When Alex Salmond woke yesterday morning, he would have been forgiven for pinching himself. After a political career spanning 20 years in continued opposition, he had just led the Scottish National party to an epoch-breaking victory, undoing 50 years of Labour-dominated history. For much of the past week there was a mounting sense that the SNP, the perennial bridesmaids of Scottish politics, were heading for yet another quintessentially Scottish defeat.

Such was the regularity with which Salmond had promised much, only for it to end in glorious failure, he was in danger of being compared with Ally McLeod, the Scotland football manager famed for his ludicrously hyperbolic talk prior to the 1978 World Cup finals in Argentina. “We’re on the march with Alec’s army,” could have been the party’s theme tune.

Yet this weekend he is preparing for government as the prospective head of an administration that, within four years, could lead Scotland to independence. Others may have something to say about that, not least the electorate – 75% of whom, according to polls, don’t want separatism – but who would have predicted such an outcome even this time last year? Throughout Friday, the trickle of SNP gains and Labour losses continued fitfully amid the chaos of suspended counts. Anger and despondency within the SNP camp slowly gave way to a growing belief that the party might match Labour after all.

Towards the end of the afternoon, strong showings on the regional lists together with surprise gains in constituencies such as Edinburgh East and Argyll and Bute put the SNP on level pegging with Labour on 42 seats each.

By 5pm, after Salmond had made his presidential address, there were only two regional lists to declare and 14 seats unallocated. The first round, in Lothians, put the SNP out in front for the first time, with 45 to Labour’s 43.

Then, in a scene almost choreographed for tension, Highland and Islands declared four seats for Labour and none for the SNP. It was suddenly all over. But after the SNP demanded a recount, the tally changed. By the time the returning officer had allocated six of the seven seats remaining, the SNP and Labour were tied nationally on 46 each.

The allocation of the final seat in Scotland went to one Dave Thompson, ensuring his place in history as the SNP candidate who tipped the balance 47-46 and gave the nationalists their first shot at power.

Salmond was given the news at the Prestonfield hotel in Edinburgh, shortly after delivering his presidential address on its manicured lawn. Angus Robertson, the SNP’s campaign manager, hugged his leader and told him: “We’ve won.”

Salmond’s delight was echoed by an explosion of ecstatic cheering from a throng of his party’s senior staff. After hugging his wife, Moira, Salmond gathered his team, many of them tearful, and thanked them for helping to change history.

The foundations for this victory had been laid two years previously. The party had a disastrous showing in the 2003 election when, under John Swinney’s anaemic leadership, its share of seats fell from 35 to 27. It was followed a year later by an equally poor showing in the European elections, precipitating Swinney’s departure. Salmond took the chance to return as leader, offering to lead his lost tribe to the promised land once more.

The following year, in June 2005, a group of senior party figures and supporters gathered for a summit at the Craigella-chie Hotel in Speyside. The secluded hotel has a reputation for tranquillity as well as discretion, attracting the likes of Annie Lennox and Ewan McGregor as guests. It was here that a plan was hatched to unseat Labour and propel the SNP into office.

In charge was Angus Robertson, a former journalist and communications consultant who had worked for the Austrian Social Democrats and the UK Cabinet Office before being elected MP for Moray in 2001. The invitation list he drew up included the best of the party’s “next generation”, the twenty- and thirtysomethings who would prove key to the SNP victory last Thursday.

They included Kevin Pringle, Salmond’s most trusted adviser, party secretary Alasdair Allan, policy wonk Stephen Noon, head of communications John Fellows and the newly elected MP for the Western Isles, Angus MacNeil, who went on to initiate the cash-for-honours inquiry that fundamentally tarnished the Labour brand. There were also SNP supporters from the worlds of business, public affairs and academia. Significantly, Salmond and his deputy Nicola Sturgeon were left out of the mix to encourage uninhibited discussion.

