scottish ministers will also join a new UK-Scottish tax committee.

Other areas, including control over air weapons, drink-driving and speed limits will also be devolved.

Responsibility for stamp duty and landfill tax will also be handed over.

A Scottish Crown Estate Commissioner will also be created, and Scottish and UK ministers will act jointly when appointing the BBC Trust member for Scotland.

0619.18 Scotland United Rally, Glasgow

Scotland United Rally in Glasgow supporting the demand for a national referendum on devolution and independence, 1992. Picture: Derek Copland

The term “Scottish government” will also be formally recognised, in place of the previously used title, “Scottish Executive”.

“It is a powerful blueprint which will strengthen Scotland by improving devolution,” said Mr Moore.

“Future Scottish governments will have more accountability to the public for the financial decisions they make and will have access to significant borrowing powers.

“Devolution has worked well over the last decade but today’s bill addresses a number of major issues and takes the settlement forward in a powerful and positive way.”

The Scottish Parliament was set up in 1998, and MSPs meet at a purpose-built Parliament at Holyrood.

The Scottish Parliament currently has responsibility for domestic issues that are specifically relevant to Scotland, but not foreign policy.

Scottish First Minister, Alex Salmond, welcomed the idea of new devolved justice powers, but said the people of Scotland want much greater financial responsibility.

Draft Referendum (Scotland) Bill Consultation

Scottish First Minister, Alex Salmond

“This bill was a great opportunity which the UK government has missed,” he said. “Unfortunately, people will be disappointed by a lacklustre Westminster bill that tinkers around the edges, retains the key powers in London, and leaves big questions unanswered.

“The fiscal powers are far too limited, and, for the sake of Scotland’s economy and public services, the bill needs to be strengthened either by the Scottish Parliament or the people.”

Critics have also noted how plans to hand over powers on the aggregates levy and aviation tax have been put on hold.

MSP Patrick Harvie, of the pro-independence Scottish Greens, said the Scotland Bill was part of a “flawed process, dominated by the interests of political parties rather than Scotland’s people”.

SNP external affairs minister, Fiona Hyslop, told the BBC this: afternoon “We’ve got real concerns that really this might be a Tory Plan that will sell Scotland short, in relation to some of the funding proposals that we think might come forward.

“Scotland should be able to decide its own policies in these things, that’s what we’ve done in relation to tuition fees, and indeed prescription charges, but that’s us taking responsibility for our own affairs.

“We’re quite relaxed about encouraging more powers, but they need to be the right powers, and I think the problem we’re going to have with this proposal is that it’s neither, we really need to get onto the issue about economic growth.

“Income tax is only one lever, if we look at corporation tax, or others, look at the renewable revolution we’re about to have in Scotland. The fact we don’t have powers over those areas actually will restrict us in growth so we’re really looking at a bit more expansive a bit more ambition than we think will be in the bill.”

The Scottish secretary said the handover of new powers, set to happen in 2015, would address concerns that the Scottish parliament was not accountable enough for the cash it spent.

The number of skilled workers allowed into the UK from outside the European Economic Area has been capped at 21,700.

Home Secretary Theresa May revealed details of the cap in a statement to MPs this afternoon.

Overall, the number of people allowed to come and work in the UK from outside the EU will be cut from around 196,000 to the “tens of thousands”, Mrs May explained.

The figure is a cut of 6,300 on the equivalent figure for 2009, and is much stricter than the cap of 43,700 recommended by migration advisors last week.

Passport Control

So how will the cap work?

– It will not include employees transferred by their companies from another country if their salary is more than £40,000

– In the new year, ministers will produce proposals to reduce the number of family members who can join immigrants already living in the UK.

– The Home Secretary said the number of “tier one” people – highly skilled workers looking for a job, will be cut from 13,000 to 1,000

– The number of “tier two” workers – those who already have a job – will rise by 7,000

Mrs May said the system of trying to attract the brightest and the best had not worked.

“At least 30% of tier one migrants work in low-skilled occupations such as stacking shelves, driving taxis or working as security guards and some don’t have a job at all,” she said.

The announcement follows weeks of tense discussions between Tories and Lib Dems.

Immigration has long been a contentious issue, and one on which the two parties do not agree.

While the cap was a flagship Conservative policy during the general election, the Lib Dems opposed it, favouring instead better border control, entry and exit checks, and a Regional Points-Based Immigration System.

On their website, the Lib Dems say: “Our National Border Force would have the power of arrest. We would also introduce a Regional Points-Based Immigration System to ensure that immigration is targeted on areas that are under-populated and want more immigration, like Scotland.”

The Conservative government pledged to reduce immigration to the levels of the 1990s – tens of thousands a year, instead of the hundreds of thousands a year.

Clegg and Cameron battled over immigration during the televised leaders debates, and the issue remains controversial now.

Passport Control @ DXB

Earlier this month the Commons home affairs select committee said the proposed annual cap on immigration will cover fewer than 20% of long-term migrants to Britain. They said it will make little difference to overall immigration and may do serious damage to Britain’s knowledge economy.

There has been intense lobbying from businesses. The Confederation of Indian Business and some British financial leaders have also expressed concern that the cap would prevent entrepreneurs from coming to Britain.

However, Sir Andrew Green, of the Migration Watch think tank, said of the cap: “This is the first time in British history that any government has set a broad policy objective for net migration and we have to do that.”

Appearing on BBC Radio 4 Today programme, Green added: “We must reduce immigration – our population is heading for 70 million in 20 years, 68% of that, more than two-thirds, is down to immigration.”

