An Alien Nation

Other countries don't do Budgets. They have simple finance bills and frequent debates on altering a tax. They don't make an annual carnival of public money, starting with that battered red box flourished outside Number 11 ("What's Daddy got in here for you?") and going on to the hopelessly stylised contest in the House of Commons. But Budget Day is one of those age-old rituals invented only the day before yesterday. Maybe the fountain of deliberate leaks this time means that cabinets and treasuries are growing fed up with the whole pantomime of suspense.

The pantomime of the Budget's actual contents – the Robin Hood of redistribution versus the fat-cat Sheriff – turned out to be nonsense. Weeks of phoney drama in the Coalition about the 50p tax rate and the exemption threshold made almost no difference to the real economic strategy: the Tory intention to use the deficit "emergency" to diminish the public sector and to protect the flows of private wealth from public restraint. Nothing new there. What's new is the blatancy – the calm intention, scarcely now concealed – to let the 30-year-long slide into inequality accelerate to its "natural" speed.

Beware of the word "fairness" in these politics. It's a sticker to hide the hole where the word "equality" used to be. "Fairness" means that the cutting of top-rate tax is "balanced" by squeezing stamp duty out of mansion purchases, or by letting more of the poor off income tax. But it's merely optical, a word-play to soothe credulous Liberal Democrats. And in this case it didn't work. Blocking the incomes of the old to allow a millionaire an extra £40,000 a year? Even George Osborne lacked the chutzpah to call that "fair".

The gap between rich and poor continues to widen. Again, it's "fair" that Scotland should seem to get something out of the Budget: the meagre income tax and borrowing powers rescued from the waterlogged Scotland Act. But in reality this Budget, like most recent Government policies, has almost nothing to do with Scotland. Its main concern is with metropolitan politics: sewing up rents in the Coalition, keeping the ratings agencies quiet, getting the City to see that a few things must change if everything is to remain essentially the same.

Inequality takes many forms. It's not just that the wealth gap and the wages gap and the race gap and the gender gap are widening all the time. All these cracks are undermining the traditional slogans of "national unity" and "cohesion", the ideal of building a united society, which once seemed so important. Remember how Tony Blair, before and after he became prime minister, used to preach: "One Britain!" "Young Britain!" "New Britain!" "United Britain!" It went uncomfortably too far: voices demanding "One Nation, One Will" rouse nasty echoes. But the Cameron-Osborne Tories are so relaxed about disunity that it's scary. Old social bonds fall apart. So could the Government's indifference mean that they are waiting for some Second Coming to replace old bonds with new ones? Poverty and helplessness, for instance, have been held to teach people their place.

This is why the most significant inequality is geographical. Most of the Budget was flam, but the part about letting public-sector wage levels be negotiated locally – that's really interesting. The protests have been justified and predictable: wages will be dragged down to private sector levels which, in many parts of the UK, are much lower. Purchasing power will shrink; growth will be strangled. All that is probably true. But there is something bigger here. This Government is quietly abandoning a fundamental principle of a democratic state. This holds that the duty of central government, in a territory with varied communities and landscapes, is to level up the standard of living. According to this, government must manage the economy so that the car worker in the big city can enjoy the same affordable gas supply, access to schools or home help in sickness as the farmer in a remote seaside village. Many good federations were founded on that principle in the 20th century – West Germany, for instance, wrote into its constitution the duty of rich Laender (states) in the Federation to transfer wealth to poorer states. How could any democracy accept that one region under its authority should share federal responsibilities – sending its children to serve in the armed forces, or paying federal taxes – while remaining more backward than its neighbours?

But history and geography made it easy for the UK to ignore this sort of thinking. The Industrial Revolution took place in northern and midland England, in Scotland and south Wales. Southern England was a relative backwater of poverty and ignorance – but London, as the capital of the landowning classes, remained the site of political and financial authority. Then, as Britain lost its world dominance in trade and manufacture, the "drift" of wealth and enterprise reversed. By the late 20th century, mass unemployment and urban decay "out there" – Tyneside, Glamorgan, Lanarkshire – had changed the mental map of London governments.

Now Britain north of the Trent and west of the Severn had become a pattern of tiresome "regional" policies. They called them "distressed areas" or "development regions", and tried to steer new industries into them by carrot or stick. A great chance was missed when the wartime "regional commissioners" were abolished; all-powerful and enlightened, they might have been the nucleus for democratic regional government throughout Britain.

How could the "drift" of prosperity towards the southeast of England be halted? The problem obsessed governments in the 1960s. Maybe it's only a story, but when Tony Benn became a minister, he is supposed to have ordered a huge wall-map for his office showing Britain was upside down (Caithness where Dorset would normally be, and Cornwall waving its leg at Spitzbergen). This was meant to show his civil servants that the drain of talent and investment out of the old industrial areas was not driven by the force of gravity but could be reversed by vigorous planning.

Nothing much changed. Ten years on, Margaret Thatcher impatiently scrapped regional policy over most of the United Kingdom. Now unchecked, investment and population continued to funnel into the English southeast and the London area. Scottish protesters were told that government policies had little to do with it; the free market was making its own choices.

But then in the 1990s, Scottish journalist George Rosie made a devastating TV documentary, Scotching The Myth, proving that figures for "identifiable public expenditure" were eyewash. Government had for years been systematically and deliberately concentrating its agencies, quangos and research institutions as close to London as possible. As he put it: "Greater London and the southeast of England are by far the most heavily subsidised, tax-cossetted, featherbedded regions of Britain."

Logically, Rosie's facts and figures should have closed down for good all the chatter about "Scotland the subsidy junkie". But he had hit a very sensitive nerve: the ganglion of metropolitan privilege and power which still paralyses English democracy. No-one down south wanted to discuss his findings. Although Rosie followed up his programme with newspaper articles, no political party dared to take up the weapon he had offered them. And Scotland is still cartooned as a parasite gorged on Home Counties money.

Seen in this light, the Chancellor's decision to let public-sector pay vary by region has two meanings. For Britain as a whole, it repeats the Budget's two-fingered gesture of cash for the rich and cuts for the poor. It says: "We are tired of pretending that the gap in living standards between Gateshead and Godalming is an evil to be put right. Let's be honest: the gap between posh parts of the UK and deprived parts is good! It's good for competition, good for mobility, good for business. Let it widen." But for Scotland – which will be greatly affected because of the size of the non-devolved civil service – it says something else: "You no longer interest us. This Budget was not for you. The needs and institutions and even the political language of Scotland and the rest of the UK have diverged so far that it's become a waste of time to design economic programmes with Scotland in mind. Don't go just yet, we may need you for something. But try to keep your voices down."

It's bad luck for the Scottish Conservatives that this weekend's conference at Troon falls just after the Budget. They launch the Friends Of The Union campaign at a moment when the Anglo-Scottish gulf is widening almost as we watch.

Cameron's brand of Conservatism seems as alien to uncommitted Scots as Mrs Thatcher's, but did anyone at Troon dare to say so and challenge the party to stand on its own feet? Strange how such a strikingly conservative (with a small "c") society as Scotland has become impenetrable to the outfit led by Ruth Davidson.

As the sociologist Professor David McCrone pointed out, only 50 years ago, the Tories were in effect the party of Scottish nationalism. They stood not only for sectarian "Unionism" (Irish version) but for a fiercely patriotic image: the "Scottish soldier", the tartan Relief of Lucknow, the pipers on the Normandy beaches.

In those days, the Scottish Tories thought they knew why the Union with England mattered. Now they are less sure. Ironic as it sounds, their best chance for revival is to be cast adrift in an independent Scotland.