Scotland 10 England 0: Scottish Nationalists proclaim the benefits of devolution

The Scottish Nationalists were in jubilant mood yesterday as they gathered for their annual party conference in the mountain resort of Aviemore. They are riding high in the opinion polls and seem intoxicated by 160 successful days in power.

Yesterday, Alex Salmond, the First Minister, was given a standing ovation as he poked fun at the Labour Party – which this year lost its first election in Scotland for half a century – before launching into a flurry of eye-catching policy pronouncements which included a £100m investment in colleges and universities.

"I am sure the country will excuse us over the next few days if a wee bit of celebration creeps into our proceedings," Mr Salmond said, to cheers from the conference faithful.

These are rare old times for the SNP. Having seized control of the Scottish Parliament at Holyrood by a single seat in May, they have enjoyed an extended honeymoon buoyed by a series of populist measures. Since the summer, the minority government has moved to scrap deeply unpopular road tolls on the Forth and Tay bridges and abandon the £2,289 "graduate endowment" charge, which is paid by Scottish university graduates to fund tertiary education.

Today, the SNP is claiming, Scots can look forward to comforts from cradle to grave undreamed of by English citizens south of the border. Children benefit from smaller classes and healthy free meals, while being spared the burden of heavy debt faced by graduates down south.

The Scottish health service is vastly better funded than its counterpart in England, with more new hospitals, shorter waiting lists, free prescriptions and the provision of cancer and Alzheimer's treatments considered too expensive elsewhere in Britain. For the elderly, there is free public transport and free personal care. Indeed, the good times apparently being enjoyed north of the Tweed are casting a shadow over the English shires.

At Prime Minister's Questions this week, Graham Brady, the Conservative MP for Altrincham and Sale, asked Gordon Brown; "Why should my constituents pay more tax so that the Prime Minister's constituents pay no prescription charges?"

Mr Brown, whose Kirkcaldy and Cowdenbeath constituency is the 27th-safest seat in Parliament, hit back by pointing out that, since devolution, it falls to the Scottish Parliament to decide how to spend its budget. But, as the SNP continues to up the ante by providing Scots with social benefits unknown south of Berwick, the headaches for the Prime Minister – and for Alex Salmond – will only worsen between now and the next election. The notorious West Lothian Question – first posed by Tam Dalyell in the 1970s to highlight the anomaly that Scottish MPs in Westminster voted on English issues but the reverse did not apply – has found a new edge, as many Scots are happy to acknowledge.

According to one Scottish political official: "The SNP's activities are stoking up 'disgruntled of Englandshire' against what are being portrayed as the 'whingeing Jocks'. But the reality is that, if they want the same things done in England that we have, then it's up to them to get their politicians to do it. We want to make devolution work. We will have no truck with these nay-sayers."

The arguments, which will be well-aired this weekend in Aviemore, have only just begun. The amount of money Scotland receives from Westminster is laid down under the Barnett formula agreed almost 30 years ago, which allocates central government funding to the various regions of the UK. The pot is limited so, if Scotland chooses to match English and Welsh spending on health and education, it will be forced to make cuts in other areas such as transport, law and order or the environment.

According to Mr Salmond, a Labour government wounded by its losses in the Scottish elections is turning the screws on its old fiefdom. "We must expect Westminster to make life difficult for Scotland," he warned delegates yesterday. "I don't think they are sitting round the cabinet table and cheering us on."

But Mr Salmond is starting to face problems of his own as he prepares for next month's Budget. His triumphant party conference was nearly overshadowed by claims that the SNP was set to break an electoral pledge to recruit 1,000 more police. The SNP also believes the latest settlement in the Comprehensive Spending Review – in which Scotland was promised its Westminster handout would rise to £30bn by 2010 – is "extremely bad". Mr Salmond, who is pressing the case for full independence, believes Scotland will lose about £357m under the deal. He is particularly angry that Scotland misses out on the profits from North Sea oil, which is currently nudging $86 a barrel. But according to Professor Richard Harris, director of the influential Glasgow-based Centre for Public Policy for Regions, a fully independent Scotland would struggle to match what it currently receives from London, even with the proceeds of Brent crude. He says the country would run at a loss of about £1bn a year, which would have to be covered by borrowing.

Both the SNP and the previous Labour–Liberal Democrat administrations have fought shy of exercising their devolved power to vary income tax by 3p in the pound, considering it too politically and economically risky. CPPR analysts calculate that individual Scots still receive a 27 per cent higher share of identifiable government expenditure than people in England, 13 per cent more than the Welsh but 9 per cent less than the Northern Irish. This is despite the fact that the gross domestic product per head of population in Scotland is only 4.5 per cent below that of the UK as a whole. However, Scotland continues to lag behind its southern neighbour in a number of key indicators such as life expectancy.

"Scotland is a better place in absolute terms to live now than it has been for many years," said Professor Harris. "But, in relative terms, has Scotland caught up with the rest of the UK? The SNP government would say no."

For Annabel Goldie, the leader of the Scottish Conservatives at Holyrood, devolution was a turning point for the nation but there are creeping fears that certain elements of the body politic are working to stoke discontent south of the border.

"The heat should be taken out of the debate and the calm facts should be put in place," she said. "At the end of the day, there is only one anomaly created since devolution – and that is the West Lothian question which Gordon Brown refuses to ask, let alone answer."

A brief history of the Union

* 1688-1746: Jacobite uprisings aimed atrestoring the Stuart lineto the throne.

* 1 May 1707: Act of Union is passed.

* 1746: Bonnie Prince Charlie is defeated by royal troops at Culloden.

* 1800s: A road-building programme in Scotland, designed to ease passage for troops, brings about economic regeneration.

* 1934: The National Party of Scotland and the Scottish Party join to form the Scottish National Party (SNP), winning seats at Westminster in 1945 and 1967.

* March 1979: A referendum in Scotland narrowly backs the Union.

* 1980s: Margaret Thatcher uses Scotland as a guinea pig for unpopular policies, such as the poll tax.

* September 1997: Tony Blair takes office promising to bring in devolution. 74.3 per cent of Scots vote for a 129-seat parliament.

* 12 May 1999: The new parliament convenes.

* May 2007: The SNP becomes the largest force in the parliament.

* August 2007: The SNP announces plans for another referendum on independence.