The committee stresses the need for transparency and calls for the figures used to calculate all parts of the financial arrangements of the Scotland Bill to be opened up for scrutiny, in order to enhance decision-making. It says it intends to keep this area under review and requests regular reports on progress.
Income tax rates
At the heart of the Government's proposals are the provisions to give the Scottish Parliament the powers to raise a single rate of Scottish income tax, and to reduce the block grant accordingly.
The committee says it is a major omission that neither the Bill nor the Command Paper provides an adequate explanation as to how the balance between income tax and the reduction to the block grant will be calculated. The Government should have put forward a considered proposal on the principles and methodology of this system, and detailed consideration should be given, as a matter of urgency, to how the reduction in the block grant will be calculated.
Provisions in the Bill for both capital and revenue borrowing powers are to be welcomed, but the committee notes the concern of witnesses that the limits are too low. It recommends that the Government, in close consultation with the Scottish Parliament and with the committee, reconsiders the proposed limits, and it suggests as a starting point for discussion the amount of £1bn, with a limit of £500 million in any one year.
The act of devolving financial powers does not, in and of itself, create an immediate bonus or boost to the economy, it is how these powers are used which is important and the committee regrets that debate around this issue has distracted from thorough debate of the Bill's proposals.
The report also highlights the committee's intention to continue its scrutiny role as the proposals are implemented. In particular, it intends to closely monitor the roles of the UK Government, HMRC and the Office for Budget Responsibility.
Commenting on the report, Ian Davidson MP, Chair of the Committee, said,
"Of primary importance to the Committee is the need to strengthen the devolution settlement for the benefit of the people of Scotland, and cooperation and transparency are key. Overemphasis on the formal division of responsibilities has diverted attention away from the need for cooperative working and for the best use to be made of powers already devolved. This is an area which requires further examination.
The package of measures in the Scotland Bill, taken together, give the Scottish Parliament greater ability to make their own decisions and be judged by them, as well as providing a secure economic and social framework within which Scotland and its people can thrive. This is to be welcomed. However, there is still some work to do and we look forward to the Government's response to our report."