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Smith Commission: Labour anger grows at Miliband’s U-turn on ceding powers to Holyrood Smith Commission: Labour anger grows at Miliband's U-turn on ceding powers to Holyrood
(about 12 hours later)
Scottish MPs would be banned from voting on tax changes for the rest of the UK under sweeping plans to be outlined by David Cameron.Scottish MPs would be banned from voting on tax changes for the rest of the UK under sweeping plans to be outlined by David Cameron.
The landmark change, which could prevent a future Labour government winning Commons approval for its own budget, would mirror changes proposed today to hand control of income tax bands and rates to the Scottish Parliament. Labour fears Mr Cameron’s move would create “two classes of MP” and put the 307-year Union at risk.The landmark change, which could prevent a future Labour government winning Commons approval for its own budget, would mirror changes proposed today to hand control of income tax bands and rates to the Scottish Parliament. Labour fears Mr Cameron’s move would create “two classes of MP” and put the 307-year Union at risk.
There were bitter recriminations in Labour’s ranks after Ed Miliband backed proposals from a cross-party commission chaired by Lord Smith of Kelvin, which also called for some welfare policies to be devolved to the Edinburgh parliament. Its historic report was seen as a step towards a federal UK but politicians were divided over whether the reforms would save the Union or lead to its eventual break-up.There were bitter recriminations in Labour’s ranks after Ed Miliband backed proposals from a cross-party commission chaired by Lord Smith of Kelvin, which also called for some welfare policies to be devolved to the Edinburgh parliament. Its historic report was seen as a step towards a federal UK but politicians were divided over whether the reforms would save the Union or lead to its eventual break-up.
Some Labour MPs expressed fears that the party leadership, in a desperate attempt to avoid a meltdown in Scotland at next May’s general election, had signed a “suicide note” that would neuter a future Labour government.Some Labour MPs expressed fears that the party leadership, in a desperate attempt to avoid a meltdown in Scotland at next May’s general election, had signed a “suicide note” that would neuter a future Labour government.
Until now, Labour has strongly opposed Conservative and Liberal Democrat plans to cede power over income tax. But Mr Miliband made a major U-turn as it became clear that Labour could suffer a crushing defeat in Scotland next May. The Scottish National Party was bound to accuse it of breaking the promise by the three Westminster parties for more devolution if Scots voted No to independence in their September referendum.Until now, Labour has strongly opposed Conservative and Liberal Democrat plans to cede power over income tax. But Mr Miliband made a major U-turn as it became clear that Labour could suffer a crushing defeat in Scotland next May. The Scottish National Party was bound to accuse it of breaking the promise by the three Westminster parties for more devolution if Scots voted No to independence in their September referendum.
Mr Cameron was “delighted” with the Smith Commission report, and denied it put the Union at risk: “I think the report today also makes the case for English votes for English laws unanswerable and we will be taking action on that shortly.”Mr Cameron was “delighted” with the Smith Commission report, and denied it put the Union at risk: “I think the report today also makes the case for English votes for English laws unanswerable and we will be taking action on that shortly.”
The Prime Minister’s official spokesman said: “There is an important principle about English votes for English laws. His view is that it should apply to financial matters.”  The Prime Minister’s official spokesman said: “There is an important principle about English votes for English laws. His view is that it should apply to financial matters.”  
A final decision will depend on who is in power after the general election, as the devolution law will not be introduced until after that.A final decision will depend on who is in power after the general election, as the devolution law will not be introduced until after that.
Some senior Labour figures are worried that Mr Miliband has stored up problems for a future Labour government. One said: “The SNP has got us on the run. Cameron will exploit this.” Some senior Labour figures are worried that Mr Miliband has stored up problems for a future Labour government. One said: “The SNP has got us on the run. Cameron will exploit this.” 
Lord Smith of Kelvin (left) arrives to present the the Smith Commission report in Edinburgh (Getty Images) A Labour backbencher said: “We have not thought through the implications. This will return to haunt us.”Lord Smith of Kelvin (left) arrives to present the the Smith Commission report in Edinburgh (Getty Images) A Labour backbencher said: “We have not thought through the implications. This will return to haunt us.”
Alistair Darling, the former Chancellor, told the Commons that the changes must not undermine “the integrity and the strength of the UK” and the fiscal union must remain one of its central pillars.Alistair Darling, the former Chancellor, told the Commons that the changes must not undermine “the integrity and the strength of the UK” and the fiscal union must remain one of its central pillars.
