Handing Scotland more tax powers could cause tension in the North East say academics

Prime Minister David Cameron has said he hopes Scottish devolution settlement will be lasting, but professors warn it may already need to be reviewed

Academics in Scotland have warned that devolving tax powers could see this region’s rich residents moving north of the border.

And with the possibility that giving the Holyrood parliament control of air taxes could cost the North East millions and thousands of jobs, they anticipate devolution will become even more politically contentious.

Prime Minister David Cameron hopes that the next Scotland Bill will lead to “an enduring settlement” between the UK and Scotland, but politics professors raise concerns it will merely lead to “new sources of tension and dissatisfaction,” and lead to growing pressure for a further revision of the devolution settlement.

Professor Michael Keating, of Aberdeen University, said the principle that devolution should cause “no detriment” to Scotland or the UK will be “politically contentious”.

“Detriment could be read more widely to cover tax competition,” he said. “So if Scotland were to abolish air passenger duty and divert traffic from Newcastle to Edinburgh Airport, England might complain about the lost revenue.

Wealthy residents could also be lured across the border by different taxes on high incomes.

“Determining what should count as ‘detriment’ will remain politically contentious and technically complex.”

On Thursday business leaders in this region said the North East would not “forgive or forget” any moves to give Scotland an advantage over local firms, or Newcastle International Airport, after Chancellor George Osborne admitted the move could see 450,000 passengers choosing to travel further north to fly out.

And now academics say the new powers are “confusing” and may lead to growing calls to review the settlement further.

Paul Cairney, professor of politics and public policy at Stirling University, said: “The rhetoric has been about greater financial responsibility and accountability but, in fact, what they have produced is a confusing system providing a complex interplay between reserved and devolved taxes.

“The result is great confusion about what tax and spending decisions we can meaningfully describe as being made by the Scottish Government.”

Nicola McEwen, professor of territorial politics at Edinburgh University, said: “At the same time as increasing powers, it also increases the Scottish Parliament’s dependence on UK policy and decision-making.

“In the area of welfare, the draft clauses specifically create concurrent powers, where new powers given to Scottish ministers to affect the delivery of Universal Credit will be shared with the UK Secretary of State, and subject to his agreement.

“Similar provisions are established in relation to energy efficiency.”

She added: “Unless such joint working can be conducted on the basis of equality of status and mutual respect, the complexities and interdependencies are likely to create new sources of tension and dissatisfaction, and lead to growing pressure for a further revision of the devolution settlement.

“The Prime Minister’s hope that this will lead to ‘an enduring settlement’ may seem forlorn.”