The starting point for the weekend, which was called simply Conference 2007, was that the status quo was unsustainable. There was a conviction that unless the party started talking to the public instead of talking to itself in elections, it would never win power. Notes from the meeting reveal those present rated the SNP’s past performance as “mediocre” and felt “people want more than just protest”. It was about thinking “outside of the box”, said one of the conference’s participants.

“It was a step-change in our approach. It was about the big play, about power. People knew we had to stop accepting campaigns that were destined to fail and get serious about winning. It was the weekend the penny dropped.”

Delegates drew attention to several items that they felt had contributed to the party’s consistent failure, including lack of confidence and self-belief. However, the most important factors were lack of money and poor communications.

Priorities were divided into five main areas – communications, governance, message, organisation, and resource. Each one was assigned to a team of senior staff and politicians, then broken down into key milestones that had to be met. The most important words on the board appeared under governance: “To be ready for government before May 3, 2007 and to be in government thereafter.”

In comparison to previous years, the changes were a revelation. In 1999 and 2003, the campaigning had literally been based on a wall of Postit notes. This time around training manuals were distributed, instructing candidates how to establish a rapport with voters by mirroring their posture, body language and speech patterns. They were instructed to “fix the voter in the eye”, adding, “It is manipulative. It works! It must be done sincerely.”

For most of 2006 the perseverance of Team Salmond appeared to be paying off, assisted in no small measure by the intransigence of their main opponent. Scottish Labour was largely invisible for much of last year, trundling along in the expectation that the nationalist threat would collapse in line with previous campaigns. Jack McConnell alienated many of his own MSPs by cutting them out of his decision-making, preferring the advice of two special advisers, Douglas Campbell and Rachel McEwan.

Labour was the only party at Holyrood not to have a press officer based at the parliament. The SNP, meanwhile, crammed the airwaves and press with its campaign messages, the overarching one being that it was now a party fit to govern.

One of the first signs that the strategy was paying off for the nationalists came in September, when a Sunday Times/ YouGov poll showed 44% of Scots in favour of independence against 42% who wanted continued rule by Westminster. Support for the SNP was also up, with the party now neck and neck with Labour.

A month later, Sir Tom Farmer, the Kwik-Fit millionaire, bumped up the SNP profile with a £100,000 donation. Although he stopped short of actually endorsing the nationalists – in theory the money was given to stimulate national debate – the message was clear: serious money meant a serious party and a business-friendly one to boot.

While his staff relentlessly worked the media about the new face of the SNP, Salmond began a personal makeover, learning to bite his tongue instead of his opponents. Out went the laddish aggression, the bombast, the folksy aphorisms and the gleeful, almost sadistic, mockery that had earned him his “smart Alec” reputation. Instead, in came a more polite, more restrained vocabulary and demean-our as he trained for the role of statesman.

Belatedly realising that it had been-wrong to bank on an SNP implosion, Labour’s response was to resort to scare tactics. At its conference in Oban, in November last year, home secretary John Reid delivered his infamous warning that an independent Scotland would encourage Al-Qaeda terrorists. It was as loopy as it was ineffectual, provoking scorn rather than support for his party. Nonetheless, Labour persevered with its strategy into the new year, mounting an election campaign that contained more warnings of apocalypse than the Bible but it was consistently outflanked by a fleeter, more nimble, and ultimately more professional opponent.

The SNP’s spring conference in mid-March Glasgow was pivotal. Tony Blair tried to puncture its optimistic mood with a lecture about the dangers of separation on the opening day. But he was wrong-footed by a letter published that morning from Sir George Mathewson, who was the former chairman of the Royal Bank of Scotland, endorsing Salmond for first minister. Blind-sided, Blair stumbled and called Sir George, one of the UK’s most respected businessmen, “self-indulgent and absurd”.

The prime minister’s gaffe was followed the next day by the SNP unveiling a record £500,000 donation from Brian Souter, the founder of Stagecoach. For Labour, the weekend was a disaster – for the SNP a triumph of forward planning.

