Mundell hails tax powers deal "truly historic" and says any new deal will not be imposed by Whitehall

Speaking at Prime Minister’s Questions, David Cameron hailed the settlement to transfer fiscal powers to Scotland as “an excellent deal”.

And he said: “No more grievance, no more fussing about process, no more arguments about the arrangements: now is the time to get on and govern.”

Later in the House of Lords, his Conservative colleague Lord Forsyth, the former Scottish Secretary, claimed Nicola Sturgeon had been "bought and sold with English gold" to secure the further tax and welfare powers and called for England, Wales and Northern Ireland to be treated with "similar generosity".

Professor Anton Muscatelli, Principal of Glasgow University and one of Scotland’s leading economists, concluded: “The deal now secured is a good one for both the UK and Scottish taxpayers," he said. "It will ensure a sound basis for the future funding of the things that we all rely upon, such as the NHS, schools and the police.”

Just hours after the First Minister and Chancellor George Osborne sealed the deal following months of complex and intense negotiations, Mr Mundell described it in a Commons statement as “truly historic”.

It would, he told MPs, “pave the way for the Scottish Parliament to become one of the most powerful and accountable devolved Parliaments in the world”.

And he noted: “We have respected all the principles set out in the cross-party Smith agreement and delivered a deal that is fair for Scotland and fair for the whole United Kingdom.”

The new powers, outlined in the Scotland Bill, mean that almost full control over income tax, amounting to £12 billion a year, £5bn of assigned VAT and a £2.5bn annual welfare budget will be under the control of MSPs.

The historic legislation is now almost certain to be approved by MSPs before the Holyrood election on May 5 and it means that, from April 2017, Scottish workers can expect to pay all of their income tax to the Scottish Government.

Mr Mundell explained the nub of the agreement was that for a five-year transitional period both governments would “share Scotland-specific risks”; Edinburgh would hold the economic risks of any tax decisions it took, London would “hold the population risks”.

The temporary agreement would be subject to a review in 2021 “informed by an independent report”.

The Scottish Secretary told MPs: “There will be no additional cost to England, Wales and Northern Ireland from the powers being transferred compared with if we were not proceeding with this devolution settlement because the sum being delivered to the Scottish Government is exactly the same as would have been delivered under the Barnett Formula.”

However, the Treasury’s initial position was that the status quo should not continue and Edinburgh should share some of Scotland’s population risks. No calculation of the costs to taxpayers in the rest of the UK has been officially published, had this approach been adopted.

Angus Robertson for the SNP welcomed the deal and pointed out how Scotland’s budget had at one point faced the threat from the Treasury of a £7bn cut but the First Minister and her deputy, John Swinney, had “stood up for Scotland” had ensured it would “not be a pound or even a penny worse off”.

In response to questions from the Nationalist leader in the House of Commons, Mr Mundell made clear the fiscal framework review would be independent and concluded by the end of 2021. He also stressed: “There will be no imposition of any formula at the end of that period and what happens will be by way of agreement.”

Ian Murray for Scottish Labour said the deal marked “an historic date in Scotland’s devolution journey,” adding: “The promises made to Scotland in 2014 have been met; the Smith agreement implemented, Barnett protected, powers transferred, the Vow delivered.”

The details of the two government’s agreement are due to be published today.