THE Scottish Government would be able to break the UK welfare cap and raise all benefits, including the state pension, if it so wished, under the new powers proposed by the Smith Commission, Alistair Carmichael has told MPs.

The Scottish Secretary, giving evidence to the House of Commons Scottish Affairs Committee, was asked to clarify the extent of the new welfare powers proposed by the Commission.

He explained the proposals on welfare would give Edinburgh "very wide powers", amounting to up to £3 billion, but it was up to Ministers to decide how to fund any new provision, through cuts elsewhere or raising taxes.

His Liberal Democrat colleague Michael Crockart, who represents Edinburgh West, noted how the Commission gave Scottish Ministers "a fairly wide remit to do anything they like in the welfare system" and that the only power they did not have was the ability to cut a reserved benefit.

"That's my understanding," replied Mr Carmichael.

Ian Davidson, the Committee's Labour Chairman, suggested once the Commission agreement was implemented, the Scottish Government would have the power to "double, if it wished, every single benefit, and also have the power, if it wished, to double pensions".

The Secretary of State replied that while pension policy was reserved, Edinburgh could, if it wanted to, top it up. "I suppose the same principles would apply. They would have that power."

Mr Davidson suggested, for example, Scottish Ministers could increase the Winter Fuel Allowance by £10,000 a year or any sum to enable the state pension in Scotland to be doubled.

Mr Carmichael replied: "I would say, sensibly, the Scottish Government would be best advised to focus its effort on administering and funding those commitments it has primary legislative responsibility for under the devolved settlement. But you can see the terms of the heads of the agreement; if they choose to do otherwise, if they choose to top up, they have the power to do so."

He stressed any increases would mean there would either have to be corresponding savings elsewhere or Scottish taxes would have to be increased.

Seeking to clarify the extent of Edinburgh's future powers further, Mr Davison asked: "Similarly, the Scottish Government would be able to break the UK welfare cap in terms of individual amount to people because they would have the power to increase any benefit they wished and would not be bound by the welfare cap."

Mr Carmichael replied: "De facto, that would be my understanding."

The welfare cap, introduced in 2013, limits benefits that households can receive to £500 per week.