Today’s announcement that the UK Tory party is backing the full devolution of income tax to Holyrood, and will commit to that in its 2015 manifesto, is hugely significant. It means that both coalition parties now support some tax competition between Scotland and the rest of the United Kingdom.

By contrast, Ed Miliband has made clear that he will never sign off on any devolution deal that allows Scotland to undercut the rest of the UK on tax. Instead, he wants a system where the Scots could only choose to have the same tax rates as the rest of the UK or higher ones.

This difference raises the possibility that if independence is defeated in the referendum, the SNP, the Tories and the Liberal Democrats could come together to strike a deal on more tax powers for Holyrood. Labour opposing this deal would dramatically alter the contours of Scottish political debate.

As Alex Massie argues, today it is far easier to see what the purpose of the Scottish Tories is. Whether this translates into more seats remains to be seen, but they now have a coherent intellectual position and an increasingly impressive leader. Combine that with how the independence referendum will shake the kaleidoscope of Scottish politics and the decline of the Liberal Democrats, and you can see how the Tories might finally recover in Scotland.

Tags: devo max, Devolution, Scotland, Scottish independence referendum