GORDON Brown has performed a dramatic U-turn that has opened the door for Holyrood to be handed new tax-raising powers.
In an interview with the BBC to be shown today, Brown appears to back the case for change, declaring there is "an issue" over the Scottish Parliament having responsibility for spending money but not for raising it.
He says he supports plans put fo
rward by Scottish Labour leader Wendy Alexander to set up an independent commission to study plans to transfer more tax powers from London to Edinburgh.
This could lead to income tax rates, business taxes and VAT all being set by the Scottish Government and not Downing Street.
Brown says: "I think there is a very strong case for moving forward with this review. A strong case for looking, after 10 years of devolution, at what is the right steps forward… There is an issue about the financial responsibility of an Executive or an administration that has £30bn to spend but doesn't have any responsibility for raising any pounds of that."
The Prime Minister's comments are a major shift to his position prior to the last Scottish election, when he backed the status quo.
The Scottish Parliament has the power to lower or raise income tax by 3p in the pound – a power it has never used. But there is strong support from all parties to hand it power over other taxes.
In the interview, for The Politics Show, Brown adds: "This is what any review should look at. Nobody should pre-judge it. There is a case for saying that in any other devolved administration in the world there is usually a financial responsibility that requires not only the spending of money by the administration but also its responsibility to take seriously how it raises money.
"Now the question is, just as local government has to raise some of its money through council tax, just as many other areas in the world where there are devolved administrations have to raise money through assigned taxation, is there a case for doing so? So that's one of the things that could be looked at."
Brown's comments come at the end of a week when the Scottish Labour Party has faced claims of a civil war over the commission.
Scotland Office minister David Cairns said that the issue of constitutional reform at Holyrood was one that only interested the "McChattering classes". He also argued that there was no need for Holyrood to have more tax-raising powers.
Speaking to Scotland on Sunday Cairns insisted that he supported the commission as well, but he also voiced support for the Barnett Formula – the system under which the Scottish Parliament is simply handed £30bn a year to spend.
"I was saying that the much-maligned Barnett Formula has delivered well for Scotland over many years and there's a case for it," he said.
However, Brown has now clearly acknowledged that there is a pressing need to examine whether that system should end. The remit of the commission will now be set by the three parties which back it – Labour, the Liberal Democrats and the Conservatives – in the next few weeks. Scotland on Sunday understands that there is strong support within the Labour Party and the Lib Dems to appoint former Lib Dem leader Sir Menzies Campbell as the chairman of the commission.
His backers say he has the necessary gravitas to steer the commission through rough political waters. However, the Tories are believed to want to block Campbell's nomination and are calling for a figure from outside politics to lead it.
Brown's call on tax powers comes as one of the UK's leading constitutional experts will this week urge MPs to give Holyrood financial independence. Vernon Bogdanor, professor of government at Oxford University, said the Scottish Government must be given the power to raise its £30bn budget through a Scottish income tax in order to avert "political disaster" and the break-up of the Union.
He said: "It's absurd that while the smallest English district council can raise tax, the body representing the people of Scotland does not. It makes perfect sense to give Scotland fiscal autonomy."
He will make his comments, outlined in an article for Scotland on Sunday today, to a committee of MPs who are examining constitutional change.
But a spokesman for First Minister Alex Salmond said: "The Prime Minister's acceptance that change is necessary stands in stark contrast to the 'no change' position in which he fought last year's Scottish election campaign."
He added: "The unionist parties in Scotland should be on their guard over the motivations of London-based politicians. They may be walking into a Downing Street trap."
In his interview with the BBC, the Prime Minister also offers his support for Wendy Alexander, who was forced to the brink of resignation after she admitted wrongly accepting a donation from an offshore businessman. Brown conceded that Labour in Scotland was going through tough times.
He said: "I think Wendy Alexander will turn out to be a great leader. She has had my support, has my support, will continue to have my support. I think she's doing a very good job in difficult circumstances."
The full article contains 878 words and appears in Scotland On Sunday newspaper.
