Devolution Proposals Under Scrutiny

5 November 2014, 06:02

MSPs are set to scrutinise proposals for further devolution to Scotland including a plan to make Scotland wait up to 15 years for a Westminster bailout if it lives outwith its means.

Professor Ronald MacDonald, of the University of Glasgow, will join Professor David Heald, of the University of Aberdeen, and Professor John Kay of the London School of Economics at Holyrood's Finance Committee today.

In a paper released last month, co-authored by Paul Hallwood of the University of Connecticut, Prof MacDonald said MSPs must recognise decisions taken by the Scottish Parliament have real costs and that increased spending means taxes will have to go up to finance it.

Mr MacDonald, a former adviser to the Better Together campaign, said if Holyrood's decisions lead to a shrinking economy they should have to live with that for an "extended period of non-adjustment'' of between 12 and 15 years.

In a submission to the committee, Prof MacDonald said: "If the block grant did fall as a result of the proposed changes, or if the Barnett block grant was replaced, it is crucially important that block grants from Westminster should not be elastic in the sense that if the Scottish Parliament cannot finance its chosen spending level out of the existing block grant and own-sourced taxes, the block grant is not automatically or quickly increased.

"In this regard, the Holtham Commission, for example, recommended a 12 to 15 year 'waiting period' with respect to the Welsh Assembly and Government. A non-elastic block grant amounts to a 'no bailout clause'.''

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