A WIDE-RANGING package of tax and welfare powers for the Scottish Parliament will be unveiled today when the Smith Commission publishes the results of its cross-party talks on devolution.
The Scottish Government will become responsible for providing a long list of benefits, it emerged last night, in addition to taking almost full control of income tax.
It will result in the biggest transfer of power from Westminster to Holyrood since the advent of the parliament in 1999, outstripping the partial devolution of income tax and other responsibilities under the 2012 Scotland Act, sources close to the commission claimed last night.
Among the benefits to be devolved are disability living allowance, severe disablement allowance, attendance allowance and personal independence payments, all of which are linked to disability.
The Scottish Government will also take over winter fuel payments and the Work Programme, the Department for Work and Pension's controversial scheme to help the unemployed gain skills and experience.
However, it is understood housing benefit, which Scottish Labour wanted to be devolved, will continue to be administered by the UK Government as it forms part of the combined new Universal Credit payment for the low paid and unemployed.
Under the agreement, the Scottish Government will receive a cash transfer from the Treasury. It will be free to maintain, raise, cut or reform the devolved benefits.
Details of the agreement reached between the parties emerged last night, as Lord Smith of Kelvin prepared to publish his report at the National Museum of Scotland in Edinburgh this morning.
It is understood half of the revenue raised from VAT in Scotland will be handed direct to the Scottish Government with the other half remaining with the Treasury for UK-wide spending. As reported earlier this week, the Scottish Government will also become responsible for raising income tax to fund a large part of its spending.
Ministers will have control over rates and bands, though the personal allowance, the threshold at which workers start paying income tax, will be set by Westminster.
Labour went into the Smith Commission talks opposing full devolution of income tax, fearing it would strengthen Prime Minister David Cameron's case for introducing "English Votes for English Laws", limiting the rights of Scots MPs. However, it is understood the party has won guarantees the proposed income tax arrangement would not prevent Scots MPs from voting on UK budgets.
Ed Miliband, the UK Labour leader who was among those initially wary of devolving all of income tax, is expected to welcome the deal in a speech in Glasgow tomorrow.
A source close to the Smith Commission said: "We want to pool and share resources around the UK to provide cradle-to-grave benefits. But people will be surprised by how bold the commission has been on welfare."
Further devolution was promised by all the main pro-UK parties in the run-up to the referendum. The Commission was set up to reach agreement on their different policies. Labour, the Conservatives and the Liberal Democrats have been joined in talks by the SNP and the pro-independence Greens.
Despite their involvement, a fierce political battle is expected, with Alex Salmond already having warned the deal will amount to a "betrayal" of the pro-UK parties' promises.
The pro-UK parties will claim they have exceeded their vow to deliver "extensive" new powers for Holyrood.
Under a timetable first proposed by Gordon Brown, draft legislation is due to go before the House of Commons in January. Among other powers to be devolved, Holyrood will gain control over abortion law.
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