Michael Keating shows that there are many possible outcomes after the General Election – and even more potential reactions

At the moment of writing, it is impossible to predict the result of the 2010 General Election. Labour seem worn out and mostly resigned to losing, their younger figures positioning for the leadership battle and likely civil war that will follow. The ideological differences among the prospective candidates look like variations on New Labour akin to the Blair-Brown disputes since the 1990s. Yet if Labour look like losers, the Conservatives look anything but winners. They have failed even worse than the Government in adapting to a post-crash world and the end of the false certainties with which both parties have consoled themselves for the last two decades. They stumble from one pronouncement to another, finely tuning their message to the focus groups without any clear message or defined policies. It is this performance, together with the distortions of the electoral system, that has raised the prospect of a hung parliament.

An alternative, and perhaps more likely, scenario is for the Tories to come a new accommodation with Scottish nationalism. Scottish Conservatism is near-dead, which gives the London leadership a free hand. All the evidence we have suggests that English Tories are not at all worried about what the Scots do at home or their freedom to do it.

Let us assume, however, that the Conservatives are on track for a working majority. What are the consequences for Scotland and for the constitutional settlement? We can take it for granted that there will be severe cuts in public expenditure, which will impact directly on Scotland in retrenchment in welfare, and indirectly through cuts in the block transfer by the Barnett Formula. This could provoke a sharp reaction in Scotland, especially if oil prices are high and the figures show Scotland paying for the UK recession while suffering cuts in public services. With the SNP still in government in Edinburgh, it could the Labour Party that benefits from this, especially if the party in Scotland adopts a stronger territorial profile (see below).

It is equally likely that some of the deficit will be filled by raising charges in health, education and social services in England and continuing the gradual privatisation that has been New Labour’s legacy. This will encounter a strong rejection in Scotland and Wales where traditions of social democracy have survived in better shape, as have commitments to universalism in provision (and probably in Northern Ireland too). A UK Conservative Government, in turn, could react in two ways. It could seek to impose its will on Scotland and Wales by forcing them into the same kind of restructuring. This could mean reverting to a neo-Thatcherite strategy, a programme of social engineering to wean the Scots from their anachronistic attachment to welfare, the ‘dependency culture’ as they liked to call it. This would imply recentralisation and an undermining of the devolution settlement. It could also imply the end of the United Kingdom by provoking a crisis of territorial accommodation deeper than anything that happened in the 1980s and 1990s.

An alternative, and perhaps more likely, scenario is for the Tories to come a new accommodation with Scottish nationalism. Scottish Conservatism is near-dead, which gives the London leadership a free hand; remember that it was the Scottish Tories, not Westminster, that dreamt up the poll tax and insisted on trying it out here first. All the evidence we have suggests that English Tories are not at all worried about what the Scots do at home or their freedom to do it. What they object to is the perceived influence of Scots in London (recall the London commentariat’s musings on the Scottish Raj), and on Scotland’s ‘excessive’ share of government spending. So a deal could be in prospect. The Conservatives bring in English votes for English laws at Westminster, so dealing with the West Lothian Question (this is in their programme). They cut the number of Scottish MPs, already promised as part of an overall reduction of the size of the House of Commons and an equalisation of the electoral quota. They abolish the Barnett Formula, which they erroneously think is responsible for Scotland’s spending advantage (in fact Barnett works to reduce it). In return they concede a large measure of fiscal autonomy to the Scottish Parliament. So if the Scots want to maintain their ‘old-fashioned’ social democracy north of the border, they are welcome, just so long as it does not affect England. This, of course, entails abandoning the Scottish Tories but they long since ceased to count for much in the wider party.

This would be a sharp reversal of position, since it has traditionally been the progressive parties that have been most favourable to home rule (although not consistently so). There is, however, nothing in Tory ideology that should rule it out. On the contrary, it could be sold as part of Conservative ideals of self-reliance, much as Ted Heath tried to some forty years ago, only to be frustrated by the Scottish Tories, then a significant force. Whether David Cameron or those around him would have the boldness and imagination to do this, and so liberate Tory England, is far from certain, but let us assume that it came to pass.

