Labour call for all Scottish VAT revenue to stay in Scotland

The Labour Party is set to call for all VAT revenue raised in Scotland to be assigned to the Scottish government.

The party will table an additional change to the Scotland Bill on further devolution powers on Wednesday.

The bill is due to return to the Commons over the coming weeks for further consideration by MPs.

Labour said its amendments would give Holyrood the power to design a new welfare system for Scotland.

Scottish ministers would be able to top-up welfare benefits, even where individuals have been sanctioned, and create new benefits, it said.

Amendments have also been submitted to investigate the concerns raised by some charities regarding the impact of new income tax powers on the Gift Aid system.

But the SNP described Labour's proposals as a "gimmick".

'Truly empowered'

The party's deputy leader, Stewart Hosie, said: "This is a way of trying to make the numbers look good, but assigned revenue is not real control - it is just a gimmick.

"These tax proposals are purely cosmetic and do not give any extra powers to the Scottish Parliament. Westminster will still make all the decisions on VAT, and the amount raised in VAT will simply be deducted from Scotland's current funding.

"If Labour want to see a truly empowered parliament and deliver on the commitments they made to the people of Scotland before the referendum then it is time for Labour to back the SNP and support the devolution of trade union laws, employment rights, and real powers over taxation and welfare."

So far, no opposition amendments have been accepted by the Conservative government.

Dozens of changes were proposed by the SNP, Labour and the Lib Dems during the progress of the legislation through the Commons.

None was accepted by Tory ministers, who dismissed suggestions that the UK government was not listening and promised to return after the summer with improvements to the bill.

Meanwhile, Scottish ministers will warn that they could block added powers for the Scottish Parliament unless the accompanying financial deal is "fair" to Scotland.

Deputy First Minister John Swinney will tell MSPs that the present package falls far short of Scotland's needs.

ANALYSIS

By Brian Taylor, Political Editor, Scotland

The Scotland Bill - presently progressing through Westminster - devolves more power to Holyrood under plans drawn up by the Smith Commission.

But John Swinney will warn today that the bill must be amended, arguing for example that it still implies a veto for Westminster over new welfare powers.

That's disputed by UK Ministers - and Conservatives at Holyrood say the Bill meets Scotland's needs.

Separately, officials are trying to share out cash to reflect new income tax powers for Holyrood.

If there's no deal, the Bill could be blocked by Scottish Ministers who are said to be "deadly serious" about the prospect.

However, most analysts expect an agreement to be ultimately reached.

Among the amendments already proposed to the Scotland Bill are further welfare powers and the removal of sections which critics say amount to a veto for the UK government.

The bill transfers additional controls over income tax rates but assigns only 50% of VAT revenues.

Labour says its proposals on VAT, drawn up over the summer, would deliver revenues worth around £5bn to Holyrood.

Shadow Scottish Secretary Ian Murray said: "Labour is the party of devolution. It was a Labour Government, after a decision by people across Scotland, that created the Scottish Parliament in 1999 and we will show that same ambition and determination in pushing for more powers in the Scotland Bill.

"We are focused not just on making sure that the Scottish Parliament gets the powers it needs, but also on how we will use those powers to improve the lives of people across the country.

"We have approached the Scotland Bill constructively, because this is a real opportunity for people across Scotland, and we want to make sure they get the powerhouse Parliament at Holyrood they were promised.

"Our amendments would significantly increase the powers currently in the Scotland Bill by devolving £5bn more of revenue and ensuring that the Scottish Parliament has the powers over welfare that Scotland needs to design its own social security system."

The Labour amendments were discussed with new party leader Jeremy Corbyn on Sunday night, who agreed they were a priority.