IN A panicked bid to persuade Scots to reject independence in September's referendum, Britain's three main party leaders promised to transfer extensive new powers to Edinburgh. On November 27th agreement was reached on precisely which powers would go north: Lord Smith of Kelvin, a grandee appointed by David Cameron to mediate between the three parties and the separatist Scottish National Party (SNP), published his deal. It gives the Scottish government power to set tax rates and to retain all income tax raised in Scotland. Mr Cameron says he will issue draft legislation by January 25th. If passed, the proposals will mean a dramatic reshaping of the British state, and could weaken, not strengthen, the union. The rise of the SNP loomed over the talks. Though the independence camp lost the referendum, it has won the aftermath: the party has quadrupled in size and surged in polls of voting intentions. That piled pressure on unionist negotiators - one reason for such a generous final set of proposals. The Labour Party, at whose expense the SNP's surge has come, had originally favoured only partial devolution. Under the Smith plan, just the basic tax-free allowance, relief for things like pension contributions and tax on unearned income would be set in London. That means the Scottish government would collect over 60% of its spending, up from about 10% now, putting it on a par with sub-national authorities in America. Many in the Labour Party are horrified by the plan. On November 23rd Alistair Darling, a former chancellor of the exchequer, warned that devolving full control of income tax would undermine Britain's system of pooling and sharing risks. Mr Darling believes the proposed new powers for Edinburgh might loosen Scotland's place within the United Kingdom. Another cause for worry in the party is that it could relegate Scottish MPs (most of whom are Labour) to second-class status within the House of Commons. For the SNP, by contrast, the Smith proposals do not go far enough. Despite having pledged ahead of the referendum to accept the result, the party is still demanding full independence. It may be frustrated for now, but the proposals could aid its cause by encouraging fresh calls for further devolution from Westminster in England, Wales and Northern Ireland, too. The nationalists are not beaten yet.