Cameron offers major concessions to Salmond

SNP leader gets new economic powers and is told that Westminster will not place obstacles in way of referendum

Alex Salmond has won his first concession from David Cameron after his party's historic election victory on Thursday, with a pledge that Scotland can begin borrowing hundreds of millions of pounds to fund public projects in future years.

The Government has acceded to the Scottish National Party leader's demands for immediate authority to borrow at least £300m annually from the Treasury to help boost Scotland's economic recovery. Mr Salmond had been demanding the change – in the face of resistance from Westminster – during the passage of the Scotland Bill, which will devolve a number of economic powers from London to Edinburgh.

Michael Moore, the Secretary of State for Scotland, has also confirmed that Westminster will not use its own legal powers to block a referendum on Scottish independence.

The concessions suggest that the coalition is anxious not to antagonise the emboldened First Minister in charge of a majority administration. The leaders of Scottish Labour and the Liberal Democrats have announced their resignations after their parties were swamped by the SNP tide on Thursday.

Labour's leader Iain Gray announced he would stand down from the job in the autumn, while his Lib Dem counterpart, Tavish Scott – who presided over the loss of 12 out of 17 seats – yesterday confirmed he was quitting immediately.

Mr Salmond, having added 23 to the tally of MSPs and finished with a four-seat majority, greeted his victory with a grand speech in Edinburgh, where he held out an olive branch to rivals, saying he looked forward to their "constructive opposition".

But he pledged that, in a later telephone call with Mr Cameron, he would be "laying down markers as to what this result, this mandate, means in terms of Scotland's relationship with the UK". Mr Salmond revealed yesterday that he had "laid out the grounds whereby there's going to have to be economic teeth inserted into that Scotland legislation because we need recovery in Scotland".

While an independence referendum is unlikely to happen for at least two years, the Scotland Bill has emerged as the first arena for conflict between Holyrood and Westminster.

Mr Moore, who will meet Mr Salmond to discuss the Bill tomorrow, said he was preparing to make announcements about funding arrangements, "particularly around the timing of borrowing powers". He added: "That is an area I am looking forward to showing some good progress."

However, it was clear that the Government will have to make more compromises if it wants to maintain cordial relations. The new SNP administration is demanding further concessions, including the right to set corporation tax on business. Amid growing demands for the Government to call the Nationalists' bluff and sanction an immediate referendum, Mr Moore yesterday confirmed that he would not attempt to block a vote on Scotland's future.

Opponents claim Mr Salmond is delaying the referendum because, despite his party's level of support, the majority of the Scottish electorate remains opposed to independence. The former Scottish Labour apparatchik John McTernan said: "The strategy is to normalise independence and build up support for it over what would effectively be a five-year referendum campaign. Picking a fight over the Scotland Bill is part of that: if he extracts concessions, he wins, and even if he doesn't, he wins by being seen fighting Scotland's corner at Westminster."

The process towards independence is a long and complicated one that would involve at least two referendums, and still the Government would ultimately have the final say on Scotland's future. One Tory former Scotland secretary, Lord Forsyth, said the coalition should seize control of the issue before Mr Salmond can build up support for independence. He told The Scotsman: "We need to give people a choice, and I would like to think that preserving the United Kingdom is top of the Prime Minister's priorities. Once that issue is settled, we can then address the life-threatening issues facing our public services and businesses, debate on which was singularly absent from the Scottish election campaign."

Murdo Fraser, Scottish Conservatives' deputy leader, said: "If we're going to have a referendum, we should have it as soon as possible so we can get the question settled once and for all."

But Mr Moore made it clear that Westminster had no appetite for an early showdown. He said: "We will not be putting any difficulties in the way of the referendum taking place and we will work with the Scottish government to ensure that they can have it when they choose."

The procedure: Five steps to independence

1. A Bill is passed by the Scottish Parliament authorising a referendum.

2. The referendum asks the people of Scotland to approve the executive entering into negotiations with the British government over the future of the nation.

3. If the referendum is passed, the two administrations discuss terms of independence – covering issues including the division of assets and debt, the future of North Sea oil and Scotland's membership of international bodies.

4. Legislation for a second referendum, which, technically, can be authorised only by Westminster.

5. The final referendum asks the Scottish people if they want independence on the negotiated terms.

Source: Constitution Unit, University College London

Start your day with The Independent, sign up for daily news emails
Have you tried new the Independent Digital Edition apps?
ebooksA celebration of British elections
  • Get to the point
2015 General Election

Poll of Polls

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: Helpdesk Analyst - Devon - £20,000

£18000 - £20000 per annum: Ashdown Group: Helpdesk Analyst - Devon - £20,000 ...

Ashdown Group: Data Scientist - London - £50,000 + bonus

£35000 - £50000 per annum + generous bonus: Ashdown Group: Business Analytics ...

Ashdown Group: IT Project Coordinator (Software Development) - Kingston

£45000 - £50000 per annum: Ashdown Group: IT Project Coordinator (Software Dev...

Ashdown Group: Editor-in-chief - Financial Services - City, London

£60000 - £70000 per annum + benefits : Ashdown Group: A highly successful, glo...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power