THE UK Government has dismissed claims it would have to plug a multi-billion pound shortfall in Scotland's finances if all tax and spending decisions were devolved to Holyrood.


Former First Minister Alex Salmond insisted the Scottish Government's budget was protected under the Smith Commission deal which recommended handing Holyrood further tax and welfare powers.

However, a Scotland Office spokesman said the principle of "no detriment," which is written into the Smith Commission agreement, applied specifically to the package of powers agreed between the main Holyrood parties last year.

Writing in the pro-independence National newspaper, Mr Salmond highlighted a clause in the Smith agreement saying "neither the UK government nor the Scottish government (would) gain or lose financially simply as a consequence of devolving a specific power".

He said it "renders ridiculous" warnings that a fiscally autonomous Scotland would be £7.6billion worse off than under existing UK-wide funding arrangements, because of falling oil revenues.

But a Scotland Office spokesman said: "The 'no detriment' principle is a key part of the Smith agreement.

"Full fiscal autonomy is not part of the Smith agreement. The two things are different and it is wrong to connect them."

Scottish Labour's finance spokeswoman Jackie Baillie said: "This is a ludicrous argument from Alex Salmond.

"He appears to finally accept that the SNP's plan for full fiscal autonomy within the UK would make Scotland worse off, but wants somebody else to fix it. It would be funny if it wasn't so serious."

The SNP attempted to fight back yesterday after days of criticism over its plan to seek full fiscal autonomy, under which all tax and spending decision would be taken at Holyrood, with the Scottish Government making an annual contribution to shared services such as defence.

The independent IFS think tank warned a fiscally autonomous Scotland would be £7.6billion worse off in the current financial year, leading to claims by Labour the Scottish Government would have to cut services or raise taxes.

SNP leader Nicola Sturgeon has said her government would plug the gap by borrowing and using new powers to boost the economy, raising extra tax as a result.

Campaigning in Braehead, she said Labour was "talking nonsense".

Her deputy, Stewart Hosie, said the IFS study was "absolutely irrelevant" as it covered the current financial year.

He added: "We are not going to have full fiscal autonomy this year, we haven't even had the election.

"We would have to have the Queen's Speech and then legislation through both Houses of Parliament.

"It's absolutely irrelevant because it is

a figure for this year."