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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.


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