It would have profound implications for politics in Scotland. For the first time the Scottish parties would have to face up to the choices modern democracies must make and to their consequences. The SNP would have to decide whether it is really a low-tax or high-spending party – in recent years it has tried to be both at the same time. All parties would need to think about the scope and limits of universalism in free services. Can we really say that free estuarial bridges are essential social services in the same category as care for the elderly? Do we really need to pay the university fees of students whose parents are wealthy enough to buy them houses to stay in during their years of study, when students from poorer families are many times less likely to get to university? Are tax cuts for companies really a good idea when there are pressing social needs? Should we provide free buses for all over-60s (I confess an interest here)? How can we improve the lot of those hundreds of thousands of Scots living in poverty? In other words, we would have had the policy debate that has been missing these past ten years, about the kind of social project that should underpin devolution.

A majority Conservative government, combined with a weakened UK Labour Party, would also pose challenges for Labour in Scotland. With better prospects for returning to power than its Westminster counterpart, Labour at Holyrood could look like a more attractive option for the rising political generation. Scottish Labour could gain in autonomy and start to play the Scottish card, a familiar tactic from its previous bouts in opposition. This could create further pressures for more devolution and an intensified competition with the SNP who, now more than ever, will be seeking the same vote with the same range of policies. This could stimulate a policy competition on the centre-left, in contrast with England, where the competition has largely been on the centre-right and dominated by the concerns of south-east England, with the northern regions increasingly marginalised.

It is likely that any minority government, Conservative or Labour, would move on constitutional change, including more devolution for Scotland and Wales, since this does not cost much and ties the nationalist parties to the fortunes of the government.

A majority Conservative Government would also reinforce the trend to Euroscepticism in England. We know that the incoming MPs will be even more hostile to Europe than the existing ones, while Cameron has talked of repatriating powers and passing a British Sovereignty Act to limit Europe’s jurisdiction. As most of these ideas are incompatible with continued membership of the European Union, the prospect of withdrawal into a loose free-trade zone is a real one. Certainly the Conservatives will be even more hostile than New Labour about extending European provisions on workers’ rights and the idea of a ‘social Europe’ more generally. The UK would thus move ever closer to the American model of market capitalism, while Europe retains its social conscience. At some point, (southern) English and Scottish interests in Europe could diverge so radically that Scotland would have to find its own way, with independence in Europe becoming the only solution.

The prospects of a hung parliament depend as much on the quirks of the electoral system as the behaviour of the voters, but it remains a possibility. With a block of perhaps thirty MPs from territorial parties (including all the Northern Ireland ones) alongside the Liberal Democrats, politics would be opened up on multiple dimensions. A government with a majority in England could be defeated with the votes on non-English MPs. With SNP members not voting on purely English matters, and Sinn Féin not voting on anything, further uncertainties are created. It is likely that any minority government, Conservative or Labour, would move on constitutional change, including more devolution for Scotland and Wales, since this does not cost much and ties the nationalist parties to the fortunes of the government. A Conservative, but not a Labour government, would bring in English votes for English laws, securing its position in the longer term. A minority Labour government would be much more cautious on Scotland, since Scottish votes would be so important to it, and vulnerable to the SNP. This could create serious strains within the party, as the Scottish branch had to prove its credentials in the face of nationalist competition while the UK party would seek to impose control from the centre – we already saw some of this in the 1970s.

All of this will set the conditions for the Scottish elections a year later. If Labour is in opposition at Westminster, its life in Scotland will be a great deal easier. It can oppose UK policies on privatisation in social services and education, even those it pursued while in government. It can attack the Westminster Tories for the inevitable cuts and the SNP for carrying them out. Indeed it may at last succeed in outflanking the SNP on the left, especially if the latter gives way to its more neo-liberal wing. Whether such a shift is possible within a year is perhaps questionable, especially if the party at UK level is consumed in a leadership battle but if it can then a return to government in Scotland in 2011 is not to be ruled out. Such a development would represent a further stage in the devolution process: Labour in office in the devolved territories but not at the centre. This could, potentially, rebalance the party and open the way to new thinking for progressive policy in Scotland. That, however, would require considerable renewal, an opening out to civil society and a willingness to engage in debate without preconditions. Whether any of our parties are now capable of such renewal is, alas, doubtful. New ideas will have to come from elsewhere, which is why it is more vital than ever that we develop a capacity here for bold thinking and innovation, looking beyond Westminster to the experience of small progressive nations elsewhere.