THE man who named the Barnett formula yesterday warned Westminster could “mess up” future Holyrood tax decisions and leave newly-devolved powers “unusable”.

Addressing the Scottish Affairs Committee, Professor David Heald of Glasgow University raised grave concerns about current moves to transfer limited tax powers to the Scottish Government.

Calling for greater transparency, he accused the Treasury of deliberately misleading the public and parliamentarians and said politicians would use the change-over for electoral gain – but that the Scottish Government cannot win.

The academic also raised the prospect of new fiscal agreements being used to “pay Scotland back” for the referendum.

In an evidence session yesterday, Heald told MPs: “The Scottish Government has to notify the Treasury by November 30 about what the Scottish income tax rate will be – there is nothing to stop the UK Chancellor messing that up at the end of March.

“The Scottish Government might then respond with a competing move but Scotland would then have to pay HMRC to adjust people’s tax codes and you can imagine what the media coverage of that would be. The UK Government has such enormous advantages in the political game.

“If there isn’t goodwill on both sides it is probably difficult to make any system of fiscal devolution work.”

Heald called the planned transfer a “political fix after the referendum” which is happening “without thinking about what that means” and hit out at the Treasury in a call for greater economic transparency.

Speaking about potential adjustments to central government funding for Scotland, he said: “The documentation about Barnett has never been fully in the public domain.

“The Treasury has spent 25 years deliberately misunderstanding parliamentary questions and Freedom of Information requests asking for comparable expenditure in England, which drives the changes in the Scotland block, comparable expenditure in England, which drives the Wales block, and comparable expenditure in Great Britain, which drives the Northern Ireland block.

“You can’t run this system with devolved parliaments and assemblies under different political control in the same way as if it was part of the single UK Government.

“Transparency is more important than almost everything else.

“The Treasury is perfectly aware of what kind of information it should put in the public domain but it has chosen not to do so.”

Raising the prospect of cross-border power games, Heald said: “One of the things the system could be used for is paying Scotland back for having the cheek to have a referendum on independence.

“Alternatively it could be that the Scottish Government might view it as creating another grievance which could give it justification for having another referendum. Even in well-established federal states such as Canada and Australia there are big disputes about how the system works.

“I suspect there will be sufficient flaws in what’s agreed and sufficient ambiguities that if people want to destabilise the system they will be able to do so.”

Also giving evidence, senior research economist David Phillips of the Institute for Fiscal Studies said the Smith Commission had failed to consider “who should bear the risks of exogenous shocks” to Scotland such as a potential oil price collapse.

He said: “The system that has been designed says we are going to devolve to Scotland the risk and reward of your own policies but also the risk and reward of shocks hitting Scotland differentially to the rest of the UK.

“By having this quick-fix solution – here is some stuff we want to devolve and here is the simplest system to devolve it – we haven’t had this debate about risk-sharing. It’s high time we did have that debate.”