David Cameron and Alex Salmond talk Independence
Prime Minister David Cameron has offered to consider more powers for Scotland, in the event of a vote against independence.
Ahead of a referendum expected in 2014, Mr Cameron admitted Scotland could go it alone, but said he believed in the United Kingdom "head, heart and soul".
He said it would be "deeply, deeply sad" if Scotland became independent.
The prime minister also suggested the move would have implications for the UK's EU and Nato membership.
Mr Cameron has since been in talks with Scottish First Minister Alex Salmond, who said after the meeting: "Things have moved on quite substantially".
He said the only serious issue of disagreement was over the question used in the referendum and whether there should be a second question on "devo max".
However, he said he wouldn't "buy a pig in a poke" from Mr Cameron over a referendum on independence.
He said: "The prime minister's position is he wants to have one question. My position is we are in the middle of a consultation with the Scottish people and we are open-minded.
"If there is a strong demand from civic Scotland, from the unions, the voluntary sector, the churches, civic society in Scotland, for something different, for some other option to be tested, politicians at the very least should listen to that."
Mr Salmond said it was now incumbent on Mr Cameron and others to set out more details on the offer of further devolution for Scotland.
"The prime minister is now saying for the first time that another option is now on the table. What I said to the prime minister in the discussions is if that is the case, we now have to know what it will be."
Mr Cameron said he had made little progress with Mr Salmond and reiterated that his "absolute priority" was to preserve the United Kingdom.
He said voters in Scotland should be presented as soon as possible with a "simple, straightforward and legal" question over whether they wanted to remain in the UK or not.
He described his discussions with Mr Salmond as "constructive", but told the BBC: "On the issue of independence, separating Scotland, leaving the United Kingdom, I am afraid there wasn't much progress."
Government sources told the BBC the talks had been "frustrating".
The Scottish government is open-minded about including a second question on the ballot paper, asking people if they want more powers for the Holyrood parliament, short of independence.
Mr Cameron said the independence issue had to be dealt with simply, telling BBC News: "We have to settle that question before then going on and asking, I think quite legitimately, is there more that we can do to improve the devolved settlement?
Making his case for the Union, Mr Cameron said: "I'm not saying that Scotland couldn't make it on her own, of course Scotland could, just as England could - but ideally hope that this doesn't happen.
"I believe in the United Kingdom, head, heart and soul.
"We've achieved so much together, we can go on achieving great things together, so I hope that, when the time comes, Scots will vote to stay in our shared home."
The prime minister said: "It's never been part of my argument that Scotland couldn't make it on her own - there are countries in Europe, small countries that make it on their own, but my argument is, we are better off, we are stronger together, we're fairer together, we're richer together.
Mr Cameron said the UK enjoyed "solidarity", adding: "When one part of the United Kingdom suffers a setback, whether it's a drought or a flood or severe weather or economic dislocation, we are there for each other. (#uksnow. Good times)
"We've achieved all these things together and I think to throw all that away would be deeply, deeply sad."
The prime minister said there was also a strong economic case for the UK, which he described as the world's 7th largest economy.
He said that, as an independent country, Scotland would have the "advantages of oil but the disadvantages of an over-extended banking system", while other costs like pensions and benefits would come into play.
The PM went on to say there would be lots of "consequences" for organisations like the armed forces, the BBC, the NHS and the UK's nuclear weapons, based at Faslane Naval Base on the Clyde.
"The UN Security Council seat, our membership of the European Union, our leadership in Nato, our nuclear deterrent, our strong armed forces, they are all things that belong to the whole of the United Kingdom," he said.
"Clearly you can't break them in bits, as the defence secretary put it, you can't snap parts of our defence industry off like a bar of chocolate if Scotland was to go its own way."
Mr Cameron described himself as "one voice among many" in the independence debate, adding: "There will be Labour politicians, Liberal Democrat politicians, people of no political party, people who hate politics will all step forward and make arguments about whether Scotland should stay in the United Kingdom or not."
The prime minister also dismissed support for independence among so-called English nationalists, saying he was "not interested".
Salmond's oil fund plans - more pro/con at source
Scotland's first minister has revealed plans for an independent Scotland to establish an ''oil fund'' to help future generations.
Alex Salmond said that earmarking about a tenth of oil and gas tax revenues - about £1bn a year - could lead to a £30bn fund over a generation.
The plans are based on a scheme operated by the Norwegian government.
Labour said the idea was 30 years out of date and the Lib Dems said economic influence would drop outside of the UK.
Mr Salmond said currently the UK was the only oil producing country not operating an oil fund scheme.
He told the BBC: "The only finance department that hasn't done it really as a major oil and gas producer is the United Kingdom Treasury.
"If you look at every other, just about every other, major oil producing country - whether it's Abu Dhabi, Norway, or the states of Canada - all of them have built up an investment fund for the future of their state or the future of their country.
"Westminster is the exception in this regard and I think most people looking at the management of oil and gas resources would rather follow the Norwegian example than follow the example of the Treasury in London."
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