Downing Street, May 4, 2010: Cameron takes a call from Salmond...

MAY 4, 2010

It's the morning after the general election and Prime Minister David Cameron is looking forward to his first day in Downing Street. But first he must take a call from his new friend Alex Salmond...

'ALEX Salmond is on the phone, Prime Minister. He wants to offer his congratulations."

"Alex, hi! How are you dear chap?"

"Good, David, good. Told you Labour was easy meat, didn't I?"

"Yes – thanks so much for the advice. 'Time for a Change'... worked a treat."

"Glad to have helped! Anyway, pretty slim majority you got there, David. I'm sure you noticed the fact we've now got 20 MPs."

"Yes, well done you! I guess I'll be needing your support."

"All we're asking for is Scottish corporation tax, a Scottish oil fund, our council tax benefit money, our attendance allowance cash. That's all."

"Ah, sorry Alex. No can do. I told you – the Union's really rather important to me."

"No matter! All grist to the mill for my independence referendum... you do know about my referendum, David?"

"Ah. Slipped my mind actually."

"Oh well. Got to go!"

"When are you having it....."

"Bzzzzzzzzzzzzzzzzzzzz."

In a hot conference room in London last week, SNP MP Pete Wishart was holding court. The occasion was a conference organised by the Constitution Unit of University College London and Wishart had been invited to discuss the question of devolution at the crossroads. But all Wishart wanted to talk about was the resurgent Tories. Later that night, Conservative candidate Edward Timpson was elected as the new MP for Crewe and Nantwich, overturning Labour's 7,000 majority with a 7,000 majority of his own. It was yet another staging post on the Tories' now seemingly inevitable march to victory.

Wishart could hardly contain his excitement. "It looks like there will be a Conservative Government in 2010. It will be the best possible moment," he trilled. Only a few months later, Wishart added, the SNP Government plans its referendum on independence. The confluence of events had Wishart grinning from ear to ear. "People in Scotland will be faced with a very clear choice. They (the Conservatives] will be returned with less democratic legitimacy (in Scotland] than they had in the 1990s. It is likely that they will have only two out of 59 seats."

The question the SNP would be able to put to the Scottish electorate would be simple, Wishart declared: "Who do we want to run those important reserved issues? A Conservative Government or the Scottish Parliament?"

Alex Salmond's dream scenario – being able to illustrate the need for Scottish independence by pointing to an "English-imposed Tory Government" – is now growing ever closer. And with wonderful timing – for the Nationalists – it looks like it is set to happen just a few weeks before Salmond prepares to ask the Scottish people to decide their future. The First Minister awaits Cameron's first few weeks and months in office like a venus fly trap. In Scotland last week, wallowing in the applause of the Tory faithful in a conference in Ayr, Cameron offered a steadfast defence of the Union. But does he know what perils await him? And if so, what has he got up his sleeve?

Allies of Cameron have declared in recent weeks that it is the question of the Union – and how the Tories should preserve it – which causes the Conservative leader most concern as he prepares his blueprint for Government. Certainly, nobody can dispute that the battleground that lies in front of him is filled with potential minefields.

At the same conference last week at which Wishart was holding court, one of the Tories' leading thinkers on the constitution, Lord Norton of Louth, laid out the dilemmas. Prime Minister Cameron would face three separate and distinct problems. First, he has to tackle his relationship with Salmond. Second, he has to work out how he deals with his party in Scotland. And third, he has to be mindful of the growing sense among the English that they deserve an equally good deal as the "sponging Scots".

A quick check on how catastrophically Labour has handled these three areas confirms just how damaging they can be if got wrong. So Norton laid out Cameron's options for action. He could embrace the move for more powers for Holyrood – thus appeasing the Scots. He could create an English 'parliament' and cut the number of Scots MPs – thus appeasing the English. He could combine the two – thus satisfying both (but potentially weakening Britain). He could dodge both and hand more power to local government. He could avoid the issue until the publication of the Calman Commission – the cross-party body currently looking into devolution. Or he could simply do nothing.

Norton claimed not to be speaking for Cameron, but whatever Cameron does, it will be one, or more, of the above. None is likely to be easy – especially when a political operator like Salmond is lurking, waiting for every potential slip.

On his trip to Ayr last week, Cameron quickly removed all prospect of one option. Playing to his home English gallery, it seems, is not going to be his course. "I am passionate about our Union. I do not want to be the Prime Minister of England. I want to be Prime Minister of the United Kingdom – all of it, including Scotland," he declared.

Close allies insist that Cameron's Unionism is genuine, stiffened further by the equally strong views of shadow chancellor George Osborne. Neither man is said to be persuaded by 'English-only' solutions. And with neither man having gone through the traumatic experience of the late Nineties – when the Tories were wiped out in Scotland – both believe that their message will eventually be heard in Scotland as well.

In a private meeting with Scots candidates on Friday, Cameron conceded to them that his 're-branding' of the party had not yet had the resonance this far north. He warned that it might require the party to actually get back into power before Scots would be persuaded of the case for change. But he is certain they can be.

But the trouble is that this doesn't deal with their immediate problem – their sheer lack of presence in Scotland. Optimistic Tories believe that several seats are up for grabs for the party in 2010 (with even Alistair Darling's Edinburgh South-West seat spoken of as a potential target). But the reality remains that Cameron will still be a Prime Minister who Scots didn't want. Thus, the main Cameron strategy to combat this deficit is a gamble – he hopes to charm Scotland and the SNP Government into submission.

