THE Scottish Conservatives are to fight to topple Labour as the main opposition party at Holyrood next year with a populist election pledge to cut taxes using new powers given to the Scottish Parliament in the Queen’s Speech.

Sources in the party are confident they can increase the number of seats they have at Holyrood, currently 15, which puts them as the third largest party, and take advantage of Scottish Labour’s difficulties after it lost 40 of its 41 MPs in the General Election.

They also point out that their leader Ruth Davidson is well-regarded and potentially able to attract voters to the Tory cause among middle-class Scots keen to pay lower taxes, as well as get the backing of one-time Tory voters who may have voted tactically to support Labour.

“Ruth’s proved already that she appeals well beyond the traditional Conservative vote. It’s widely acknowledged she had a fantastic referendum and a great General Election campaign,” said a Scottish Conservative source.

“Labour ran away from its part in Better Together almost as soon as the result was announced on September 19.

“The Liberal Democrats fled from their record in government even before the Westminster term finished. Voters notice this and punished them at the ballot box.

“That has allowed us to become the obvious choice for people who are passionate about the economy, and passionate about keeping Scotland in the UK.”

The source added: “It was shown quite emphatically on May 7 that tactical voting doesn’t work and we approach the Scottish elections next year with great optimism.”

Scottish Labour has38 MSPs, but writing in last week’s National, Labour MSP Alex Rowley, who resigned from the party’s frontbench over Jim Murphy continuing as leader after the election wipeout, feared it could be left with considerably less than 34 MSPs unless the party embraced a programme of radical reform and positioned itself as the party of Home Rule.

Yesterday’s Queen’s Speech revealed the Scottish Parliament will receive new powers to raise 40 per cent of taxes and decide about 60 per cent of public spending.

The Scotland Bill will allow Holyrood to set the thresholds and rates of income tax with the Barnett Formula, which determines the money the devolved Scottish government receives, to be reduced.

On Tuesday, David Mundell, the Scottish Secretary, indicated the measure would allow the Scottish Conservatives to launch tax cutting pledges in next year’s Holyrood election campaign.

He said the proposals in the Scotland Bill would be “delivered as quickly as we possibly can”. He added that, at next year’s vote, Davidson “wants to make the case for lower taxes in Scotland, [and] parties need to be able to make the case based on the powers they know are going to be available. So that’s the timetable we are looking to achieve.”

However, election expert Professor John Curtice from Strathclyde University said much depended on how the Scottish Labour Party resolved its difficulties following the General Election defeat and dealt with the leadership issue after Murphy stands down next month.

He also indicated the Lib Dems could also see their support increase if voters returned to them now they were no longer in a coalition with the Tories.

He told The National that everything was to play for, with no guarantees that the SNP would be back in power in either a majority or minority government.

“It’s much harder to get a majority at Holyrood than at Westminster. The SNP will have to defend their record and the big question is what can the Labour party do?” he said.

“Can it get its act together? Can Kezia Dugdale, if that’s who it is, begin to come up with a vision for the party in Scotland and from that derive an effective critique of the SNP’s term in office?

If the answer to that is yes I certainly wouldn’t assume a new SNP majority government. But if no, the SNP may well get a majority, Labour may not do well, although I’m not sure they Tories would overtake them. We might also see the Liberal Democrats coming back into business.”

The UK Government said yesterday the new Scotland Bill would embody the Smith Commission agreement which was signed by the SNP, the Conservatives, Labour, the Liberal Democrats and the Scottish Greens in November last year.

The promise of more powers to Holyrood followed voters rejecting Scottish independence by 55 per cent to 45 per cent in September’s referendum.