Now that Scotland has voted ‘no’, MPs at Westminster are raising serious questions over the promises of more autonomy for Scotland, and asking where England fits into it all. One of those MPs, Conservative John Redwood, has written a blog post asking for clarity on what the new devolution deal will mean for England.
Will the country that forms 86 percent of the UK’s population gain a form of autonomy for itself, or will it continue subsidising voters north of the border?
Now the negotiating begins in earnest to try to settle the country around a new devolution settlement. Of course that settlement has to be fair to England as well as to Scotland. Today I want to ask how the main parties think the money will be managed for Scotland.
During the campaign the Better Together parties appeared to offer more tax raising powers and more borrowing rights for Scotland. The three leaders – and Mr Brown – also clearly promised to keep the Barnett formula so Scotland can carry on spending more per head than the rest of the UK. How do these three things gel? What do they mean for English taxpayers?
Under the current dispensation Scotland can raise additional Income Tax by imposing a 3p in the pound surcharge and spend that. It has chosen not to do so. It can borrow an additional £2.2bn for additional capital spending, with permitted annual increments of £240 million.
The Liberal Democrats and Conservatives offered to Scotland control over all its Income Tax. Labour offered control over three quarters of standard rate Income tax. Presumably the grant will be reduced by the amount Income Tax raises in Scotland on the handover of the tax raising power. Presumably this will be projected forward, so if Scotland enjoys a windfall of extra Income Tax or if it changes rates to raise more Income Tax it will benefit from that.
Read more at John Redwood’s Diary
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