Preheat oven to 350 degrees F.

Add the butter, sugar and brown sugar to a mixing bowl and cream together until very smooth.

Add egg and vanilla and mix well.

Add flour and baking powder and stir until combined.

Fold in butterscotch chips (keep a small handful to sprinkle on top).

Spread into a greased square (8 or 9 inch) baking pan and bake for about 25 minutes, or until a toothpick inserted comes out clean.

Allow to cool before cutting into bars.

Melt the butter in a saucepan over medium heat.

Add the sugar and cream and stir well with a wooden spoon until blended.

Bring mixture to a boil, reduce heat and boil for about 5 minutes, stirring often.

Remove from heat and stir in vanilla. The sauce will thicken as it cools.

Serve warm over ice cream.

To store, refrigerate sauce in an air-tight container.