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Give Holyrood welfare powers, urges think tank

LARGE parts of the welfare budget, including housing benefit, should be devolved to Scotland, a major new blueprint is to recommend.

The new Devo More report, to be published by the influential IPPR think tank, will say Holyrood should have more choice in how active the state becomes.

Its author, leading devolution expert and academic Alan Trench, argues the recommendations are an attractive option for all the main pro-Union parties.

The IPPR hopes Devo More can be adopted in party manifestoes for the 2015 general election.

The report coincides with a rising interest on what extra powers might be given to Scotland should there be a No vote.

All the major pro-Union parties, including Labour, to which the IPPR is very close, are considering ways to reform devolution.

Mr Trench, professor of politics at Ulster University, who is working with IPPR on the Devo More project, said the report pointed to ways to strengthen the Union.

He said: "There is an attitude among some in Labour that giving to Scotland takes away from the UK. Devo More is an argument that is not the case - you can have more devolution and a stronger Union".

Guy Lodge, associate director at IPPR, added: "It is essential Unionist parties and Labour in particular do not retreat from offering Scots a clear and positive alternative to independence.

"This is not about giving Alex Salmond a consolation prize but about equipping the Scottish Parliament with the necessary power to enable Scotland to meet the challenges it faces."

The report, Devolution and the Future of the Union, argues putting Holyrood in charge of areas like housing benefit could reap significant rewards.

The welfare bill for housing has spiralled in recent years, in part because of problems with supply.

While Scots ministers are in charge of levers which could help increase the number of homes, such as planning laws, they do not control housing benefit. Other parts of the welfare bill should be devolved for similar reasons, it argues.

But it warns that in practical terms it would be "hard if not impossible" to devolve large redistributive benefits such as pensions and jobseekers' allowance.

The report also argues this new approachwould "serve each party's interests and outlook very well, and offers the best hope for maintaining a united kingdom".

For Labour it would offer the chance to build a more social democratic society, by linking issues like housing benefit with the levers of change. For the Liberal Democrats the report argues that Devo More offers a realistic version of the party's calls for home rule.

The system would also increase transparency and responsibilty, "since voters who want more spent on public services will be paying taxes to pay for them", a key Conservative demand.

The report adds that more ­devolution is necessary for the key aim shared by all the pro-Union parties. Such a step is "not just compatible with strengthening the union, but vital to doing so for the 21st century", it warns.

A separate report by IPPR last year suggested Devo More would also involve the devolution of income tax, land taxes, an assigned portion of VAT and alcohol and tobacco duties. It stopped short of full fiscal autonomy.

Mr Trench said that Devo More had significant advantages over its Devo Max rival.

He said: "In many ways Devo Max is the worst of solutions. Scotland would be bound by a range of EU laws that would tie it to UK policy on things like VAT or corporation tax but would have rejected the idea of sharing risks and responsibilities properly as well.

"If your goal is to find a way to where Scotland makes the greatest amount of its own decisions, what something like the Devo More package offers is the opportunity to be able to exercise influence through the UK for some things ... but also to make substantial decisions (on its own)."

A spokesman for the Deputy First Minister Nicola Sturgeon said: "We look forward to reading this paper but there is no guarantee from any of the anti-independence parties of any more powers in the event of a No vote.

"The only way to guarantee more powers is to vote Yes."

Labour MP Anas Sarwar welcomed the IPPR report and said Scottish Labour's Devolution Commission would report shortly.

Meanwhile, the economic chasm between London and the rest of the UK is likely to persist, economists have warned.

They told FT.com London would continue to move further ahead even if other regions matched its growth rate becaus the absolute gap will increase.

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