On polling day Labour enjoyed the partisan support of Scotland’s tabloid press, which, without exception, cautioned voters to avoid backing the nationalists. On its front page The Sun carried a picture of a hangman’s noose along with the warning: “Vote SNP today and you put Scotland’s head in the noose”. From that high point, however, hopes of a recovery began to fade, especially when turnout, the key to Labour victory in Scotland, appeared patchy.

By the time the polls closed at 10pm many activists were just glad that the day was over. Despite being one of Labour’s safest seats, McConnell’s majority in Motherwell and Wishaw crashed from more than 9,000 to fewer than 6,000 with a swing of 6.9% to the SNP.

As though anticipating a loss at a national level, McConnell asserted lukewarmly that Labour had “won the debate” but that it remained to be seen if it had won votes in constituencies. Holding a handful of key marginals, Labour made a decent enough start, but losses soon began tumbling in. Salmond, meanwhile, was greeted like a conquering hero as he swept into the counting hall at 3am and ousted Lib Dem Nora Radcliffe from office.

The SNP made breakthroughs with an unexpected win from Labour in Stirling, 20th on the SNP’s list of targets and the area where McConnell started his political career, and a gain in Kilmarnock that sparked a dance for joy from Geoff Aberdein, a Salmond aide. “We’re in with a chance now.”

As the dawn rose on a new political era, Elaine C Smith, the actor and comedian, couldn’t wipe the smile from her face. “The political map of Scotland has changed. The dominance of 50 years by Labour has gone. I don’t think you can overturn 300 years of history just like that, but I feel that independence is so close now. If you had suggested that could be the case 10 years ago, you would have been laughed at.” THE main loser was not in Scotland for the result. While the SNP held a celebratory party at the top of the Royal Mile on Friday, Gordon Brown, set to become prime minister once Blair resigns and moves on to the lucrative lecture circuit, was mulling over a recent conversation with Sir Menzies Campbell, the UK leader of the Lib Dems.

If Campbell, a fellow Fife MP, can put pressure on the Scottish Lib Dem leader Nicol Stephen to work for a third term with Labour, then the SNP could yet be shut out of government despite being the largest party. It would not be a decision for the Lib Dems to take lightly: if they were seen to snub the winner and side with the loser, it might cause a voter backlash at the general election. However, such is the importance of Scotland to Brown, the chancellor will be desperate to float any means of escape from the prospect of a Salmond-led government in Edinburgh. The reasons for Brown’s anxiety are manifest. The motor that drives Salmond’s party is separatism. Brown will expect him to start skirmishes in order to convince the electorate that Westminster is failing Scotland and independence is the only way to a better future. Likely flashpoints are the annual £8 billion£10 billion of North Sea oil and gas revenues, Treasury help with a new local income tax, and demands for more money for BBC Scotland. Salmond has also said he plans to create a “Trident tax”, tolling the road to the Faslane naval base on the Clyde with a unique charge for trucks conveying nuclear warheads. The charge? Around £1m per trip. “The priority will be to win the referendum in 2010,” said one nationalist insider. “That will be uppermost in his mind from day one, alongside delivering on the key promises: local income tax and economic growth. So the emphasis will be on delivery because without delivery people will not build up support and trust in an SNP-led government. “As for making demands on the oil money, I think first of all he will get the infrastructure in place, resurrecting the liaison meetings between Westminster and Holyrood that haven’t met for years. It will be more subtle than people expect.”

Another SNP MSP added: “We have to prove capable of governing so that people are encouraged to vote in the referendum.”

If Brown engages in the fight, he risks squandering the honeymoon of his first 100 days by appearing obsessed with local difficulties at the expense of middle England. If, however, he tries to stand aloof, he risks allowing Salmond’s tacticsa chance of success. The best way to deal with the situation from Brown’s point of view is therefore to keep Salmond out of power altogether. Even if his meddling produces a backlash, without an SNP government, there will be no Salmond- inspired referendum to lose.

When, on Thursday, Sal mond had finished his helicopter visit to his would-be White House, the mundane reality of the event quickly became apparent, as workmen swathed the presidential lectern in bubblewrap and bundled it into the back of a transit van. It was a reminder that much of the Salmond aura and political standing relies on his wit and mastery of showmanship. Now he is pitted against Brown for control of Scotland, we will see if he has anything more substantial to offer.

