Gordon Brown is to set out a “third option” for Scotland’s future, based on more powers being transferred to Holyrood after Brexit.

The former Labour prime minister will suggest the Scottish government be given the power to set VAT rates and sign international treaties.

Control over agriculture, fisheries and environmental regulation could be transferred, he will argue in a speech.

It comes as Nicola Sturgeon is pressing for a second independence referendum.

The first minister set out her position five days ago, saying a fresh vote was necessary in the wake of last summer’s Brexit vote.

She will tell the SNP conference later that the will of the Scottish Parliament “must and will prevail” over the issue.

Mr Brown will address the Festival of Ideas, in Kirkcaldy, Fife, where he will call for the repatriation to Scotland of £800m spent by the EU.

‘Not the time’

He will also propose that the Bank of England becomes the Bank of England, Scotland, Wales and Northern Ireland with fully staffed representation in Scotland “to reinforce the fact that the pound is for everyone”.

He was the main architect of the “Vow”, a promise of more powers for Holyrood, which many believe boosted the No vote ahead of the Scottish independence referendum in September 2014.

Earlier this week, Ms Sturgeon said Scotland’s interests would be harmed by losing access to the single market, and argued Scottish voters – who backed remaining in the EU by 62% to 38% – deserved a choice between a hard Brexit and becoming an independent country.

Prime Minister Theresa May has responded by saying “now is not the time” for such a vote, as her government focuses on securing a good Brexit deal for the whole of the UK.

In his speech, Mr Brown will argue a new form of federal home rule is needed to unite the country and avoid years of “bitter division”.

He is expected to say: “The third option, a patriotic Scottish way and free from the absolutism of the SNP and the do-nothing-ism of the Tories, is now essential because post-Brexit realities make the status quo redundant and require us to break with the past.

“The status quo has been overtaken by events because unless powers now with the European Union are repatriated from Brussels to the Scottish Parliament, the Welsh Assembly and the regions, Whitehall will have perpetrated one of the biggest power grabs by further centralising power. employment and energy.

“The patriotic way means that Scotland is not caught between a die-hard conservatism that denies the Scottish Parliament the powers it needs and a hard-line nationalism that throws away the resources we secure from being part of the Union.”

‘Demand for change’

Mr Brown has already pledged to join forces with Scottish Labour leader Kezia Dugdale to campaign for a people’s constitutional convention to look at how power is distributed across the nations and regions of the UK.

Ms Dugdale confirmed her party would vote against the SNP’s demand for a fresh referendum when it is debated at the Scottish Parliament next week.

She said: “Our call for a reformed UK is about meeting the demand for change. One message from the independence and EU referendums was that people wanted more control over their lives.

“That’s why Labour’s plan for a people’s constitutional convention and a federal UK will transform where political and economic power will lie in our country.”