Historic powers will come to Holyrood after a financial devolution deal was finally agreed but the stage is set for another fractious showdown in five years.
Nicola Sturgeon confirmed theagreement of the fiscal framework to MSPs during an emergency statement at Holyrood following months ofpainstaking, behind-closed-doors talks between the two governments.
Billions of pounds of public cash have been at stake during the hard-fought negotiations, which centred on how Scotland’s block grant is altered as the country takes control of income tax.
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The First Minister stressed Scotland’s budget would not be “single penny” worse off under the deal, which runs for an initial transition period until 2022.
“We have secured no detriment now, and for the next six years, and we have ensured that there can be no detriment imposed on Scotland at any point in the future,” she added.
Future governments on both sides of the border will need to get back around the table in 2021 to review the deal, which could lead to a re-run of thetensions of the past few months.For further coverage see Wednesday’s CourierThe two administrations haddisagreed on the formula used to reduce Scotland’s grant as Holyrood takesfurther control of income tax.
SNP ministers were against theTreasury’s “levels” deduction which they say would have punished Scotland’s predicted slower population growth.
But they have come to a resolution that both governments say is faithful to “no detriment” the principle neither side is worse off from devolution.
Chancellor of the Exchequer George Osborne said the agreement is “fair to Scotland and fair to taxpayers in the rest of the UK”.
He said: “This enables us to deliver on the vow we made to the Scottish people and delivers one of the most powerful devolved parliaments in the world and the economic and national security that comes from being part of the UK.”
The new powers, which also includes the ability to create new welfarepayments, are contained in the Scotland Bill, which is based on the SmithCommission’s findings.
Scottish Liberal Democrats leader Willie Rennie said the First Minister had “caved in” to the Treasury.
He added: “This puts Scotland in a weaker position for the review in five years’ time.”
Kezia Dugdale, the Scottish Labour leader, said the powers provide “huge” opportunities to counter spendingcuts.