Channel 4 News – Immigration Cap: how the numbers might add up

Parking tickets could rise to £120, as councils in England and Wales lobby the government for the right to increase the amount they charge in fees.

A BBC investigation has revealed some local authorities want to bring their fines in line with London, where the highest levy for non-payment offences is £120. Penalties outside the capital can only reach a maximum of £70.

While car parking charges are controlled by individual councils, outside London the amount they can charge in penalties for drivers who break the rules is set by government.

smart car parking 101

In towns outside London parking charges have risen but fines have been static for nearly a decade.

The British Parking Association (BPA) has backed the calls, and claimed there needs to be a greater difference between the amount it costs to park a car all day and the total amount a motorist can be fined. The Association says current fines are not enough of a deterrent.

Transport Minister Norman Baker said: “I think motorists will worry that this is perhaps a covert attempt to raise money from them unfairly. That’s not the Department for Transport’s objective in any shape or form.”

It has not been revealed which councils have applied for the increase in penalty charges.

Tony Travers from the London School of Economics told the BBC how councils have been encouraged by the government and the audit commission to push up their charges. “They can’t raise income from parking precisely in order to subsidise other services,” he said. “But they are allowed to put up their charges if for example traffic levels are increasing.

“They will undoubtedly make decisions that maximise revenue at a time when other sources of income are falling away.

“The idea of councils looking for completely new ways of delivering services and of charging for them hasn’t gone away because of course what these councils have to do is to deliver central government’s cuts locally and they’re trying to minimise the consequences of doing that.”

Lobbyist Gavin Devine echoed this on his Twitter account. “Furore over council parking fines story is ridiculous,” he said. “What exactly do people think will happen when council budgets are cut?”
Don't park in Islington pt 2

Law PhD researcher MattB_UK wrote on Twitter: “I hope the government reject council plans to raise parking fines. It shouldn’t be used for revenue regeneration”.

One reader wrote on the BBC’s Have Your Say page: “The motorist shouldn’t have to pay any fee to park on the road we pay ROAD FUND LICENCE the motorist PAYS for the roads.”

Another wrote: “Moneymaking – pure and simple”.

Other readers took a very different view: “This won’t affect you if you parking legally!” said one. “But the fine at the moment is so low that is does not deter people. If you break the law you should pay, and you can’t complain that the fine is too much.”

David Cameron’s enterprise advisor Lord Young has resigned after claiming most Britons “never had it so good” during the recession.

Young quit at lunchtime only two hours after Cameron had accepted his apology, and appeared to accept that he would stay in post.

The multi-millionare sparked outrage after giving an interview to the Daily Telegraph, in which he said low interest rates meant “for the vast majority in the country today, they have never had it so good ever since this recession – this so-called recession – started”.

Lord Young of Graffham also said those complaining about the cutbacks “think they have a right for the state to support them”.

Overnight Downing Street had described Lord Young’s remarks as inaccurate and offensive. His remarks had sparked criticism from Labour and silence from Liberal Democrats.

The Labour leader Ed Miliband said: “Lord Young is right to go. I think his remarks are frankly disgraceful and many of the people who are struggling up and down this country with the consequences of the recession that we had, the consequences of the spending cuts that we are seeing, will be insulted by his comments.”

However, in many ways Lord Young was right in what he says.
Lord Young

Firstly, his claim that 100,000 job losses are within “the margin of error” in the context of the 30 million-strong job market is quite correct. In an excellent blog, stumblingandmumbling explains how the ONS estimates that the sampling variability of its estimate of employment is 152,000. Indeed, the BBC’s Chris Buckler explains how interest rates have been at 0.5% for the last 18 months, compared to 20 years ago, when they were at a peak of 15%.

Secondly, lets take a look at Young’s suggestion that “most people with a mortgage who were paying a lot of money each month, suddenly started paying very little each month. That could make three, four, five, six hundred pounds a month difference.”

In fact, since December 2007  the average standard variable mortgage rate has dropped from 7.68% to 3.93%. With the average mortgage just over £100,000 (11.1 million mortgages with total debt of £1.2 trillion) this implies a monthly saving of around £350. Those on fixed rates will have benefited less. Others, some tracker mortgages, will have gained more.

However, the gains are extremely minor compared to the overwhelming amount of people who have lost out in the recession. Primarily there are those who have lost their jobs – a net 876,000 full-time jobs have gone since the cyclical peak. Furthermore, since December 2007 average earnings have risen 3.7%, but the constant tax CPI has risen 7.6%. Furthermore, in real terms people’s disposable incomes have fallen over the past year. Job insecurity is a genuine concern for thousands, and it is impossible to deny we are experiencing an age of austerity.

Last night Lord Young said he had written to Cameron to “apologise profoundly” for his “inaccurate and insensitive” comments.

“I deeply regret the comments I made and I entirely understand the offence they will cause,” he said. “They were both inaccurate and insensitive. Low mortgage interest rates may have eased the burden for some families. But millions of families face a very difficult and anxious future as we come to grips with the deficit. I should have chosen my words much more carefully.”

One lorry driver from Barnsley told the BBC: “He’s living on cloud coo coo land isn’t he? Everybody’s struggling aren’t they? He’s got to come into the real world.”

Lord Young’s comments have come at the worst possible time for the coalition government. The Conservatives, desperate to break away from the long-standing image of being the “nasty party”, have continually reiterated how “we are all in this together”. The comments of Lord Yong completly contradict this, and have sparked outrage across the country.