Scotland Must Get Full Tax Powers - Commission

The Scottish Parliament should be given new powers over tax and welfare as part of a deal in the wake of the independence referendum, it has been recommended.

The Smith Commission also said the voting age in Scotland should be lowered to 16, and that Holyrood should become more accountable and should raise its own money through taxes and a block grant.

Commission chairman Lord Smith of Kelvin told a news conference in Edinburgh that the Parliament's power to decide how it is run should be enshrined in law for first time.

He said Holyrood should have responsibility for disability benefits, the ability to create new benefits, full control over unemployment programmes and power over employment tribunals.

Lord Smith said: "Taken together, these new powers will deliver a stronger Parliament, a more accountable Parliament and a more autonomous Parliament.

"The recommendations, agreed between the parties, will result in the biggest transfer of powers to the Parliament since its establishment."

The recommendations include:

:: Powers over income tax being handed to Holyrood, so it sets bands and rates on earned income - retains all of the income tax raised north of the border and the first 10% of VAT.

:: The parliament to be granted the ability to govern how it is run, allow 16 and 17-year-olds to vote in Scottish elections and to decide on the number of MSPs.

:: Holyrood taking control of some individual welfare benefits, like attendance and carer's allowance, cold weather payments and winter fuel allowance.

:: The ability to create new benefits in devolved areas and to issue discretionary welfare payments.

But the Commission recommended that all aspects of the state pension should stay under Westminster's control to ensure they remain the same across the UK.

Prime Minister David Cameron welcomed the announcements, but said they meant action would now be taken on "Engish votes for English laws".

"I always said that the no vote did not mean no change," he said.

"The Scottish parliament is going to have much more responsibility but it will also have to be accountable for how it raises taxes.

"It is very important that people say that we need this promise to the people of Scotland, and we're keeping that, with the timing of the content of the report."

The plans are the result of more than a month of cross-party talks with representatives from each of the Scottish Parliament's five political parties.

The SNP, Liberal Democrats, Conservatives and Greens all favour the full devolution of income tax, but Labour has officially only backed Holyrood having control over some of the tax.

Former prime minister Gordon Brown has warned full control would be a "Tory trap".

Lord Smith told the news conference the agreement was "an unprecedented achievement" because it had "demanded compromise from all of the parties".

"In some cases that meant moving to devolve greater powers than they had previously committed to, while for other parties it meant accepting the outcome would fall short of their ultimate ambitions," he said.

"It shows that however difficult, our political leaders can come together, work together and reach agreement with one another. I pay tribute to them for doing just that."