TORIES pledged to think the unthinkable to revive party fortunes in Scotland have come up with the ultimate policy - virtual independence.
The Tuesday Club, a radical grouping within the party, yesterday published a discussion paper accepting the bulk of SNP economic arguments from recent years about Scotland's financial position relative to the rest of the UK.
The paper, Full Fiscal Freedom, acknowledges as fact the much-trumpeted Nationalist statistic that since 1979 Scotland has delivered #27bn more to Treasury coffers than has been received in higher public spending.
It also says that oil and gas revenues from the North Sea should be counted as specific Scottish income for the purposes of the new financial settlement, which they say would prevent devolution's proposed block grant formula from descending into instant acrimony.
The three authors of the report - Murdo Fraser, Michael Fry and Peter Smaill - argue that the Scottish Parliament should ''raise and spend all taxes in Scotland'', while continuing to contribute to UK expenditure on shared areas. ''We believe Scotland gains nothing from the Nationalist position - cutting ties with England - as our history, culture and trade are inexorably bound up with the territory to the south,'' says the paper.
Yet they make some startling concessions to recent SNP arguments. Apart from accepting the historic #27bn inflow to Treasury coffers, which they say should be used to wipe-out local authority debt in Scotland, they say future revenues north of the Border should continue to include oil and gas revenues.
They argue that:
q The Scottish Parliament is now a reality.
q Only financial freedom can remove the potential conflicts between Edinburgh and London which the nationalists will exploit.
q This approach is the only way to avoid an English backlash to constitutional change.
The authors of the report insist that only fiscal freedom offers and end to the ''begging bowl mentality'' of Scotland. Ironically, they go on to argue that the only way forward for such a fiscally-free nation involves policies of privatisation and the free market rejected by electors.
The authors of the report claim that it is vital that the debt write-off and future North Sea revenues are not squandered on wasteful public expenditure schemes, but instead used to buttress a rigorous new approach to promoting privatisation.
Mr Fraser, candidate in North Tayside next May, said of the current plan for a block grant: ''It will be an eternal bone of contention between Edinburgh and London because Scottish politicians will always argue for more money, while the pressure is already mounting on English politicians to give Scotland less. We must find a new system which averts such a dire threat to the Union.''
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