The 1979 referendum on Scottish devolution is often seen as the moment when the future of the United Kingdom changed forever. Despite only being endorsed by a narrow majority, and technically failing to meet the government's requirements, the Callaghan administration decided to ignore its backbench critics and set up the Scottish Assembly, with its limited powers over home affairs, health, education and the environment. The Scottish National Party was delighted with the result, however the fury of many Labour backbenchers meant that Callaghan could not survive the vote of no confidence held in March 1979, losing by a single vote. In the subsequent election, Margaret Thatcher's Conservatives edged into power with a majority of 43, and the SNP suffered heavily, being reduced to two seats. However, it had still delivered, and was thus more a victim of the electoral system than anything else.
However, despite being a pro-Union Tory, Thatcher found herself unable to reverse the Scotland Act of 1978, which was now ingrained in the mind of the Scottish people, so was forced to hold elections to the new Scottish Assembly in 1980, alongside local elections. The result was a resounding victory for the Labour party, however only four seats separated the SNP, the Liberals and the Conservatives, showing that the nationalists were already on the road to recovery. The new Assembly immediately found a role as offering an alternative voice for the Scots against the ravages of Thatcherism, which hit Scotland especially hard. As unemployment soared and Scottish industry was devastated, the Assembly under First Secretary Bruce Millan tried its best to help by protesting to the Westminster government and running job creation schemes. Many Scots felt it didn't do enough, and were increasingly drawn to the 'go it alone' attitude of the SNP. In the 1983 UK general election, not a single Conservative was elected in Scotland. The collapse of the Scottish Conservatives, combined with the factionalism then tearing Labour apart led to the election of a minority SNP Assembly executive in 1984 under Gordon Wilson.
This was the turning point for the Scots. Even though they were a minority government, the executive was a thorn in Westminster's side, constantly using its powers (and in some cases powers it didn't have) to counter policies from the south. Mrs Thatcher, growing tired of this obstructionism, introduced legislation in 1986 to abolish the Assembly. Wilson called a snap Scottish poll and in the sense of crisis took 84 of the 100 seats. The inevitable independence referendum followed in 1987, showing 52% in favour of leaving the UK. By late 1987, the separation was complete as Scotland struck out on its own under First Secretary Wilson and President Margo MacDonald.
At first all seemed to go well. The creation of the Scottish Fuel Fund, a sort of eternal savings bank for oil revenues, permitted public spending to rise from the dismal levels they had sunk to under Thatcher, while many of the more unpopular decisions taken since 1979 were reversed, such as the abolition of SNHS charges. Scottish membership of the EEC also brought in huge amounts of outside money into impoverished areas, helping to fund projects such as the Skye bridge, high speed rail, wind turbines and urban renewal. In time, this would lead to Scotland being a founding member of the Euro. By 1991, when the new Scottish Parliament used proportional representation for the first time, the new SNP leader Alex Salmond came close to taking over half the votes; instead he ruled as part of the SNP-Green coalition until 1999, and again after the defeat of the Scottish Labour-Lib Dem pact in 2003.
For the rest of the UK, the consequences were mixed. The Conservative government, which lost no MPs itself but saw its opposition shrink in size, was kept in power until 1997, when Labour secured a precarious majority of 27, hindered by the lack of Scottish MPs. There was no economic slump, and people got used to the idea of England's northern neighbour being a bit different. English universities saw declining student numbers as many students took advantage of the lower fees in Scotland. The armed forces still attracted a large number of Scottish recruits, who preferred the Royal Scottish Regiment to the new Scottish Defence Force. Even the Queen seemed to cope; she remained the owner of Balmoral, although for the sake of appearances she sold Holyrood House to the Scottish President Sean Connery in 1995. The separate Scottish political parties worked closely with their Westminster counterparts, but the Labour-Liberal Democrat coalition of 1999-2003 failed to re-establish the union, with it being rejected by 71% by voters.
However, this seemingly happy ending all changed in 2007-2011, with the global financial crisis overtaking Scotland. As a former economist, Salmond's claim that he had "abolished English boom and bust" looked ridiculous as the pride of the Scottish financial market, RBS, collapsed, needing an IMF rescue package to help it stay afloat. With the Euro coming close to collapse, and the oil fund draining faster than it was growing, the 2011 Scottish elections saw the pro-UK parties of Labour, the Liberal Democrats and the Unionists establish a clear majority in parliament. The new First Secretary has already promised another referendum on rejoining the UK, and has already entered talks with London. Whether David Cameron will be able to agree terms with Alistair Darling remains to be seen.
P.S. Scottish First Secretaries
1987-1990- Gordon Wilson (SNP)
1990-1999- Alex Salmond (SNP)
1999-2000- Donald Dewar (Scottish Labour)
2000-2003- Jim Wallace (Scottish Liberal Democrat)
2003-2011- Alex Salmond (SNP)
2011- Alistair Darling (Scottish Labour)
P.P.S. Scottish Presidents
1987-1991- Margo MacDonald (SNP)
1991-1999- Sean Connery (Independent)
1999-2007- Magnus Magnusson (Independent)
2007- George Galloway (Scottish Socialist Party)
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