David Cameron reignites English votes row as Scotland gets new tax powers

http://www.theguardian.com/uk-news/2014/nov/27/david-cameron-scotland-power-devolution-tax-row

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David Cameron is risking a fresh constitutional clash with Labour and the Liberal Democrats after he announced that the Tories want to bar Scottish MPs from voting on some tax decisions at Westminster that relate only to England.

Amid signs of an English backlash at Westminster, after a historic all-party deal in Scotland to give Holyrood direct control over £14bn worth of tax and welfare policy, Downing Street said that the principle of “English votes for English laws” would apply to some tax matters.

The intervention by No 10 was immediately disowned by Alistair Carmichael, the Scotland secretary, and by Labour, which warned that it would be dangerous to try to unpick a UK-wide budget. The Lib Dems said No 10 was outlining Tory policy.

The row broke out after Cameron said he would implement in full the proposals of the cross-party Smith commission introducing radical changes to Britain’s tax and welfare system in the wake of the Scottish independence referendum.

The commission said the Scottish parliament should have the right to set income tax bands and rates, though the UK government would still set personal tax allowances.

Cameron said the report showed the need to limit voting rights of Scottish MPs on some matters.

“I think the report makes the case for English votes for English laws unanswerable and we will be taking action on that shortly,” he said. “Taken together this extra devolution for Scotland and dealing with all the issues in our United Kingdom will make our United Kingdom stronger.”

Cameron’s spokesman made clear Scottish MPs would be barred from voting on some matters in a UK budget relating solely to England. The spokesman said: “There are elements where you have seen devolution on financial matters and in that respect I would say the principle of Evel [English votes for English laws] applies in that context as well.”

Labour and the Lib Dems challenged No 10 and pointed to a declaration in the Smith report that the “UK will continue to decide the UK’s budget, including income tax”. The parties said the Tories had no authority from the report to stop Scottish MPs voting on financial matters.

But No 10 pointed to the need to address concerns of English voters. Sir Edward Leigh, the Tory MP for Gainsborough, told the commons: “Unfortunately, there appear to be a number of lacunae, inconsistencies and unanswered questions in the report. If we rush this process, we are in danger of throwing petrol on the embers of English resentment and Scottish separatism.” Cameron said a new command paper setting out options for introducing “English votes for English laws” would be published before Christmas. The new powers would bar Scottish MPs from voting on the detail of any income tax changes for England, Wales and Northern Ireland after Holyrood was given direct control of nearly all Scottish income taxes, without losing their right to vote on a final budget package.

The new package will allow the Scottish parliament to raise top rate income tax to 50p – a move endorsed publicly for the first time by Scotland’s first minister Nicola Sturgeon – or to cut taxes below English rates; abolish air passenger duty, undercutting airports in northern England, and abolish the bedroom tax. The Treasury said that the total package meant the Scottish parliament was one of the world’s most powerful devolved legislatures. Once the Smith powers were in place, it would be the fifth most powerful devolved parliament on tax powers in the OECD and the third wealthiest in the OECD on overall spending.

But Scotland’s new first minister, whose party endorsed the Smith findings, made clear that the cross-party agreement did not go far enough. Sturgeon told the Scottish parliament: “I don’t want just to have the power to top up Tory cuts to welfare. I want to have the power in our hands to create a better system, to lift people out of poverty, to get our economy growing. That’s the kind of powerhouse parliament I want. Sadly it is not the one that is going to be delivered.”

William Hague, the leader of the Commons, then challenged Labour to take part in cross-party talks on cutting Scottish MPs’ voting rights, telling the Commons that he was “very much in favour” of a vote on the issue within months.

Downing Street sources admitted, however, that legislation to change Westminster’s voting rules would only come after the general election and assumed that the Tories regained power. Any vote before the election would be symbolic, they said.

After first insisting that only limited income tax powers could be devolved, Labour leader Ed Miliband and shadow chancellor Ed Balls agreed to devolve income tax to Holyrood fully only after winning assurances that Scottish MPs would not lose their rights to vote on a UK budget. Labour sources said they expected the UK government to honour that deal.

The Labour leader believes that the future status of Scottish MPs at Westminster should be decided carefully in a convention after the general election. He will make clear during a visit to Scotland that the concerns of English voters have to be addressed when he says that “devolution does not stop at the border”.

Miliband will say: “We will bring power closer to people across the whole country. Of course, devolution will not be precisely the same in every part of Britain. Because devolution does not stop at the Scottish border. It must be shaped by local people according to local needs. But it must happen.”

But the Scottish National party’s deputy leader, Stewart Hosie MP, accused Labour of being duped by the Tories, who were secretly plotting to undermine that central principle of the Smith agreement that Scottish MPs would still have full voting powers over a UK budget. “English votes for English laws is David Cameron’s real agenda, and the Labour party look extremely foolish for cuddling up to the Tories in the no campaign during the referendum,” Hosie said.

The plans in the Smith report include:

• Giving the Scottish parliament full control over nearly £11bn worth of income tax collected in Scotland, allowing MSPs to cut or raise income tax rates, but not to affect tax rates on shares or savings, or the level of personal allowance – the starting level at which income tax is paid, currently set at £10,000.

• Allowing Holyrood to alter the housing elements of the new Universal Credit benefits payment, empowering MSPs to abolish the bedroom tax in Scotland, reintroduce weekly payments and increase housing payments

• Giving Holyrood the right to introduce new benefits and control winter fuel and cold weather payments, attendance allowance, disability living allowance and other benefits, taking the total Scottish welfare package to more than £2.5bn.

• Full control over air passenger duty, opening up competition between airports in Scotland and northern England

• Assigning 50% of all VAT revenues in Scotland to the Scottish parliament.