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David Cameron, UK prime minister, endorsed the proposals of a commission led by Lord Strathclyde, a former leader of the House of Lords, to give the Scottish parliament the power to set income tax bands and rates. “There is no reason why the changes shouldn’t happen early in the next parliament," Mr Cameron said.
The proposals from the Conservative party follow promises from Labour and the Liberal Democrats. The UK’s three main parties are all now committed to major constitutional changes if Scotland votes to stay in the UK on September 18.
Polls say many voters favour more devolution over independence or the status quo.
Ruth Davidson, Scottish Conservative leader and a former opponent of devolution, said giving the Scottish parliament more power over tax and spending would strengthen the union and make it easier for her party to focus campaigning on lowering taxes.
“This document offers a radical vision for a more powerful Scottish parliament, a more responsible Scottish parliament,” she said.
“By providing for a more stable distribution of powers, it is a thoroughly unionist document.”
The commission also suggested that control of air passenger duty be transferred to Edinburgh, that it be assigned a share of value added tax receipts raised in Scotland and take over elements of welfare spending, such as housing benefit.
Devolving control of income tax and air passenger duty would make the Scottish government responsible for taxes equivalent to about 40 per cent of its budget, according to Alan Trench, an adviser to the commission.
If the Strathclyde proposals were implemented in full, devolved taxes and the Scottish share of VAT would amount to about half the budget, Mr Trench found.
The Tory proposals on income tax match those of the Liberal Democrats and go further than those of Labour, which has said Scotland should be barred from cutting taxes only for the rich in order to prevent a “race to the bottom” with Scotland and the rest of the UK competing to attract wealthy individuals.
Ms Davidson said she would welcome cross-border competition on tax.
Conservatives hope the devolution proposals will help revitalise the party in Scotland, where it has struggled since the early 1990s.
Ms Davidson said the changes would not lead to any alteration of the “Barnett Formula” for calculating the block grant from Westminster, allowing Scotland to continue to receive per capita spending that is considerably higher than the UK average.
Nicola Sturgeon, Scotland’s deputy first minister, said there was now a “desperate bidding war” among pro-union parties.
But she said voters should remain sceptical. “A Yes vote in September is the only way to guarantee those powers are delivered.”
The latest poll by Ipsos Mori found support for a Yes vote had risen four percentage points since February to 36 per cent, while the number of people saying they would vote against independence had fallen three points to 54 per cent; 10 per cent said they were undecided.
Peer persuades party on merits of devolved powers
The last time Lord Strathclyde was involved in enacting major constitutional change to British politics, some believed his heart was not really in it.
In 2012, the then Conservative leader in the Lords was given the job of driving through reforms to turn the upper chamber into a mostly elected House, something that looked, and proved, impossible.
Some in the coalition believed that failure was partly due to Lord Strathclyde himself. He told the Financial Times during its passage that the legislation would make peers “more aggressive” in challenging the Commons. This fuelled dissent among Tory MPs who ended up scuppering the bill entirely.
In the past year, the former minister has taken on an almost equally Herculean task: persuading his party of the benefits of devolution for Scotland, something it has opposed for generations.
This time, however, the peer’s gregarious charm appears to have worked its magic. Hours after Lord Strathclyde unveiled his plans to devolve new powers to Scotland, including almost complete control of income tax, they were backed by the party in Westminster and Holyrood.
The fact that the plans have largely been accepted by the party are in part a measure of the esteem in which the long-serving peer is held. Lord Strathclyde was given his first frontbench role by Margaret Thatcher more than 25 years ago, and was one of only 90 hereditary peers to be elected to remain in the House of Lords after 1999.
While his resignation as leader in the Lords last year seemed to signify a retreat from the heat of front-bench politics, Lord Strathclyde might find that entering the turbulent debate on independence could prove his most taxing role yet.
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