Handing over control of income tax rates to the Scottish Parliament could lead to lower levies as London and Edinburgh compete against each other, a former minister has said.

Veteran Tory Sir Tony Baldry (Banbury) said all those who believed in lower taxes should welcome the potential of the proposal to prompt a "healthy competition" between Westminster and Holyrood.

Speaking in the debate on The Smith Commission's recommendations in the Commons, he told MPs: "If Edinburgh starts to set a rate significantly higher than that set by this Parliament, then there is going to be a drift and movement of talent from Scotland down south.

"And likewise if we set a rate of tax higher than in Edinburgh, people will start to move towards Scotland.

"So this competition should hopefully lead to lower rates of tax."

Scottish Secretary Alistair Carmichael replied: "That is indeed one of the possible consequences."

He added: "The truth of the matter is that for the first time since it was set up, the Scottish Parliament will control both sides of the books.

"They will control the areas for which they have responsibility, both how they spend the money and how they raise it.

"They will then have to be accountable to the voters for how they tax them. I think that will turn out to have a transformative effect on Scottish politics in time."