Scottish powers ‘too centralised’, Alexander warns

The Chief Secretary to the Treasury has warned Scotland could be one of the most centralised countries in the world, with too much power concentrated in Edinburgh.

Danny Alexander MP was giving evidence on fiscal devolution to Holyrood’s finance committee.

He argued power should be devolved to local authorities.

He also told MSPs he saw no reason why Holyrood’s budget could not coincide with the Autumn Statement.

Mr Alexander was quizzed on how the UK government’s plans to give new financial powers to the Scottish Parliament, following the ‘No vote’ in the referendum, would work in practice.

A draft bill for the promised new powers was published last week.

He warned the committee there was a ‘real danger’ too much power had become centralised in Edinburgh.

He said: “I think there is a really strong case now, including on the financial powers, to seeing how some of them could be distributed to local authorities, to the regions, and to different parts of Scotland.

“And I hope that’s something this parliament, and particularly this committee, would want to take a leading role in pushing through.”

‘Gaming’

Constitutional experts have warned that Scotland’s economy could be exposed to “gaming,” where tax announcements at Holyrood in October can be quickly headed off by the Treasury in December because the Scottish government “shows its hand” first.

Mr Alexander denied ‘gaming’ takes place but said there was nothing to stop Holyrood making its Draft Budget “co-terminus” with the Autumn Statement.

Conservative MSP Gavin Brown said: “You have a situation were the Scottish government has to declare its hand, effectively, a month before the UK government.

“Is there any logical reason for that being the case or could you have a situation where both of them effectively declare their hands around the same time?”

Mr Alexander said: “I think I’m right in saying that the budgetary cycle here (at Holyrood) has always been October or November, as opposed to December, so it fits logically with the way you do business in the Scottish Parliament.

“But if there was a suggestion that you wanted to change that to make it co-terminus with the Autumn Statement, for example, I’m not aware of any practical constraints that would prevent that.”

It was suggested there had been tax competition between the two governments last month when Finance Secretary John Swinney’s plan to increase tax on more expensive properties in Scotland was quickly followed by Chancellor George Osborne’s announcement of a lower tax in England.

The Chancellor was able to make his changes overnight, whereas Mr Swinney had to wait until April.

The time-lag prompted a speeding up of transactions in Scotland to avoid the new higher rate and Mr Swinney subsequently revised his plans.

Mr Alexander said the time-lag was necessary this year as it was a new tax and pledged to return any extra taxes generated for the Treasury to Scotland.