**** George whining about fairness again. Having second thoughts on discouraging a yes vote are we George? *** Chancellor George Osborne has threatened a constitutional crisis after the next election by challenging the right of Scottish Nationalist MPs to hold the balance. With recent polls suggesting that the SNP could win more than 40 seats north of the Border, Mr Osborne told the Treasury select committee that it would be wrong for a UK Chancellor “to be beholden” to Scottish Nationalist votes. First Minister Minister Nicola Sturgeon has already declared that her party would only make a deal to prop up a Labour government and would seek to keep the Tories out of office. However, in his evidence to the committee on more powers Mr Osborne suggested it would be wrong for all Scottish MPs to vote on aspects of the Budget after most of income tax is devolved to Scotland. In his evidence Mr Osborne also warned that devolution would mean a Scottish government would have to bear any losses resulting from its decisions and agreed that devolution of income tax could lead to tax competition in the UK. Mr Osborne’s comments on the SNP acting as power brokers after the election in May came amid concerns that the Scottish and UK governments would still be negotiating on how to impliment the recommendations of the Smith Commission on further devolution. He said it would be wrong for a Chancellor to be “beholden” to the SNP to get his Budget through while there were still question marks over the impact of Scottish Government decisions and whether the rest of the UK should make up losses for decisions made in Holyrood. Mr Osborne told MPs: “There’s a very particular task for the next government, which is to negotiate this fiscal programme, which is hopefully going to endure for a long time, and it’s very important that that negotiation is conducted in a way that is fair to the whole of the United Kingdom. “If you had a Chancellor of the Exchequer who could only get their way because they were relying on Scottish Nationalist votes to get their way in the House of Commons, I don’t think that would be fair to the rest of the United Kingdom.” The comments provoked a row with Nationalists who pointed out the Conservatives currently run large parts of Scottish life with just one MP north of the Border. SNP strategic communications director Kevin Pringle tweeted: “But he [Osborne] thinks it entirely fair for the Tories to impose policies on Scotland from Westminster while only having one MP here!” An SNP spokesman said: “It is seems incredible that the Chancellor wants to ban Scottish MPs voting on parts of the entire UK Budget simply because of the incomplete devolution of Income Tax rates and bands. “Until Income Tax is devolved in full and with it responsibility for savings and investment income, it is illogical and wrong for the Chancellor to carve Scottish MPs out.” The Chancellor also suggested that Holyrood will need to operate under strict rules when it gets more powers on benefits and income tax. Mr Osborne said some form of “balanced budget” rule may be needed to ensure the Scottish government did not use the new powers to live beyond its means. The Chancellor said: “Of course we wouldn’t allow Scotland to go bust, but in order for that situation not to arise we would have to agree fiscal rules, independently verified, to make sure that doesn’t happen, so that we never actually reach that situation where the sovereign backstop has to be deployed.” He said a form of balanced budget rule, which would not necessarily require a balance every year, was “something that will operate and will be very solid and robust”. He warned that creating a second “top up pension” in Scotland would “go against the spirit of the Smith Commission” although Lib Dem Chief Treasury Secretary Danny Alexander has conceded Holyrood would have that power. But referring to Scottish Labour promises to use new powers for higher tax and spend policies, Mr Osborne warned: “Scotland would live with the consequences of having imposed a punitive rate of income tax, so if it imposed a punitive rate of income tax and as a result people left Scotland, part of the concept of further devolution is that Scotland would live with the consequences of that action, would take responsibility for that action.” Although he accepted that it would also “accrue the benefits” and not share of decisions it made that increased the revenue for Scotland. On the prospect of tax competition, Mr Osborne said: “Ultimately that is a decision primarily for the Scottish Parliament and the Scottish government as to whether they pursue that or not. But he added: “I think it is quite interesting that off the back of the changes we announced at the Autumn Statement to stamp duty that then led to the Scottish government saying it would revisit its proposals on stamp duty. “You could say that that is a bit of tax competition in action.” Mr Osborne conceded there could be some impact of the plans for further devolution on regional airports in England if Holyrood lowered its Air Passenger Duty (APD), citing HMRC research that predicts Manchester would lose around three per cent of its traffic and Newcastle around 10 per cent. “I think these are manageable but I think (the Conservatives and Labour) could work to try and find a solution,” he added.
Posted on: Tue, 20 Jan 2015 20:27:09 +0000
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