The case for giving Holyrood further tax powers

ALEX SALMOND spoke last week of wanting an independent Scotland to work in partnership with the British and Irish governments through a new "council of the isles".

Others in the SNP argue a staging post to independence might be to negotiate a "New Union" where defence and foreign policy remained UK responsibilities, but all other powers were devolved. And most of the parties are at least considering pressing for some further powers to be transferred from Westminster to Holyrood - except Labour.

In his John P Mackintosh Lecture in Haddington last week, Jack McConnell made what he sees as the positive case for "home rule inside the UK", arguing devolution has too often been propounded as an alternative to something less palatable - whether rule from Westminster or full independence.

He argued that under the present set-up Scotland enjoyed "the best of both worlds". But that, of course, does not mean the balance could not shift, with some more powers - over broadcasting, perhaps, control of the civil service, gambling or immigration - being switched to Edinburgh.

There is a superficial logic to Mr McConnell's comment that it would be sensible to make the fullest possible use of existing powers before demanding lots more. But it is not quite true. He is not suggesting, for example, that Holyrood should raise - or cut - income tax by 3p, as it already has the power to do. Indeed, it has long been argued that this limited tax power is such a blunt instrument it is never likely to be used. But there is at least an arguable case for giving the parliament further tax powers so it is more answerable for the money it spends.

Despite his apparent rejection in the lecture of more powers for Holyrood, Mr McConnell has in fact been ready to push the boundaries of Scotland's devolved responsibilities with his Fresh Talent initiative, aid for Malawi and just last week persuading the UK Government to set up separate teams to deal with asylum seekers north of the Border.

Labour's Lib Dem coalition partners believe in a federal Britain and their recent autumn conference endorsed an increase in Holyrood's powers, including exclusive control of the electoral system, transport, medical contracts and energy policy, as well as more say on broadcasting. There seems no reason why responsibility for some of these other areas should not gradually be handed from London to Edinburgh if it becomes clear in time such a move makes sense.

It seems unsatisfactory, for instance, that the head of the Scottish civil service is answerable to Whitehall rather than Holyrood. Equally, it is only reasonable the Scottish Parliament should have responsibility for its own electoral system. It is understandable that Labour might view its support for such ideas as tantamount to encouraging the SNP, but it may well be refusing to consider them is simply playing into the Nationalists' hands. And that at the moment is who they fear most. But Labour's best defence is prosperity - without pain the majority are never likely to take the leap of faith that independence will require.

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