Ed Balls, the shadow Chancellor, made clear his doubts in an interview in Parliament’s The House magazine before the Smith Commission reported. He said there must be “a UK income tax system” without weakening “the pooling and sharing of risks”, adding: “It’s no secret it’s my job to be concerned about these things."Ed Balls, the shadow Chancellor, made clear his doubts in an interview in Parliament’s The House magazine before the Smith Commission reported. He said there must be “a UK income tax system” without weakening “the pooling and sharing of risks”, adding: “It’s no secret it’s my job to be concerned about these things."
But Labour claimed Mr Balls won an important concession as the Commission proposed that the personal tax threshold would remain a matter for the UK chancellor. Other Labour MPs said Mr Miliband had no choice but to embrace income tax devolution.But Labour claimed Mr Balls won an important concession as the Commission proposed that the personal tax threshold would remain a matter for the UK chancellor. Other Labour MPs said Mr Miliband had no choice but to embrace income tax devolution.
“This might keep our losses in Scotland down to between seven and 12 seats,” one said, reflecting Labour’s gloom about its election prospects.“This might keep our losses in Scotland down to between seven and 12 seats,” one said, reflecting Labour’s gloom about its election prospects.
The Scottish parliament in Edinburgh now has more devolved power (David Cheskin/PA) In a speech in Glasgow tomorrow, Mr Miliband is expected to say that a Labour government would include the Smith Commission’s proposals in its first Queen’s Speech. He will tell the Scottish people: “We have listened. We have learned. And we have changed.”The Scottish parliament in Edinburgh now has more devolved power (David Cheskin/PA) In a speech in Glasgow tomorrow, Mr Miliband is expected to say that a Labour government would include the Smith Commission’s proposals in its first Queen’s Speech. He will tell the Scottish people: “We have listened. We have learned. And we have changed.”
The Labour leader will argue that devolution must “not stop at the Scottish border” and “real powers” devolved to English cities and counties. But he will reiterate his call for a constitutional convention to consider the role of Scottish MPs at Westminster – which has been criticised as an attempt to kick the issue into the long grass.The Labour leader will argue that devolution must “not stop at the Scottish border” and “real powers” devolved to English cities and counties. But he will reiterate his call for a constitutional convention to consider the role of Scottish MPs at Westminster – which has been criticised as an attempt to kick the issue into the long grass.
The devolution plans will now become the key dividing line in Scotland at the general election. Nicola Sturgeon, Scotland’s new First Minister, rejected the Smith Commission’s proposals, saying they would mean “continued Westminster rule” with 70 per cent of tax and 85 per cent of social security would still be controlled in London.The devolution plans will now become the key dividing line in Scotland at the general election. Nicola Sturgeon, Scotland’s new First Minister, rejected the Smith Commission’s proposals, saying they would mean “continued Westminster rule” with 70 per cent of tax and 85 per cent of social security would still be controlled in London.
Mr Cameron came under pressure from Conservative MPs to act quickly on “English votes for English laws” and he is unlikely to disappoint them.Mr Cameron came under pressure from Conservative MPs to act quickly on “English votes for English laws” and he is unlikely to disappoint them.
John Redwood, the former Cabinet minister, said the it would be "unjust" for Scottish MPs to vote on income tax rates in the rest of the UK. He asked: "How unjust would it be if they decided to impose a 22p or 23p standard rate income tax on us in England while the Scottish Parliament is having a 20p rate in Scotland?"John Redwood, the former Cabinet minister, said the it would be "unjust" for Scottish MPs to vote on income tax rates in the rest of the UK. He asked: "How unjust would it be if they decided to impose a 22p or 23p standard rate income tax on us in England while the Scottish Parliament is having a 20p rate in Scotland?"
Some Tories warned that handing more powers to Scotland would fuel demands for independence. Sir Gerald Howarth said they “could inflame pro-independence sentiment,” and Sir Edward Leigh said they could pour "petrol on the embers of English resentment of Scottish separatism".Some Tories warned that handing more powers to Scotland would fuel demands for independence. Sir Gerald Howarth said they “could inflame pro-independence sentiment,” and Sir Edward Leigh said they could pour "petrol on the embers of English resentment of Scottish separatism".