Reform Scotland makes 'devolution plus' proposal

Money raising powers are at the heart of the Scotland Bill

Extensive tax-raising powers could be given to Holyrood without Scotland leaving the UK, a think-tank has said.

Reform Scotland believes its "devolution plus" plan would make the parliament solely responsible for raising the money it spends.

Its proposal would see most welfare benefits being transferred, but state pensions, sickness and maternity pay staying with Westminster.

Currently the Scottish government receives a block grant.

That would be removed if Reform Scotland's plans were adopted.

Reacting to the think-tank's proposals, a spokesperson for Finance Secretary John Swinney said that support for independence was growing and he was "extremely confident" of winning the case in a future referendum on the issue.

The plans are part of a submission to Holyrood's inquiry into the Scotland Bill, which aims to increase the powers of parliament.

Reform Scotland said MSPs currently controlled 60% of public spending but were only responsible for raising less than 7% of funding.

The Scotland Bill would allow Holyrood to take charge of half of the income tax raised in Scotland.

However, Reform Scotland believes that does not go far enough and wants wider tax-raising powers to be handed to Holyrood.

The group's Ben Thomson said £19.9bn was spent on social protection in Scotland in 2009-10 - of which only £113m was spent by the administration in Edinburgh.

He said: "In the case of the Scottish government, our view is that Holyrood should raise all the money that it has responsibility for spending.

"This is based on the principle that better government comes from politicians being financially accountable for their decisions and that the centralised allocation of budgets provides the wrong incentives for promoting efficient public sector spending.

"It would also give politicians in Scotland the necessary financial levers and incentives to create a tax environment conducive to growing the Scottish economy."

Mr Thomson added that his organisation wanted to see a more coherent and effective approach to alleviating poverty.

He said: "Many areas associated with this goal are already devolved to the Scottish Parliament, such as housing and social inclusion, yet the Scottish government can make no concerted attempt to address poverty without the necessary tools and that requires welfare provision to be devolved."

The intervention comes as MSPs on the Scotland Bill Committee continue to take further evidence from senior politicians, academics and experts.

The Scotland Bill is aiming to bring in legislation which would transfer more responsibility to Holyrood, including some £12bn of financial powers.