The charm was evident in Cameron's speech last week. Cameron spoke of his desire to govern "with respect" for voters' views. "Whoever is Scotland's First Minister, I would be a Prime Minister who acts on the voice of the Scottish people and will work tirelessly for consent and consensus so we strengthen our Union and never put it at risk," he added.

One leading Cameroon added: "Every courtesy would be extended to Alex Salmond – to take account of Scotland's special interests with an understanding that this requires a sensitive handling."

One Scots Tory added: "Whoever Cameron makes Secretary of State for Scotland should make it their job to ring up Alex every morning and ask him: 'What can I do for you today?'"

The Conservatives say they will avoid the trap which they believe Labour has fallen into of providing a convenient bogeyman for Salmond to attack. "If the Tory party were to slip into caricature then it would work for Salmond," says one leading Conservative figure. All sign of arrogance will be removed; the SNP is set to be drowned in a sea of Humble Pie.

The problem comes, however, when the charm can no longer hide disagreement. SNP MPs, for example, say that should the Tories require Nationalist support for a majority in the House of Commons, top of their list of demands will be a cut in corporation tax north of the border. Such a plan has been ruled out by the Treasury thus far, on the grounds that different rates of corporation taxes cannot be accommodated in a single state. So what would Cameron do – bearing in mind that to refuse would be to play into Salmond's hands? The Tories say they plan to make it their business to be reasonable – so long as Britain itself was not damaged.

A party source said: "If there is a clear political consensus within Scotland that something should happen that would not manifestly imperil the Union then it would be sensible to do that. The judgment has to be that there will be a democratic consensus for it, but also would it imperil the Union or enhance it?"

The agreed strategy is to effectively close ranks behind the findings of the Calman Commission, in the hope that its findings will be seen to be on the side of good sense and reason.

Such a 'reasonable' approach, the Tories argue, will blunt the SNP's lazy assumption that as soon as a Conservative Government is elected at Westminster, Scotland will erupt into a state of nationalist outrage. Times have moved on, they argue. Cameron will have a honeymoon, just like Salmond's. And Scots will instinctively accept, they add, that the huge question of independence cannot be decided purely because Scotland doesn't like Tories very much. "I don't think it is the case that you can win the case for separation by saying: 'Let's protect Scotland from the bogeyman,'" adds one senior insider.

They sound confident, but doubts linger. Won't Cameron's flexibility surely not be tested against the boundaries of his own passionate Unionism? And will the SNP not make it its job to find where that breaking point is? Salmond has talked of making Westminster dance to a Scottish jig. Last week, Cameron insisted that he will lead Scotland on a Unionist march. But he had dust off his dancing shoes off just in case.

Dream team? Cameron's likely Cabinet

GEORGE OSBORNE
Chancellor of the Exchequer

As one of the leading lights of the New Model Conservative Party, George Osborne is Cameron's closest friend and one of the party's key minds. The friendship was struck up on the backbenches during personal discussions of the post-9/11 era. They reportedly made an agreement over which of the two would stand for the leadership, although both deny a pact was ever made. Osborne's policy of taxing non-domiciles in order to cut inheritance tax is seen as a key factor in Gordon Brown's election climbdown.

DAVID DAVIS
Home Secretary

Originally seen as a hard man of the party's right-wing, Davis has since painted himself as an old-fashioned libertarian, most significantly taking a vocal stand against Labour's ID card scheme. His background, growing up in a single-parent parent family in what he describes as a Yorkshire "slum", is politically valuable to the Tories in a cabinet packed with Old Etonians and ex-public schoolboys.

WILLIAM HAGUE
Foreign Secretary

History has been kind to William Hague since his doomed leadership of the Tories came to an end in 2001. Now seen as a victim of timing rather than as a baseball-capped buffoon, Hague is once again a much-respected figure in the Tory set-up. While not necessarily a Cameronista, his down- to-earth demeanour and political experience add gravitas to the flimsy-looking Notting Hill Set.

MICHAEL GOVE
Education Secretary

A noted policy wonk and self-confessed "dungeons and dragons nerd", Gove was born in Edinburgh and raised in Aberdeen. He went through both state and independent schooling before, like Cameron and Osborne, heading south to Oxford University. Gove gave up a lucrative career as a columnist for the Times to take up a position on the Conservative frontbench as the shadow secretary for children, schools and families, although he can still be found in print and on Newsnight Review as an arts critic.

IAIN DUNCAN SMITH
Welfare Reform Secretary

The "Quiet Man" of Conservative politics seems to have found his voice in highlighting the plight of the poor in British society since being dumped as party leader in 2003. He established, and is chairman of, the Centre for Social Justice, a think-tank responsible for finding solutions to Britain's greatest problems.

DAVID MUNDELL
Secretary of State for Scotland

As Scotland's only Conservative MP, David Mundell is the default choice for Secretary of State for Scotland. However, the lack of competition for the role is perhaps the only thing going for Mundell after he allegedly criticised Annabel Goldie's Scottish Conservatives for having "a simple lack of thinkers" in a leaked memo, much to Cameron's reported distaste.