The road to power

1934: SNP formed

1968: Edward Heath makes Declaration of Perth and sets up the Douglas-Home committee to address demands for home rule.

1970: Douglas-Home committee reports recommending an elected Scottish assembly.

1973: Margo Macdonald wins Govan by-election for the SNP with 41.9% of the vote against backdrop of the nationalists’ “Its Scotland’s Oil” campaign.

1974: In the February UK general election, SNP wins 21.9% of the vote in Scotland and seven seats. Devolution with the UK white paper published. Labour’s Scottish executive rejects devolution decision.

1979: Devolution referendum defeated by 40% rule. Conservatives led by Margaret Thatcher come to power.

1983: Conservatives returned to power.

1987: Conservatives win again but with only 24% of the vote in Scotland.

1988: Jim Sillars of the SNP wins Govan by-election with 48.8% of the vote and a 33% swing from Labour.

1997: Labour led by Tony Blair come to power in UK general election. Tories wiped out in Scotland. SNP’s share of the vote is 22.1%. September referendum on a Scottish parliament wins overwhelming public support.

1999: Scottish parliament election. The Scottish parliament elects Donald Dewar as first minister.

October 2000: Donald Dewar dies of a brain haemorrhage. Henry McLeish is elected to succeed him as first minister.

November 2001: Jack McConnell is elected first minister by the Scottish parliament following the resignation of Henry McLeish.

The case for fiscal autonomy

THE great Scottish victories are always Bannockburns, won by the skin of the teeth. For 1314, read 2007.

If fortune is niggardly to Scotland, that means the opportunities have to be exploited with subtlety rather than bravado. The two qualities vie in the breast of Alex Salmond.

The SNP’s greatest test now lies in the prospect that a referendum on independence can only be held, as he wants, within three years. Leaving aside the trickiest question of all – whether he can win it given the cautious mood of the electorate – there is the small matter of whether it can even be legislated in a parliament where open support for it runs at best to 50 MSPs out of 129.

Luckily his Lib Dem partners (if that is what they are to be) have given up a hostage to fortune in their proposal for a fresh constitutional convention. In Scotland this has sound historical precedents, and it was what legitimised demand for devolution in the early 1990s. But the Lib Dems are unlikely to allow a referendum on the convention’s agenda either, at least not at the outset.

What business can a convention have, then? The obvious answer is fiscal autonomy for Scotland, with a government in Edinburgh raising its own taxes and making a fair contribution to the common expenditures of the United Kingdom.

This is more or less Lib Dem policy anyway. It is even supported by a good number of Tories. From the SNP’s point of view it takes a big step towards independence, if without actually getting there, leaving only foreign policy and social security in London’s hands.

More to the point, the policy would cover the deepest chink in the nationalists’ armour in the new parliament. On the question of independence, all the other parties line up against the SNP. On the question of fiscal autonomy, the other parties could line up against Labour (which, out of the mouth of Gordon Brown himself, has expressly rejected it) to support it.

If a constitutional convention can agree on the terms of fiscal autonomy, then the argument for ratifying it by referendum becomes strong – in the same way that the last convention’s scheme of devolution was ratified by the referendum of 1997.

It would be a fine example of democracy Scottish-style, the way we do things in a nation renewing itself. And if the Lib Dems still needed convincing, make it a referendum with multiple options. I would expect the vote in favour of standing still or of going backwards to amount at most to 20%, while 80% would plump for fiscal autonomy either for itself or in anticipation of independence.

Another and more basic requirement to win such a referendum is trust among voters that Scotland can run its own economy. I voted SNP on Thursday, but I remain dubious in the extreme about the party’s loud demands for big spending: this is not what has brought success to other small countries from Ireland to Estonia.

An alternative name for fiscal autonomy, among those who discuss these matters, is fiscal responsibility. I want to see the new government of Scotland, in the four years ahead, proving it can show that, too.

Michael Fry

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