Gerald Warner - How to lose votes and alienate supporters

MESSING around in boats is not necessarily the ideal therapy for tired politicians during Parliamentary recess, as shadow chancellor George Osborne has discovered to his cost. Osborne's slack-jawed remarks about donations to Tory Party funds have done nothing to improve public perception of his judgment.

Inevitably, it was Osborne's donations dialogue that captured the metropolitan media's imagination; but the shadow chancellor committed a more substantial gaffe just 10 days ago, in Scotland. Following talks in Edinburgh with HBOS, Osborne was asked about the concept of "full fiscal autonomy" for Scotland. He replied: "I'm very open-minded about whether there needs to be more revenue-raising powers for the Scottish Parliament."

Osborne needs, very quickly, to close his mind – and his mouth – on the topic of full fiscal autonomy. The Scottish Tories are doing Alex Salmond's work for him; and now the UK party is endorsing this collaboration. The Vichy Tories at Holyrood were quick to follow up this advantage, spinning to the media that "It is encouraging that George is allowing the Calman Commission the breathing space to come up with the unthinkable, such as giving Scotland more revenue-raising powers".

So, there you have it: the Holyrood Tories now relish "the unthinkable". If the Scottish Conservatives' embrace of rolling devolution were even a Machiavellian success, it might command some credibility. Instead, it has relentlessly alienated supporters. When the Tories fought a last-ditch battle against devolution in 1997 they gained 493,069 votes; at last year's election that had shrivelled to 334,743 votes.

The Scottish Conservative and Unionist Party – as it still calls itself, in flagrant defiance of the Trade Descriptions Act – should never have participated in the Calman Commission, whose purpose is to extend the powers of the Scottish parliament, going half-way to Alex Salmond's objective of independence. Beyond that, the Tory MSPs want to go further – to full fiscal autonomy, which is independence minus only a flag and anthem.

Fiscal autonomy – placing every penny of tax raised in Scotland in the hands of the Holyrood spendthrifts – is supposed to make the parliament more "accountable". Accountable to whom? To its client-state constituency, is the realistic answer. Only just over half of an electorate of four million pay tax; 22% of people of working age are claiming a key benefit or receive a tax credit; 23% of the workforce is in the public sector, as is 55% of the economy. Where is the constituency there for fiscal continence?

Fiscal autonomy would sound the death-knell for small businesses, wealth creators, people on fixed incomes. It would throw to the socialist wolves every element in Scotland that traditionally, though decreasingly, votes Tory. You will look long and far before you find an equivalent betrayal of its supporters by a political party.

There are now two Tory parties in Scotland. There is the Vichy clique at Holyrood, relishing the patronage of devolution, untrammelled by responsibilities to constituents since they are List MSPs, anxious to court the good opinion of their opponents and indifferent to the views of Conservative voters. The second Tory Party outnumbers them 100 to one. It is composed of area chairmen, constituency activists and voters. It has no influence and is disregarded.

In January, when Annabel Goldie announced her adherence to the Calman Commission, she faced a grassroots rebellion at a meeting of the party's Scottish Council. She shrugged that off. Now her faction has prevailed on the shadow chancellor to approve – or, at least, not veto – the forthcoming sell-out on increased powers, to be followed by full fiscal autonomy. There is a bonus for Osborne: it is a painless way of getting rid of the Barnett Formula and appeasing English voters.

Tories have before them the chastening example of Scottish Labour, which overdosed on devolution and now finds itself on skid row. Unless the grassroots constituency membership rises up and reclaims its party from the Holyrood cabal, Unionists will find themselves presented with a fait accompli, creating a Scotland their children will find uninhabitable. The delusion that you can take Scotland 95% of the way to separatism and rein in at the last moment is a recipe for disaster.

The frustrating thing is that this was the month when Alex Salmond, whose Arc of Prosperity has mutated into an Arc of Poverty and who was treated largely as a figure of fun on the BBC's Question Time last week, could have been put on the ropes by a resurgent Unionist party – if only one existed. This is a deeply shameful betrayal that will not be forgiven by posterity.