By Matt Falloon
EDINBURGH (Reuters) - British Prime Minister David Cameron delivered an impassioned plea to the Scots on Thursday in defense of the United Kingdom, enticing Scotland to reject independence with an offer to devolve more power to Edinburgh.
Scotland's nationalist regional government, which already controls some areas of spending, wants to hold a referendum in late 2014 on full independence that could spell an end to a 300-year-old union with England.
Cameron took his case for keeping the United Kingdom intact to Scotland's picturesque capital, arguing in a speech laced with sentimental historical references that Scotland was better off as part of the union.
"The union helps to make Scotland stronger, safer, richer and fairer," he told a business audience, speaking against a panorama backdrop of Edinburgh castle, perched on a craggy volcano.
"Of course, Scotland could govern itself. So could England, but we do it so much better together," he said.
He warned Scotland would face an uncertain economic future alone. "There is for some smaller nations the risk that independence can actually lead to greater dependence," he said.
Cameron later began talks with Scotland's First Minister Alex Salmond, leader of the pro-independence Scottish National Party (SNP), to thrash out differences over the timing and content of the referendum Salmond wants to hold on independence.
Salmond, a wily politician, appeared to have won a tactical advantage by hosting Cameron on his home ground while Cameron had to make the long journey from London.
As Salmond shook hands with Cameron and ushered him into a government office, the meeting had every appearance of talks between the leaders of two independent countries.
In his speech, Cameron dangled the carrot that, if Scots rejected full independence, he would be open to looking at what further powers could be devolved from London to Edinburgh, but he did not spell out what they were.
Salmond was skeptical, telling the BBC: "If the prime minister has an offer to make to the people of Scotland then ... he should spell it out now."
Scotland has its own legal system and already has devolved responsibility for domestic matters such as health, education and emergency services.
Cameron's trip to Edinburgh to speak personally to the Scots, who have no great love for him or his politics, is a strong sign of how concerned London is about the referendum.
The government will hope the offer of a further devolution of powers to Scotland could convince swing voters of the merits of staying in the union.
Polls suggest between 30 and 40 percent of Scots support independence. The SNP hopes it can increase that by 2014, when national pride may be boosted by the 700th anniversary of the Battle of Bannockburn, a famous victory over the English.
On a blustery but mild winter's day in Edinburgh's steep and winding cobbled streets, city workers and shoppers were largely skeptical about the nationalists' cause.
"A few of my friends support Scotland becoming independent but I think that is just to show their patriotism," said Dan McCormack, a 26-year-old customer services assistant at Bank of Scotland, arguing that the SNP needed to do a lot more to convince voters of the economic viability of independence.
"I think independence would be wrong because the Scottish economy wouldn't survive on its own."
About 40 demonstrators against government spending cuts sat down outside St. Andrew's House, the government building where Cameron and Salmond were meeting, to protest, chanting "Cameron isn't welcome here."
The demonstration forced Cameron to enter the building through a rear entrance.
Cameron wants the referendum held earlier than 2014 to avoid what he says is damaging uncertainty for the Scottish economy.
Salmond would like to offer Scots the option of voting for greater devolution, a half-way house between the status quo and independence. The British government says there should just be a yes or no question on independence on the ballot paper.
All major British parties want to keep the union intact, but Cameron faces a dilemma over how to handle the pro-union campaign because his Conservative Party is unpopular north of the border, where it has just one member of parliament, and Salmond portrays Cameron's interventions as interference.
Some battle lines have already been drawn, with the SNP demanding 90 percent of Britain's North Sea oil revenues for Scotland while also arguing that the Bank of England should rescue distressed banks in an independent Scotland.
British taxpayers stumped up billions to save Royal Bank of Scotland from collapse during the 2008 crisis.
An independent Scotland would have to choose whether to keep using the British pound while having no influence on British monetary policy or to seek to join the euro at a time when the single currency zone is in turmoil.
(Additional reporting by Adrian Croft; Editing by Jon Boyle)