Cameron should remain careful but respectful in negotiating

"WELCOME to Scotland, Prime Minister: and here's the bill for £700 million for crossing the Border. We don't take cheques, but UK government credit cards will do nicely, thank you very much."

When they meet for the first time today, Alex Salmond is unlikely to be quite so blunt in greeting David Cameron but the indications last night were that the tone of his remarks will not be too far from those we caricature above.

For yesterday the First Minister was clear that he would unashamedly put a list of spending demands to the new Prime Minister as the Nationalist administration in Holyrood seeks to reinforce its claim to be standing up for Scotland.

The test for Mr Cameron on his first foray into the complicated world of Caledonian constitutional politics will be how he deals with Mr Salmond's demands. For the sake of his party and its fledging coalition with the Liberal Democrats, it is a test he must pass.

In putting in place the criteria to make a judgment, we would first acknowledge that the Prime Minister has made good an election campaign promise to come to Scotland in the first week of his premiership.

That he has done so is in itself an indication that his much-vaunted "respect agenda" had at least some substance but if he is to give devolved Scotland due deference, it will be by actions not diplomatic skills.

To that end, we would urge Mr Cameron to look at the First Minister's demands objectively whilst at the same time being aware that Mr Salmond rarely does anything without considering the Nationalists' political interest.

Mr Salmond has demanded that the Prime Minister gives Holyrood borrowing powers; and called for 350 million of accelerated capital spending; 165 million as Scotland's share of London hosting 2012 Olympic Games; and an 180 million fossil fuel levy held by Ofgem in London.

On borrowing, it is hard to see why Mr Cameron should not grant Mr Salmond his wish. Although borrowing at Holyrood would add to the UK's already huge debt, even local authorities can borrow and government-backed borrowing tends to be cheap.

It is harder to make the case for the accelerated spending, given that the Scottish Government already had an advance from the previous government and you cannot go on bringing forward spending. London's Olympic money is outwith the Barnett formula and is likely remain so.

However, on the fossil fuel levy – taken from energy producers using non-renewable resources and spent on developing Scotland's offshore energy sector – there would seem to be a case. We therefore suggest Mr Cameron should be conciliatory when there is a case, but not bow to all of Mr Salmond's demands as to do so would play into the SNP's hands. If he does the former, he will be showing respect – and command it in return.