I moved to Scotland in 2002, so I don’t have any memories of the creation of the Scottish Parliament — when I moved here, it was already a fact of life. However, based on what I’ve read, I believe Labour’s thinking in the ’90s could be paraphrased as follows:
When we’re in power at Westminster, the Scottish Office works great, but when the Tories are in power, they control the Scottish Office, too, which is a problem because they’re not us. So if we create a Scottish Parliament with a Scottish Executive to replace the Scottish Office, it’ll work exactly the same as before when we’re in power in both places, but when the Tories are in power, we can at least rule Scotland and use it as a showcase for our superior policies.
Unfortunately for Labour, there were a few problems with this analysis. For instance, voters tend to get fed up with all parties at some point with the inevitable consequence that the SNP would eventually get into power in Scotland. Also, Scottish voters would naturally expect the Scottish parties to respond to their concerns and desires, so it would become impossible to have the same policies on both sides of the border, which would be a bigger problem for Scottish Labour than for the other parties.
However, I believe the biggest problem is that New Labour is based on triangulation (“the tactic of shifting party policy in to a broadly perceived “centre-ground” in order to increase electability and outmanoeuvre the opposition, who subsequently become associated with extremism and anachronism”), but you can’t triangulate against two different parties at the same time without exploding like a chameleon on a piece of tartan.
The reason for this becomes clear when you consider than triangulation really means moving towards your opponent. However, when you have one opponent on the right and another on the left, doing triangulation towards both — let’s call it hexangulation — will tear you apart.
The alternative is to triangulate only in one direction and completely ignore the other opponent. This seems to have been Labour’s solution, focusing on triangulation against the Tories while allowing the SNP to monopolise all the popular policies in Scotland. The result is that they have deserted the centre-left in the process, making it easy for the SNP to supplant Labour as the dominant party north of the border.
Of course it hasn’t helped Labour that their best talent has always been sent to Westminster rather than to Holyrood, and their disastrous idea to keep the constituency candidates off the regional lists got rid of a lot of their best people at the last election.
However, at the end of the day the decision to sacrifice ideology on the altar of triangulation while introducing devolution must be the main reason for Labour’s collapse in Scotland.