A No vote in next month's referendum will not only herald new powers for the Scottish Parliament but also for communities across Scotland, consistent with the Liberal Democrat vision of federalism, according to Danny Alexander.

The Chief Secretary to the Treasury, speaking in Inverness last night, said his party had been at the forefront of setting up the Scottish Parliament and was leading the campaign to empower it with real financial and money-raising responsibilities.

He said: "That is already on its way thanks to the recent legislation passed by the House of Commons, and the clear commitment from all parties means the Scottish Parliament is guaranteed to get more money-raising powers in the event of a No vote. 'No thanks' does not mean no change - far from it.

"But our philosophy of federalism does not stop at further empowering Holyrood, important though that is. A federal approach means distributing power to the most appropriate level - Europe, UK, Scotland, and local. Federalism means devolution from Edinburgh, not just devolution to Edinburgh."

Mr Alexander said he believed a fundamental part of a new settlement in Scotland after a No vote "must be more powers held and used here in the Highlands and Islands, and in other local communities in Scotland."

"The next phase of the challenge for us will be to make sure that after a No vote politicians in Holyrood act as decisively to pass power back to Scotland's communities as the UK parties will to ensure more powers for Scotland. There is nothing radical or liberal about independence - the really radical liberal approach is federalism - and here the rallying call for that must be 'More power for the Highlands'."