Tripped up by the whingeing Scots

The full cheeky enormity of what the Conservatives have done to Labour over political reform is only now starting to dawn on opposition front benches. It is quite a story. The misruling of Britain is the strongest single Opposition theme - ground on which Tony Blair's attack needs to be particularly fierce if Labour is to ignite a moral crusade. Within the space of only a few days, however, Labour has been reduced to slithering, half-panicked retreat.

Had this happened during an election campaign, it would have been a turning-point: if Labour hasn't been badly scared by the anti-Scottish Home Rule hysteria of the past week, it should have been. Here is a warning and, if the warning isn't taken seriously, a portent.

The Tory attack was a try-out, a probing thrust. It may not have registered strongly with voters. But it teaches a lesson: that, however secure Labour thought it was on the broad issue of constitutional reform, a thousand devils dance in the detail. And it only takes one sloppy idea to turn the whole debate.

This thought was rammed home by the release yesterday morning of Labour's evidence to the Nolan inquiry on standards in public life, which itself starts public hearings this week. The Labour document is a compelling one which reads for once as though it hasn't been through a dozen committees - it was, in fact, written almost entirely by Jack Straw. It describes a new form of dependency culture.

Straw argues that the policy of rolling back the state has led to a paradox. Though the numbers directly employed by the state have dropped by nearly half since 1979, public spending has remained at about the same proportion of GDP. The fall in numbers of employees has not led to a reduction in the jobs to be done.

"Instead, these functions, previously provided by the state, are now provided by government contractors, through the process of privatisation, compulsory competitive tendering, and market testing. This has led to a great increase in the number of privatefirms and individuals wholly or largely dependent upon the state for their profit and livelihood.'' The paper goes on to discuss quangos, privatisation fees, party funding and other matters, and calls for a new "Governance of Britain Act''.

The centralism, the blurring of accountability and the whiff of corruption that Straw discusses add up to the single biggest political failure of the Tory years. They are the raw material upon which Labour could base one of the most savage attacking campaigns of modern times.

But if the left thought they could define what political reform meant, they were rudely surprised. Major's counter-attack implied that none of the above mattered compared to the West Lothian question - and this was followed up by Tory MPs suggesting thatthe proposition "constitutional change'' could be equated with the words "greedy, whingeing Scots''. An impudent reaction, but a fast and intensely political one.

Now it is true that Labour has a special problem with Scottish Home Rule: it is obliged to speak to two very different audiences at the same time. It must make a reassuring case to Middle England and a rousing case to those Scots who might otherwise be tempted to vote SNP. Tailoring the same policy to opposite audiences, as Major has been doing on Europe, inevitably results in a blurring of the message: forked tongues mumble words.

It is also true that one of the things Labour lost the morning that John Smith died was a leader who could, because of his age and experience, make Home Rule sound dully common-sensible.

And the third, biggest truth is that Home Rule could lead to the break-up of the UK. But for that to happen the Scottish parliament would have to be so successful that Scots would want it to have more tax-raising powers over them, and would be so enthusiastic about it that they would want their own military forces, currency and so on. Well, maybe: but it would be a rare flowering in a Western democracy.

Alternatively, break-up would require a revolt by English voters against a continuing Scottish connection. How likely is that? Polling confirms what anecdote and personal experience suggest, which is that so far, most English voters have no rooted objection to Scottish Home Rule and are, if anything, mildly in favour. For most, those famous English virtues, "le fair-play'' and a sense of proportion seem to dominate reaction.

Things are different at Westminster, because these matters touch the lives of parliamentarians. The West Lothian question is so far mostly one asked by MPs for MPs about MPs. The mood in the Commons last Thursday, with Conservative backbenchers baying about Scottish subsidies, felt more nakedly and nastily England-v-Scotland than anything I've heard outside the chamber except on sporting occasions.

But this goes back to the very same issues Jack Straw was writing about in his paper for Lord Nolan and his committee - the arrogance of a cosy, comfortable and dependent political class. There seems to be a feeling among some Tory MPs that any British government not rooted in the Home Counties is somehow illegitimate.

Perhaps these MPs, encouraged by John Major, will be able to rouse Middle England to righteous anger about Scottish Home Rule. But doing so depends upon them persuading voters that the average Scot is "the problem'' - presumably a more offensive dependent of state largesse than the army of managers of privatised utility bosses, the merchant bankers who have formed special units to tout for Government business, the quango appointees, and so on.

This ought to be a tough proposition to sell. Thus far, the English electorate seems markedly less nationalistic and hysterical than the English political elite. And this is not surprising. But a fortnight ago the idea that Tories could turn the whole constitutional argument in their favour seemed to most people utterly outlandish; and it doesn't now.

All this has come early enough to be a lesson for Labour, nothing worse. The question for the Opposition now is not simply whether or not it can reformulate its ideas for devolution of powers in England - that is already going on. The question is whetherit has the necessary clarity, self-certainty and anger to sell and carry through the British political revolution to which, on paper, it is committed. It ought to be a silly question. Is it? Here, at least is where the habit of caution so painfully taught over so many years has no place at all. Here is where Tony Blair's people must raise their game - or lose it.