Rift between Holyrood and Westminster intensifiesBy Paul HutcheonScottish Political Editor
HOLYROOD should be given control of £400 million of council tax benefit, according to Scotland's most prominent trade union group.
The Scottish Trades Union Congress (STUC) believes the cash, which is at the centre of a row between Westminster and the SNP government, should automatically be controlled by MSPs rather than Whitehall. Union leaders believe the transfer of responsibilities should be part of a long-term review of the Scottish parliament's financial powers.
The STUC's annual congress meets in Inverness tomorrow amid tension between the Nationalist government and Labour administration in London.
First minister Alex Salmond's plan for a local income tax is being thwarted by Labour ministers, who plan to hold on to the £400m in council tax benefit spent in Scotland if the Nationalists push ahead with their proposals.
The STUC, which does not support a local income tax, believes the money should become part of the "block grant" given to Holyrood by Westminster.
In an STUC policy document on the parliament's powers, which will be voted on by delegates this week, the organisation's general council "supports in principle" the devolution of council-tax benefit. The umbrella group believes the transfer of powers should be part of a long-term review of the Barnett Formula, the system that determines any increases to the Scottish government's block grant.
It states: "The general council does not recommend support for the immediate abolition of the Barnett Formula and sees much to recommend a needs-based component to any future block grant agreement. However, in the longer-term consideration of a mixed formula is necessary including the possibility of additional tax raising powers."
The STUC's general council believes the Scotland Act should be amended to allow Holyrood to borrow money. The general council backs the devolution of housing benefit, which is controlled by Westminster, equalities legislation and "limited further powers" over broadcasting.
However, the STUC paper rules out supporting other areas of devolution. In particular, the general council has come out against giving Holyrood control of VAT, health and safety legislation, and corporation tax. "The predictable moves to lower the Scottish rate for Corporation Tax would undermine social cohesion and sustainable economic development," the document notes.
As well as staging a debate on the Scottish parliament's powers, congress will hear speeches from Salmond, prime minister Gordon Brown and Holyrood's Labour leader Wendy Alexander.
STUC general secretary Grahame Smith said: "The general council's decision to review the powers of the Scottish parliament predated the National Conversation and the Constitutional Commission but now they are here we will make sure the views of our members are heard.
"Although not unmindful of the complications, the STUC general council's recommendation to our Congress is that, in principle, the payment of benefits such as council tax and housing benefits should be devolved to Scotland so that they are aligned with the policy responsibility."
An SNP spokesperson said: "The STUC's ideas are a welcome contribution to the debate on Scotland's constitutional future. The correct view that resources such as council tax benefit should remain in Scotland and not be removed by Westminster leaves the London Treasury and the Labour Party increasingly isolated."
