EXTRA powers for the Scottish Parliament have been agreed without five of the six key demands set out by Alex Salmond.
Ministers from Holyrood and Westminster agreed to push ahead with the Scotland Bill after striking a deal, particularly over additional borrowing powers.
However, the UK Government rejected calls for responsibility for corporation tax, the Crown Estate, excise duties, broadcasting and a formal role in European Union meetings, prompting the LibDems to claim the First Minister had "crumbled" over his six original demands. Of those, only one, on borrowing powers, has been partially met.
Bruce Crawford, Scottish Government Strategy Secretary, admitted a degree of disappointment, saying: "We fought hard to get more powers in the Scotland Bill, and succeeded in removing the harmful elements, but the UK Government resisted more significant changes."
Arguing that the Scotland Bill would be "out of date before reaching the statute book", he added: "It represents a real missed opportunity. To stimulate the economy we need much greater financial responsibility that will allow us to boost our recovery, invest in our public services and support long-term sustainable growth."
Mr Crawford said changes meant the bill no longer risked costing Scotland billions of pounds as both sides had to agree implementation arrangements, while plans to take back existing devolved powers have also been removed.
Both governments agreed to other changes, including a com-mitment to look at borrowing limits before spending reviews.
The Herald revealed recently how Scottish Government figures had made it clear that despite the lack of progress, the SNP simply could not be seen to turn down additional powers for Holyrood, however limited, and would "bank the extra powers and move on".
Scottish Secretary Michael Moore said his deal with Mr Salmond had conceded a regular review of borrowing limits ahead of spending reviews, a consultation on the Scottish Government being able to issue its own bonds, and a review in three years of the current system of criminal appeals to the UK Supreme Court, but not the certification scheme which would have returned power to Scottish judges.
This means the central change will be the Calman tax proposal of cutting 10p from the standard rate of income tax along with removing the yield from that from Scotland's block grant, forcing the Holyrood to levy Scottish income tax to replace that.
Also devolved will be stamp duty, landfill tax, the right to create new taxes and limited borrowing powers but Scottish ministers said this will only raise the proportion of taxes raised controlled by Holyrood from 7% to 16%
Mr Moore said: "Today marks a major step forward for devolution and I am glad Scotland's two governments have reached agreement over the Scotland Bill."
Scottish LibDem leader Willie Rennie said: "The SNP will be red-faced after its demands for rushed extra powers crumbled under scrutiny. Just months ago it described the Scotland Bill as a poison pill, dog's breakfast and dangerous but after all its hot air it has ditched its demands and concerns and now supports the bill."
Labour leader Johann Lamont said it was good news for those who believe in a stronger Scottish Parliament within the UK. For the Tories, Ruth Davidson said it was "hugely welcome and heralded a new era of devolution".
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