On 18 September 2014, the people of Scotland voted for Scotland to remain as part of the United Kingdom.
On 19 September, the Prime Minister asked Lord Smith of Kelvin to establish a commission of cross party talks to take forward commitments made by the 3 UK political parties (Conservative, Labour and Liberal Democrats) during the referendum campaign.
Which political parties have taken part in the talks?
The 5 political parties involved are the Scottish Labour Party, the Scottish National Party, Scottish Conservative Party, Scottish Liberal Democrats and the Scottish Green Party.
On 27 November 2014 Lord Smith of Kelvin published his recommendations which have the agreement of Scotland’s 5 political parties.
What are the new powers?
This is an extensive package of new powers for the Scottish Parliament. And for the first time, the Scottish Parliament will now be responsible for more than 50% of its funding. This is an important breakthrough which increases the accountability of the Scottish Parliament.
The 3 key pillars of the agreement are designed to:
1.Provide for a durable but responsive constitutional settlement for the governance of Scotland
2.Deliver prosperity, a healthy economy, jobs, and social justice
3.Strengthen the financial responsibility of the Scottish Parliament
What happens now?
The Prime Minister and the Deputy Prime Minister have welcomed the recommendations and work is underway to prepare draft legislative clauses by late January 2015.
At the same time, financial powers that were previously agreed and laid out in the Scotland Act 2012 will continue as planned. These are:
1. Stamp duty land tax and landfill tax
From April 2015, Scottish government legislation will replace stamp duty land tax and landfill tax in Scotland with the Land and Buildings Transaction Tax and Scottish Landfill Tax Revenue. Scotland will become responsible for the collection of the new taxes.
2. Extending borrowing powers
From April 2015, current borrowing powers of up to £500 million will be extended and a new Scottish cash reserve will be created to help manage the new tax receipts.
3. New capital borrowing power
From April 2015, there will be a new £2.2 billion capital borrowing power for the Scottish Parliament, with a limited version of the power in place from April 2013 to allow the Scottish government to fund £100 million of pre-payments for the Forth Road Crossing.
4. Scottish rate of income tax
A new Scottish rate of income tax will come into force in April 2016. This means the Scottish Parliament will set a new Scottish rate – with no upper or lower limit - which will apply equally to all of the reduced main UK income tax rates.