A choice for Scotland, a risk for Blair

A referendum pledge by Labour could wrongfoot the 'tartan tax' Tories, but it could upset the activists

The Conservatives may not be much of a government but they are already proving to be a serious opposition. By campaigning savagely against Scottish Home Rule, they have just changed the policy of Tony Blair's government-in-waiting. He is about to announce a radical shift on Scotland which, according to Blair's aides, will put John Major on the spot.

As Donald Macintyre noted here yesterday, Major's potent ''save the Union'' message in the 1992 election has been a lesson to both main parties. The Tories think it helped them win. Labour is worried that they're right. And over the past year the Scottish Secretary, Michael Forsyth, has rubbed the message home by successfully dubbing the proposed Edinburgh parliament's ability to vary income tax a ''tartan tax''.

Labour is caught between two nationalisms. There is the real revival of nationalist feeling in Scotland, which Labour activists mostly share and which Blair must respond to, or risk losing seat after seat to the SNP. And there is the reawakening nationalism of Tory England, which has mostly manifested itself in anti-Europeanism, but which could be whipped up by a Scottish settlement.

Blair has been worried by English nationalism for some time, and rightly so. He must assume that, if he makes it to Downing Street, he will quite quickly be facing a Tory Opposition led by Michael Portillo or John Redwood in flamingly Thatcherite form. So he needs to find a way of dealing with Scottish devolution which doesn't allow that political spectre to return to haunt them.

Yet almost anything Blair suggests to help repulse the English nationalists will infuriate Scotland's nationalists, including those in his own party - and vice-versa. He could simply ditch the proposed Edinburgh parliament's ability to raise and cut taxes. But that would mean the abandonment of a policy strongly believed in by the Scottish Labour Party and which Blair has committed himself to retaining.

It would cause a ferocious row. More important, perhaps, would be its effect on Scottish politics generally. The Edinburgh parliament would be offered the power to divide up a cake entirely produced of block grant. Anything it failed to do could be blamed on southern meanness. It would be a recipe for immature politics and anti-Englishry.

For Blair to go that way would be a serious mistake. What else? He could suggest that Westminster will have the power to over-ride the Edinburgh MSPs even on those areas of policy considered fit for a Scottish parliament. That too would infuriate the Scottish Labour Party, and the ''London veto'' would be excellent news for the real Scottish Nationalists.

So instead, I expect Blair to go for a multi-option referendum. This has one huge downside. It would remind people of the last such referendum, in 1979, which failed to clear the 40 per cent hurdle imposed by London and thus destroyed the Scottish Assembly which had been so painfully prepared by the Callaghan government. That referendum campaign set Labour MP against Labour MP and was conducted against a background of foul weather, the stoppages and strikes of the "winter of discontent". For the Labour Party in Scotland, it is not a cheerful memory.

This time round, some of the same problems would apply. Given a referendum, wouldn't some Scottish Labour MPs of a staunchly Unionist persuasion - Brian Wilson springs to mind - find it very difficult not to campaign against their own party's policy? As in the Seventies, wouldn't Westminster add an extra numerical hurdle? Labour's Scottish general secretary was in London yesterday, presumably for talks on these very subjects.

For there are strong tactical reasons for a Scottish referendum commitment. First, it would allow Labour to present the Scottish people with at least three clear choices. There would be the unchanged Union, for which the Conservatives would presumably campaign and presumably lose. There would be independence, the cause of the SNP. And there would be something-in- between.

Labour could explain in detail its proposals, including ones on the longer- term future for Scotland's relatively high central funding and on tax powers for Edinburgh, inviting Scots to weigh them up and make a choice.

The Tory allegation that a Labour vote in Scotland at the general election would mean a ''tartan tax'' would be destroyed: such a tax would be imposed only if Scots later voted twice for it - once for a parliament with those powers, and then again for tax-raising MPs to sit in that Edinburgh parliament.

The allegedly over-generous treatment of Scotland from public funds would also be aired before the new parliament was established. The referendum could, of course, go the ''wrong'' way for Labour. But that seems unlikely; and it would ''out'' both the Tory Unionists and SNP, obliging them to take their unadorned case directly to the Scottish people.

This is a momentous decision for Blair. If the Tory attack on Scottish devolution is repulsed, then the whole Conservative case against Labour's constitutional reform programme will begin to come apart too. Can Major really make anyone's flesh creep at the thought of a Bill of Rights, or the abolition of the voting rights of hereditary peers?

The question troubling Blair has been whether these tactical advantages outweigh the anger that the Scottish Labour Party and many other Scots will feel at any delay and uncertainty over Labour's once-clear Home Rule promise. My guess is that that question no longer troubles him; and that he will publicly go for the referendum within days.