HOLYROOD will be handed the power to offset the cuts in tax credits that are set to be imposed by the UK Government, David Mundell has insisted.
The Secretary of State for Scotland also promised that the Government in Edinburgh would also have the power to "top up" child benefit payments, but warned it would have to find the cash from tax rises or spending cuts elsewhere.
The sole Conservative MP in Scotland said he he was "slightly surprised" at claims from Gordon Brown, who has described that the Scotland Bill as a "betrayal" as it did not honour the pre-referendum vow of further powers for Holyrood as the ability to top up benefits without Westminster approval was not explicit.
Mr Mundell said he would consider changes to wording in the Bill which has led to claims that Westminster would be handed a 'veto' over welfare decisions taken at Holyrood.
The comments came as the UK and Scottish Government ministers prepared to meet today to discuss welfare. He hinted strongly that he was set to announce that control over abortion law is also set to be devolved.
Mr Mundell said the current Scotland Bill would be a "game-changer" and usher in a "new era" of devolution. Full powers over income tax rates and bands are set to come into force from April 2017.
He said: "Scottish Government ministers will be able to design a significant part of Scotland's welfare system and control income tax to pay for it. If they want to top up existing benefits, they will be able to. If they want to introduce payments to those in short-term need or design new benefits in those welfare areas being devolved that will also be an option available to them.
"Powers in the Scotland Bill ensure Scottish Parliament will have the means to pay for any changes, but it will have to justify them to the public, as under the new arrangements, income tax raised in Scotland will stay in Scotland and be spent in Scotland."
The Scottish Government said that it would use new powers over welfare to design a fairer and simpler welfare system. A new paper will be launched today setting out responses to a consultation over a new Scottish system, with a further paper setting out a outline vision for social security in Scotland promised by the end of the year.
However, deputy First Minister and SNP Finance Secretary John Swinney said there was a "significant amount of doubt" over whether the Scottish Government would be able to reverse tax credit cuts.
He said there remained vetoes in the Scottish Bill meaning UK Government approval would be required for benefit changes and that it was "very unlikely" that an estimated £6 billion needed to reverse benefit cuts in Scotland could be found.
Mr Swinney added: "We'll do everything in our power and the resources available to us to tackle the issues... but the cumulative effect of the reductions in benefits in Scotland will be of the order of £6 billion by the end of this decade.
"I'm simply saying that financially that will be a challenge for the Scottish Government given the many pressures and issues that we have to address.
"Will we be able to reverse every single one of the welfare cuts of the United Kingdom government? I think that will be unlikely for the Scottish Government to be able to undertake."
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