Scotland to be given income tax control

The Labour Party has opted to drop its opposition to Scotland being allowed to make income tax decisions.

It means all three major parities now support full devolution of income tax and the Scottish parliament is expected to be offered the option to set its own policies in the subject.

Jim Murphy, the favourite to be the next Scottish Labour leader, is set to announce the decision ahead of the publication of Lord Smith’s report of the new powers for the Scottish body.

“It will create the clear connection between the raising of taxes and the spending of revenues, which is missing at present,” explained Mr Murphy.

The support could also mean that Labour will campaign in Scotland for the reintroduction of the 50p top rate of tax – something the Scottish National Party has opposed in the past.

Former chancellor Alistair Darling has raised concerns about devolving income tax decisions and believes it could have a significant impact in the long term.

“For the first time in 300 years, a UK government would no longer have control over its power to raise income taxes,” he explained.

“It could be left in a position where it determines the rate of income tax only to find it impossible to implement in Scotland, Wales and Northern Ireland.”

In September, Scotland’s residents voted in a historic referendum, with 55 per cent of the vote in favour of remaining part of the UK, although only four out of 32 local government areas voted Yes to splitting from the UK.

Dundee provided the strongest Yes vote with 57 per cent, but the other three were in the west of Scotland, where Glasgow and its neighbours West Dunbartonshire and North Lanarkshire saw a majority vote in support of independence.

Another west of Scotland district, Inverclyde, almost joined them, with 49.92 per cent supporting Scotland breaking away from the UK.

There was little doubt the vote led to a number of concerns in the business world. In a number of cases, Scottish firms did confirm they would relocate to England if the vote had gone the other way.

RBS said: “The announcement we made about moving our registered head office to England was part of a contingency plan to ensure certainty and stability for our customers, staff and shareholders should there be a ‘Yes’ vote.

“That contingency plan is no longer required. Following the result it is business as usual for all our customers across the UK and RBS.”

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