George Osborne: We want a ban on Scottish MPs voting on tax issues in England and Wales

How the Tories are backing the concept of 'English votes for English laws'

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The Conservatives want a ban on Scottish MPs voting on tax issues which only affect England and Wales, Chancellor George Osborne said today.

He also challenged Labour to rule out a power-sharing deal with the SNP after the general election, insisting that the Chancellor should not be “beholden on Scottish nationalist votes”.

Mr Osborne was speaking ahead of the publication on Thursday of draft Government legislation detailing moves to devolve more authority to the Scottish Parliament, including full authority over tax bands and rates.

It is being drawn up to fulfil the promise made by the main party leaders before last year’s independence referendum to pass more powers to Holyrood.

The Tories are also backing the concept of “English votes for English laws” – and Mr Osborne signalled he believed it should be extended to cover some Budget issues.

He told the Treasury select committee: “I don’t want to pre-empt the proposals we are going to bring forward … although I do think they will have to apply on areas connected with the Budget.”

The Chancellor said MPs from Scottish constituencies would be able to vote on aspects of the tax system which applied across the UK, including the definition of income and the system of reliefs.

In a swipe at Labour, he said it would be “very unfair” if the next Government relied on SNP support to push through its Budget plans. The SNP has hinted it could support a Labour-led minority administration in exchange for significant concessions, while Labour has sent out mixed messages on the issue.

“There is going to be a lot of hard negotiation on things like the fiscal framework and I think it would be very unfair to the whole UK if we had a chancellor of the exchequer who was beholden on Scottish nationalist votes in the next parliament,” Mr Osborne said.

The Chancellor also disclosed he would act in the Budget in March to ease the pressure on the North Sea oil and gas industry.

“I’m sure we’re going to have to take further steps in the budget, but we can only do because we’re a United Kingdom and we pool our risks,” he said.

Mr Osborne said some form of “balanced budget” rule could be needed to ensure the Scottish government did not use the new powers to live beyond its means.

He said: “Of course we wouldn’t allow Scotland to go bust, but in order for that situation not to arise we would have to agree fiscal rules, independently verified, to make sure that doesn't happen.”