A Treasury minister has hit out at Alex Salmond's claim the UK Government would be forced to plug a multi-billion pound black hole in Scotland's finances if all tax and spending was devolved to Edinburgh.

 

Highland MP Danny Alexander said that Scotland would not have "full fiscal autonomy" if UK ministers stepped in.

Experts have forecast that the SNP's policy would cost the Scottish economy more than £7 billion a year, because of falling oil revenues.

In response, former First Minister Mr Salmond has pointed to a clause in the recent Smith agreement on extra powers he says mean UK ministers would have to make up the shortfall.

The passage says that "neither the UK government nor the Scottish government [would] gain or lose financially simply as a consequence of devolving a specific power".

But Mr Alexander said the 'no detriment' rule was designed for a system in which resources continued to be pooled and shared.

If the UK did step in, the Lib Dem MP added, then it was "not full fiscal autonomy".

Mr Alexander also described the SNP's aim as "absolute fiscal catastrophe for Scotland".

On the call for the 'no detriment' rule to apply, he said: "That is not fiscal autonomy then, is it?

"We have a Smith Commission proposal, which I am absolutely signed up to, which has a lot of devolution of tax power but the continued pooling and sharing of resources with the 'no detriment' clause built in.

"Fiscal autonomy is something different.

"Fiscal autonomy says that we want to cut the financial ties with the rest of the UK.

"That we want to keep all the taxes that we raise in Scotland and we want to use that and only that to fund our spending and then we will pay the rest of the UK for shared services, like the Foreign Office and the Bank of England and what have you.

"It is a totally different model."

He said that full fiscal autonomy would "lead to cuts far greater than we have seen over the last five years on the back of the nationalists really crazy idea to take £8 billion out of the Scottish budget every year."

He added: "The SNP are unique in British political history, as far as I'm aware, as the only party I have ever heard of that is simultaneously proposing massive extra borrowing and massive extra cuts.

"It is a uniquely fiscally incompetent recipe."

Mr Salmond has said that the 'no detriment' rule "renders ridiculous" warnings that a fiscally autonomous Scotland would be £7.6 billion worse off than under existing UK-wide arrangements.

An SNP spokesman said: "As Nicola Sturgeon pointed out on Sunday, there would require to be negotiation of the framework for fiscal autonomy - transferring full financial powers would take several years even if the Westminster parties agreed, and a strong group of SNP MPs would ensure that Scotland got a good deal."

He added: "It is absolutely correct to point out that the principles all parties signed up to in the Smith Commission were agreed to at the start, in other words they relate to devolution in general, not the specifics of the Smith package."

Mr Salmond argued that the no detriment rule should apply no matter what was devolved.

Writing in the pro-independence National newspaper he wrote: "Whatever is devolved in taxation, an equal amount of revenue is deducted or added to the financial arrangements between Scotland and London.

"That would apply whether a lot is devolved, as the SNP proposes, or just a little is conceded, as the London parties suggest."

Labour said that Ms Salmond's comments showed that the former SNP leader accepted that the SNP's plan for full fiscal autonomy within the UK would make Scotland worse off, but wanted "somebody else to fix it".

Today the Liberal Democrats will launch their General Election manifesto pledge to commit and extra £2.5bn south of the border.

A Lib Dem source said that the pledge would trigger an extra £250m in Barnett consequentials for Scotland.

It would be up to Scottish ministers whether or not to spend this extra money on education, but if they did it could fund an extra 7,000 teachers and 1,000 learning support assistants.

The manifesto launch comes just over a day after Nick Clegg suggested the Tories £12 billion welfare cuts could prove a dealbreaker in any coalition negotiations.