Legislation to bring new devolved powers to the Scottish Parliament took a significant step forward yesterday as it passed its first parliamentary hurdle without a vote.

The Scotland Bill had its Second Reading in the House of Commons and will now move on to the committee stage, when MPs will be able to propose and debate amendments.

A key part of the UK government’s Legislative Programme announced in the Queen’s Speech last month, the bill follows the recommendations of the Smith Commission, which was set up after the independence referendum.

It would give Holyrood control over income tax rates and bands, a half share in VAT revenues and a greater say over welfare powers in Scotland.

Scottish secretary David Mundell opened the debate for the UK government by reiterating its commitment to deliver on its promise of further devolution.

He also maintained that there are many areas the UK and Scottish governments agree on and will urge close and constructive working between the two.

Mr Mundell said: “The fact the Scotland Bill is the first piece of legislation to be debated in this new session sends a clear and strong signal of our intent to get on with the business of delivering significant new powers for Scotland.”

The Scottish Government has proposed amendments which it says will ensure the bill implements the Smith Agreement in full by removing all vetoes, giving Scottish Ministers the power to create new benefits in devolved areas and reversing limitations in the bill’s clauses.

The extensive proposals have been sent to the Devolution (Further Powers) Committee as part of the Scottish Government’s formal response to the Committee’s interim report on the Smith Commission.

The Scottish Government is also set to convene a meeting with stakeholders to discuss the Scotland Bill and will shortly publish proposals for further powers beyond those proposed by the Smith Commission.

Deputy first minister John Swinney said: “The Scotland Bill put forward by the UK government fails to deliver the Smith Agreement in full, either in spirit or in law.

“The changes we have proposed would bring the Scotland Bill up to scratch and properly implement the Smith Agreement in full. That’s the absolute minimum we need if the Prime Minister’s respect agenda is to have any credibility.

“The amendments remove the UK government’s veto over key decisions, give the Scottish Parliament an explicit power to create new benefits in devolved areas and would ensure that the Scottish Parliament cannot be abolished without the consent of the Scottish people. These basic changes to the Bill will give future Scottish Governments the freedom to exercise new powers without interference, like any other government.

“As all parties in the Scottish Parliament supported the Smith Agreement and all have agreed with the view of the Devolution committee that the current bill does not implement Smith properly, I expect all parties to support our actions to make the Bill fit for purpose and enact the proper devolution we all signed up to.

“We will also put forward proposals shortly for more powers to be devolved through the Scotland Bill including employment policy, the minimum wage, welfare, business taxes, national insurance and equality policy - the powers we need to create jobs, grow revenues and lift people out of poverty.”