Why Blair risked the wrath of Scotland

the history and logic behind Labour's policy change on a devolution referendum

For good or ill, Labour showed last week how well it can keep a secret. As news threatened to leak of the party's historic shift on devolution last Tuesday, George Robertson, shadow Scottish Secretary, rang one of his deputies, John McAllion, to warn him of an impending change of policy.

Mr McAllion was a spokesman on the constitution and needed to know. But Mr Robertson was speaking on a mobile phone - notorious for their security lapses - and declined to reveal the detail there and then. Within two days Mr McAllion quit the front bench, complaining of a lack of consultation, and precipitating an unprecedented crisis in the Scottish Labour Party for Tony Blair.

Like Mr Blair's earlier dramatic policy shift over the abolition of Clause 4, the origins of last week's announcement stretch back over many months of secrecy. Paradoxically, they can be traced to a review of the constitutional situation in England more than a year ago.

Neil Kinnock and John Smith had promised that, if Scotland got its own assembly, the English regions should have them too. But did the English want a new tier of government? As one senior source observed last week, Smith had discussed his proposals with other parties in Scotland but not even with Labour colleagues in England.

So Jack Straw, the shadow Home Secretary, proposed a solution: the English regions would get assemblies only where local referendums showed support. His paper, "A Choice for England", concluded: "It has been a long-standing principle of the Labour Party that no major change of this kind [regional assemblies] should be made without the consent of the people affected". That, however, created another problem. If the question of devolution was to be put to the people of the English regions, why should it not also be put to the people of Scotland and Wales?

That has always been the problem with the Scottish case for devolution: how to achieve parity of treatment with the English? Early last year, Tam Dalyell, the veteran Labour MP who had opposed devolution in the 1970s, repeated his famous West Lothian Question: with unanswerable logic he pointed out that a Scottish Parliament would take over responsibility for such areas as education. Westminster would have no say on these. Why then should Scottish Westminster MPs be able to vote on education in England?

Meanwhile, the Scottish Tories were on the attack over Labour's "tartan tax" - the proposal that a Scottish Parliament would be able to vary the rate of income tax from what applied elsewhere in the UK by 3p in the pound. As one Scottish Labour front-bench MP put it, "they were shaving 2 or 3 per cent off the percentage of voters backing devolution".

With a general election looming, the Tories were certain to argue that, if Labour was prepared to tolerate extra tax in Scotland, how long before they and their Scottish shadow Chancellor, Gordon Brown, also slapped an extra 3p on income tax south of the border?

By last November, Mr Blair had decided to review Scottish and Welsh devolution. A Labour source said: "Tony went one-by-one through the policies that needed sorting out. He had decided we would not go into the election with policies we could not defend." Mr Blair set up a committee of Shadow Cabinet members including Mr Brown, Mr Straw and Donald Dewar, shadow Chief Whip, all of whom backed a referendum.

The position of Mr Robertson was less certain. Publicly he was unswerving, in February telling the newspaper Scotland on Sunday: "We have no proposals for a referendum because we want to legislate early and quickly for this outstanding commitment, and that is the clear party policy." As late as May, he wrote to the Scotsman describing reports of an impending change in policy as "a compilation of innuendo, anonymous quotation and pure speculation".

That is strong language, but not quite a denial. According to some accounts, the change in policy had been discussed in March at Mr Robertson's home, when Mr Blair visited him after the Dunblane massacre.

Whether Mr Robertson was still lobbying privately to keep the old policy or was just being over-zealous in maintaining secrecy remains unclear. So does the point at which an even more explosive proposal was agreed: to hold a referendum on the Scottish Parliament's tax-varying powers.

But by last weekend, with the latest policy document, the Road to the Manifesto, due within two weeks, the decision was taken to press the button and news leaked to the Independent ahead of official speeches.

Was it worth the furore, the resignations and the sharp exchanges which Mr Blair experienced when he met the Scottish Labour executive last Friday? Much of the resentment in Scotland resulted from the sense of policy being imposed by Mr Blair and the feeling that Mr Robertson had misled the party about what was going on.

Most Scottish Labour MPs, however, feel that they can live with the policy. At a meeting last Wednesday, only four were firmly against. Most MPs were taken aback by the separate tax question but many accept the leadership's case that a referendum will speed the passage of a devolution Bill and make a Scottish Parliament irreversible. One said: "This is the biggest change for 300 years. We have been working on it for decades and we are within a few years of getting it. It is endorsed by 80 per cent of the population, yet we were making no progress because we had lost the agenda."

But problems remain, notably the West Lothian Question, to which Mr Blair provides no answer. The issue of the reduction in the number of Scottish MPs at Westminster is not addressed, nor is the status of the Secretaries of State for Scotland and Wales once devolution starts.

Mr Blair's referendum will not be binding. So English MPs of all parties, with objections based on the West Lothian issue (rather than level of consent in Scotland) may still try to amend or wreck a devolution Bill. In low-politics terms, however, Mr Blair has neutralised the "tartan tax" issue with its dangerous spill-over potential for the election campaign in England. Even if the Scottish Parliament gets its power to raise taxes, Labour will, as one source put it, have cast-iron political cover. "If those powers are there," the source said, "it will be because people voted for them."

Alan Watkins, page 19