A BEEFED-UP fiscal watchdog should be handed the power to set financial forecasts which Scottish Government ministers base public spending plans on, an influential Holyrood committee has said.

The Scottish Parliament's finance committee has said the proposed remit of the Scottish Fiscal Commission (SFC) should be vastly expanded after questions were raised over the independence of the new body, set up to scrutinise forecasts of incomes from an expanding package of devolved taxes.

Currently, finance secretary John Swinney is able to set his own revenue forecasts, with the SFC signing off on "methodologies and assumptions" underpinning the vital and politically sensitive figures, which can allow governments to promise vote-winning policies or force them to make unpopular cuts.

The Herald's View: Why an independent fiscal watchdog matters

Under the finance committee's proposals the watchdog, which will be likely to see its influence increase with the devolution of income tax rates and bands, would be given the power to set the projections.

The move, along with a series of other recommendations that would give the SFC more teeth, would bring the Scottish body further into line with the Office for Budget Responsibility (OBR), which provides independent economic forecasts which the UK Government bases its budget on. The OBR demonstrated its substantial influence after its projections for better than expected tax revenues allowed George Osborne to perform a u-turn over controversial plans to implement savage cuts to tax credits.

The finance committee has also recommended that the body must be able to challenge and criticise the Scottish Government publicly, and called for details of disagreements it has with ministers to be published. It raised concern that its current way of working "raises a number of questions regarding the independence of the Commission or at least the perception of its independence."

Willie Rennie, the leader of the Scottish Liberal Democrats, backed the committee's finding saying a body producing its own forecasts rather than scrutinising Government figures would be a "step in the right direction".

He added: "The real question is whether we can trust SNP ministers on their forecasts, which we know from previous experience have not always been the most accurate."

The finance committee, which includes three SNP MSPs among its seven members, has also called for "much greater transparency" from the SFC over how it carries out its functions.

A report, published today, states: "The committee notes that the first external evaluation of the OBR found that it is seen to have overcome any perception of bias in its work because of its openness and had demonstrated its willingness to speak out on issues that are unfavourable to the government, bolstering its independence. The Committee recommends that the commission adopts a similar approach."

The watchdog has been operating on a non-statutory footing since the summer of 2014, however, a new Bill at Holyrood will set out its role in law. The committee also recommended that the SFC is able to assess the performance of Government against its own fiscal rules and report on the long-term sustainability of public finances.

Mr Swinney has previously resisted calls to strengthen the role of the SFC and put it on the same footing as the OBR. Giving evidence to the committee, he said he did not see the value in publishing multiple financial forecasts, stated his opposition to publishing details of disagreements between the watchdog and the Government and said he would also argue strongly against the Commission publishing initial forecasts.

However, Kenneth Gibson, Mr Swinney's SNP colleague and finance committee convenor, said the SFC should be given a much wider role. He added: "We are strongly of the view that not only should the Scottish Fiscal Commission be independent, but it is vital that it is perceived to be independent. That is why we are calling for the Bill to be amended to strengthen the Commission’s role and to give it responsibility for producing the official forecasts.

"We believe it should assess the Scottish Government’s adherence to its fiscal rules and assess the long-term sustainability of the public finances. This will further strengthen the independent scrutiny role of the Commission and reflects the view of many witnesses who have appeared before the Committee."

A spokeswoman for the Scottish Government said: "We welcome the committee’s support for the principles of the Bill and we will reflect carefully on the issues raised in the report."