Tax threat to home rule vote

With less than 72 hours to go before Scots take their momentous decision on home rule, Tony Blair will today try to head off the nightmare possibility of a parliament neutered of tax-raising powers.

"A serious parliament should be given serious powers," the Prime Minister will say on the campaign trail in Scotland. In the course of a day's hectic campaigning in Edinburgh and Glasgow he will also repeat Labour's election pledge that it will not raise income tax in the next five years.

Taxation remains the Achilles heel of Thursday's referendum. Although opinion polls show slightly more people in favour of giving the parliament the power to vary income tax than against it, the Tory-dominated "No" campaign will try to sway voters by asking how they feel about paying more tax than the English.

While an NOP poll for the Scottish Sunday Times showed 51 per cent prepared to vote for tax-raising powers, an ICM poll for Scotland on Sunday showed just 45 per cent in favour. A 3-1 majority were in favour of a Scottish parliament, the first of the two referendum questions. With William Hague, the Conservative Party leader, due in Scotland tomorrow, Mr Blair will also reject the Tory claim that devolution will lead to the break up of the United Kingdom.

Mr Blair will try to present the parliament as "business-friendly", countering the fears of Edinburgh financial institutions and members of the CBI in Scotland that different tax rates and possible changes in business rates will hit investment and force firms to relocate south of the border.

Last night the Chancellor, and Secretaries of State for Scotland and Defence were all in Scotland pushing for a convincing "yes, yes" vote in Thursday's referendum. Gordon Brown insisted that business was demonstrating its confidence in the future of Scotland with a devolved parliament by continuing to make major investments.

The actor Sean Connery last night urged fellow Scots to vote "yes" in Thursday's referendum. "It is Scotland's rightful heritage that its people should create a modern parliament reflecting the known Scottish characteristics of enterprise and compassion with justice," he said.

The Tory constitutional affairs spokesman, Michael Ancram, warned that the Labour government would have to ask "serious questions" if turn-out was low in Thursday's referendum north of the border.

There was also opposition to the proposals from Tam Dalyell, the Labour MP for Linlithgow and a long-time opponent of devolution. He warned that a "yes, yes" vote would drive talent south of the border.

Meanwhile, the silent English majority was yesterday warned that it is paying a cash penalty for being without a regional power-base.

Richard Caborn, minister for the regions, said the eventual creation of English regional assemblies would help them catch up. Scotland and Wales have caught up with the average European income since Labour set up the Scottish and Welsh development agencies 22 years ago. But most English regions remain well below that level.

If Labour won the next election, that would be followed by referendums for directly elected English regional assemblies along the lines of the one currently proposed for Wales.

Mr Caborn told The Independent that greater regional autonomy would be beneficial. "If your car is only firing fully off two cylinders, and the rest are not firing, then that is a recipe for division. If you've got all 10 cylinders firing at their maximum, then you'll have harmony, or unity," he said.

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