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A step forward on devolution

The option of devolving more power to Holyrood short of independence has always been popular with a large number of voters and the Unionist parties know it.

They also know they cannot ignore the idea before the referendum in September and so, one by one, they have promised more powers will be transferred to Holyrood in the event of a No vote.

Prime Minister David Cameron promised more tax-raising powers at his party's conference in Edinburgh last week and yesterday it was the turn of Labour in Scotland. Leader Johann Lamont said Labour's plans would devolve the maximum power possible without breaking up the Union, which in broad terms means Holyrood would raise 40% of the money it spends and would control three-quarters of the basic rate of income tax. The other significant proposal is to transfer control of housing benefit to Scotland, meaning MSPs could abolish the bedroom tax.

From the start, there has been some cynicism about these promises from the Better Together parties, but Ms Lamont insisted yesterday that her party was committed to the proposals at every level. Labour also deserve credit for progressing with a detailed plan for more devolution that voters can consider as a realistic alternative to independence.

The SNP said this week it believed 40% of voters had not made up their mind and today's poll for The Herald reveals 22% of 16-to-34-year-olds have not been following the debate at all. In other words, all the parties need to do more to engage, interest and attract voters.

In announcing its plans for income tax, Labour may have come up with an interesting way to achieve this, particularly with traditional working-class voters. Under the Labour plans, MSPs would have the power to increase the higher rates of income tax but not to lower them. This may appear less progressive than the alternative of devolving power over income tax entirely but Labour believe it could offer an altenative to voters who think a Yes vote would usher in a socially democratic, left-of-centre nation; the alternative being a parliament with more powers, including the power to tax the better-off. The only drawback could be it would undermine the chances of a cross-party consensus on devolution as the Tories are unlikely to support a plan weighted towards increasing taxes rather than lowering them.

There is another, less positive, reason for Labour's complicated income-tax plans which is that the party fears an arrangement in which Holyrood could lower as well as raise the higher rates of tax would hand the SNP a tempting option: to cut the higher rates, attract high income tax payers to Scotland and precipitate a crisis in the Union. It is difficult to say how likely this is, although the SNP has bought into the idea of cutting corporation tax to achieve much the same thing.

The other provisions in Labour's plans are simpler and will garner support. Housing benefit should be controlled by Holyrood and giving the Scottish Parliament full control of the work programme is a good idea. It could hardly do much worse than the Department for Work and Pensions.

Taken together, the plans announced by Labour would appear to make the tax system even more complicated. They will also be frustrating for those who believe only full autonomy can free the economic levers. But for a party that defends the premise that Scotland is better in the UK, Labour have made progress in taking another step in the evolving devolution process. It will not be a big enough step for some but it is a significant and welcome.

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