The outflanked Nats return to being tartan Tories

Next Saturday in Inverness, an important British political party will select a new leader to take it into the next election. Hadn't noticed? If you live south of Hadrian's Wall, it's not very surprising. A year ago, the leader of the Scottish National Party, Alex Salmond, held - arguably - the second most important job in British politics. Twelve months on, the two men vying to replace Mr Salmond as SNP "convenor" are fighting for a job which is, arguably, no longer even the second most important job in Scottish politics.

Next Saturday in Inverness, an important British political party will select a new leader to take it into the next election. Hadn't noticed? If you live south of Hadrian's Wall, it's not very surprising. A year ago, the leader of the Scottish National Party, Alex Salmond, held - arguably - the second most important job in British politics. Twelve months on, the two men vying to replace Mr Salmond as SNP "convenor" are fighting for a job which is, arguably, no longer even the second most important job in Scottish politics.

Twelve months ago, everything seemed rosy for the SNP. With the Tories in disarray, and the Lib Dems cosying up to the Prime Minister, Mr Salmond was the only party leader able to lay a glove on Tony Blair, which he regularly did. But in July, aged only 45, he announced that he was quitting after 10 years at the party's helm. The vacancy has led to a radical reassessment of the party's prospects. Shorn of its leader, its sense of direction, even its money, the SNP is hurtling towards irrelevance.

Never enthusiastic about the devolution policy he inherited from John Smith, Mr Blair had nevertheless allowed the Scots their talking-shop, making sure to disparage it in the process as akin to a parish council. And so it has turned out. So arcane and uninteresting are its debates that they only hit the radar south of the border when a "wacky" topic, such as fox-hunting or Section 28, comes up. For the rest of the time, Holyrood is powerless - failing even to force the resignation of the Schools minister Sam Galbraith over the exams fiasco. Even more than at Westminster, all power in Scotland resides with the executive.

Which is a huge problem for the SNP. Shut out of the executive, it must make do with the frustrating job of disloyal opposition. Even if it were to become the largest party in any future election, the PR system ensures that other parties can - and will - keep it from power. Despite the plethora of conspiracy theories about him, not one of which has withstood scrutiny, the surprise is not so much that Mr Salmond has walked: more that the party could find two men to slug it out for his job.

And slug it out they have. Like bald men fighting over a comb, John Swinney and Alex Neil are engaged in an increasingly bitter contest for a position which nobody could envy. Of the two, Mr Neil is considerably the more impressive. His tub-thumping style and socialist message would ensure that - at least - the SNP had an effective communicator at the helm. Mr Swinney, by contrast, comes across as a colourless bureaucrat. His hesitant, monotone manner means that his dreary phrases are forgotten as soon as uttered. So a walkover for Mr Neil, then? Er, no. This race is a shoo-in for the grey horse.

Why? The battle for the leadership is really a battle for the party's future direction. Both candidates pay lip service to its aim of independence for Scotland. But they take very different attitudes to the timescale and methods of achieving it.

Mr Neil is an independence "fundamentalist". Scorning the Scottish Parliament as something of a distraction, fundamentalists look for ways to wreck Holyrood's operation - or at the very least demand a massive and instantaneous boost to its powers. In his own words, Mr Neil is "in a hurry for independence".

Mr Swinney hails from the "gradualist" camp. Viewing the parliament as an important first step, he wants to make a go of it - to prove to the Scottish people that power is safe in their hands. Not willing - yet - to admit that their initial enthusiasm for the parliament was a tactical blunder, the majority of SNP members seem certain to give the gradualists another chance by choosing Mr Swinney to lead them.

But both camps are suffering from Holyrood's failings. When devolution was proposed, the then Labour MP George Robertson predicted that its success would "kill nationalism stone dead." He was mistaken. It is the Scottish Parliament's failure which is stifling the Nats. The dire predictions which greeted devolution ranged from the imminent break-up of the Union to the increased extremism of the Scottish Labour Party. Both were wrong. It was almost universally assumed that the Nats would benefit from devolution, and that in trying to neuter their threat, Labour would have to tack leftward. In the event, the opposite has happened. It is the Nats - epitomised by Mr Swinney - who are moving: to the right. His appeals to "middle Scotland" suggest that the party may well be turning back towards its long-discarded "Tartan Tory" clothes. Meanwhile the sizeable SNP contingent in Holyrood snipes on the sidelines, bickering about their taxi bill.

By contrast, the relatively tiny Liberal Democrat group basks in power. Brought into the coalition executive by Labour, Jim Wallace, the Scottish Lib Dem leader, has spent much of the summer as acting First Minister while Donald Dewar has convalesced from his heart operation. And he's made a pretty impressive fist of it, regularly besting Mr Salmond at Question Time. Which must be a relief for Charles Kennedy, who faces his second party conference as Lib Dem leader this week in Bournemouth. Paddy Ashdown's decision to ditch "equidistance", and ally the party more closely with Labour, was a masterstroke in opposition - but has flopped in government. The Lib Dems have failed to get a commitment to PR, and their much-vaunted cabinet committee has offered meagre scraps. Without the surprise victory in the Romsey by-election, coupled with Mr Wallace's successes in Scotland, the Lib Dems would have a dire conference week ahead.

Almost forgotten among all these shenanigans is the fourth party in Scotland: the Tories. With their Westminster representation down to zero after 1997, few commentators have been keeping an eye on them. Under the leadership of David McLetchie, however, Conservatives at Holyrood have scored some useful points - notably in beating the SNP to a motion of no confidence in Mr Galbraith over the exam results humiliation. This is not to say that the Conservatives can expect a massive revival next year, but they are optimistic - and one seat in particular merits attention. Unlike most of his spurned-by-the-electorate colleagues, the former foreign secretary Malcolm Rifkind is trying again for Westminster next time. If - and it's a big if - he manages to win, he will be a powerful figure in a disheartened party. From his position outside the Shadow Cabinet, Mr Rifkind has been ignored in all the who-will-follow-William speculation. If Mr Rifkind is an MP after the election, don't rule him out as the next Tory leader.

So the Tories up, the Nats down, New Labour clinging to its Blairite credentials and the Lib Dems pivotal. It is all a far cry from the picture of Scottish politics that just about everyone painted back in 1997. Scottish devolution has been a success for Tony Blair - mainly because it has let down the voters of Scotland.