Scotland's beautiful north – but for how much longer?

The islands' leader last night revealed he has taken the first tentative steps on a path that could see Shetland move away from UK control towards semi-independence.

Sandy Cluness, the convener of the country's most northerly council, will hold talks with the First Minister, Alex Salmond, over the constitutional future of the archipelago and its 22,000 inhabitants. The bid for devolution already has the backing of Tavish Scott, the Scottish Liberal Democrat leader, and MSP for Shetland.

Cluness wants a series of powers devolved from Edinburgh to Lerwick and even supports the establishment of a Shetland assembly with tax-raising powers. He revealed he has even been in discussions with the authorities in the neighbouring Faroe Islands, which have prospered since gaining home rule from Denmark.

He told Scotland on Sunday: "With a referendum on Scottish independence in the offing it is time to look again at Shetland's constitutional status. We want a more beneficial, more autonomous type of local government.

"What these islands need are viable, profitable economies and one way you can create that is through the ability to vary rates of taxes. We require more flexibility than we have at the moment."

The council's figurehead, who has no party affiliation, believes that the northern authority has been hindered by Government centralisation.

"We are on the periphery and have all the higher costs that come with that and not many of the advantages.

"In the 21st century there must be some way that the Government could look at a different status for Shetland and other islands like ourselves."

The leader wants powers over transport, police and fire services, water and sewage, tourism, inshore fisheries, further education, coast protection, sport and the arts to be transferred from the Scottish capital to Lerwick.

Cluness added: "In future we will be looking to discuss Shetland's constitutional future with the Scottish Government with a view to securing the best possible deal.

"There are plenty of examples of semi-autonomous islands across Europe and most of them actually do much better than we do. If you look at the Faroe Islands, their population had doubled in a period in which ours has halved."

But the politician rejected the idea of burning bridges with Scotland and withdrawing from the EU.

Scott, the local MSP, pledged his support and applauded the authority for its initiative.

He said: "I am in favour of greater powers for Shetland, but they need to sit within a coherent structure for the whole of Scotland. I'm more than happy to work with the council on their ideas, but obviously they are for the longer term."

Salmond, too, welcomed the council's approach and said their proposals would be considered.

He said: "This is an excellent example of the National Conversation in action. All such ideas can be proposed and we can reach a view on the best way forward."

Shetland's high standard of schools and public services is funded from the right to royalties won from the revenues that flow through the Sullom Voe oil terminal which is leased to BP from the local authority.

This could be bolstered further in future with scientists claiming that up to five billion barrels of oil could be under unexplored volcanic rocks to the west of Shetland. The Faroese government and Shetland Council have already been in talks about co-operating on a joint venture to exploit the potential oilfields.

Aki Johansen, the islands' diplomatic representative in the UK, said there was a warm and long-standing relationship between Shetland the Faroes.

"Both peoples are very proud of their Viking heritage and that brings us together and differentiates Shetland from the British mainland," he said.