Bedroom tax could only be abolished with consent of the Westminster Government

Draft legislation which will see ‘an unprecedented rise in the powers of the Scottish Parliament’ was published by the UK Government today – but the Scottish Government says an ‘urgent rethink’ is needed if the paper is to deliver all the Smith Commission proposals.

A Command Paper including the 44 draft clauses sets out the new powers which will come to Holyrood following the agreement reached by the Smith Commission last year – the first time all of Scotland’s main political parties have agreed what the next chapter of devolution should look like.

Prime Minister David Cameron said: “In September the people of Scotland came out in record numbers to decide the future of the United Kingdom.

“They voted clearly and decisively to keep our family of nations together. But a ‘no’ vote did not mean ‘no change’.

“The leaders of the other main political parties and I promised extensive new powers for the Scottish Parliament – a vow – with a clear process and timetable. And now, here we have it: new powers for Scotland, built to last, securing our united future.

“I pay tribute to the leadership of Robert Smith for this historic agreement and with all five of Scotland’s main political parties at the table, it was a devolution first.”

The clauses form the final part of the promise made to the people of Scotland on additional devolution and were published ahead of the Burns Night deadline.

As a result, Holyrood will become one of the most powerful devolved parliaments in the world. It will be responsible for more than 60% of Scottish spending while retaining the safety and security of being part of the wider UK.

Examples of Holyrood’s new powers will include new income tax bands, areas of welfare, some employment programmes, further borrowing powers and air passenger duty, as well as receiving a proportion of VAT. Other elements of the agreement include stating in law that the Scottish Parliament and Scottish Government are permanent institutions.

The UK and Scottish Governments have also taken steps to produce a Section 30 order which will allow 16 and 17 years olds to vote in the Scottish Parliament elections in 2016.

The draft clauses will be the subject of debate at both the UK and Scottish Parliaments. The cross-party nature of the agreement means whoever forms the next UK Government after the General Election will turn this draft legislation into law – a new Scotland Act.

Scottish Secretary Alistair Carmichael said: “The UK Government has kept its end of this historic bargain and delivered the next chapter in devolution for Scotland. For the first time, it has backing across the political spectrum with all of Scotland’s main parties committed to the package of new powers for Scotland. That means this is an agreement which is truly built to last.

“It also strikes the right balance of powers for Scotland as part of the UK. That is what the majority of people want to see and these new powers will create a stronger Scotland and a stronger UK. The Scottish Parliament will have a range of new powers in addition to the significant ones for which it already has responsibility.

“That means choices which can reflect distinctive Scottish needs while keeping the safety and security of a wider UK in key areas such as pensions and defence.”

Chief Secretary to the Treasury Danny Alexander said: “”The people of Scotland voted to stay in the UK because we wanted to ensure that we remained part of one of strongest unions the world has ever known. As promised, the UK has today delivered unprecedented new powers for Scotland, which make it one of the most powerful devolved administrations in the OECD, but underpinned by a robust framework that ensures we, the people of Scotland, can continue to contribute to and benefit from the UK’s economic strength.

“The next steps are clear: the Scottish Government and Parliament will soon have these powers, and it needs to ensure that it implements them in a way that works for Scotland, including by looking at further devolution within the country, as recommended by Lord Smith.

“Devolution doesn’t just mean the flow of powers from one Parliament to another. Devolution is about empowering our regions and our communities across Scotland and the UK.”

While the Westminster unionist parties have welcomed the draft legislation the mood at Holyrood is markedly different – the SNP government sees the paper as a ‘significant watering down’ of the Smith Commission proposals.

First Minister Nicola Sturgeon says the UK Government will hold a veto over key devolved powers proposed by the Smith Commission, including the ability to abolish the bedroom tax, under the proposals published today. She said an urgent rethink was required across several of the legislative clauses outlined by the Prime Minister if the new legislation is to deliver on both the letter and the spirit of the Smith Commission proposals.

Ms Sturgeon said aspects of the legislation represented progress but proposals in areas such as welfare, employment support and capital borrowing appeared to be a “significant watering down” of what was promised by the Smith Commission.

The First Minister highlighted three key areas that must be addressed immediately by the UK Government if the legislation is to meet the spirit and the content of the agreement set out by Lord Smith:

• The welfare provisions do not enable the Scottish Parliament to create new benefit entitlements across devolved areas and require the approval of UK ministers for any changes to Universal Credit – including the action needed to end the bedroom tax.
• Proposals for the full devolution of unemployment support fall well short of what was promised, hampering efforts to address joblessness by devolving only a section of the current support network and leaving important levers in the hands of UK ministers.
• Scotland would be tied to the UK’s current austerity fiscal framework, and under the plans set out could see capital borrowing powers replace – and not augment – the existing capital grant.

The First Minister said: “Throughout this process, I have been clear that, despite it falling short of the real home rule powers we need to create jobs and tackle inequality, the Scottish Government would be a constructive participant, working with the UK Government to bring forward what Lord Smith recommended.

“The legislation published today does not represent the views of the Scottish Government, but it does represent some progress. However, too much of what the Prime Minister has set out imposes restrictions on the recommended devolved powers and would hand a veto to UK ministers in key areas.

“For example, the proposals on welfare do not allow us to vary Universal Credit without the permission of the UK Government. That means – under the current proposals – we will not have the independence to take action to abolish the bedroom tax.

“At the same time, the power argued for by stakeholders to create new benefit entitlements in any devolved area has simply not been delivered, while the command paper makes clear that, pending devolution of disability support, the roll-out of personal independence payments and the cut to spending on disability benefits will continue.

“This cannot, under any interpretation, represent the meaningful progress on the devolution of the powers we need to design a social security system that meets Scotland’s needs.

“The support for unemployed people also falls short of what Lord Smith recommended, with the provisions set out today narrowly focused on existing schemes.

“And the paper confirms that the Scottish Government will still have to work within the framework of austerity being imposed by the UK Government. It also suggests that Scotland’s capital grant could be replaced by borrowing powers and not augmented by them as was clearly the intention of the Smith proposals.

“In these crucial areas the clauses set out today appear to be a significant watering down of what was promised by the Smith Commission and need an urgent rethink by the UK Government.”

Ms Sturgeon continued: “We remain committed to this process, despite the difficulties we have experienced in getting information in a timely fashion and we will continue to work with the UK Government and other stakeholders to ensure that the changes are made ahead of the Bill being taken through Westminster.

“Ultimately, however, the decision on whether the Smith proposals go far enough in delivering the powers we need to create prosperity, tackle inequality and protect our public services will be for the people of Scotland to take.”

Clearly, there’s still some serious talking to be done.