In my view the correct position is that the Scottish Parliament can pass such an Act, but the pertinent point which few seem to have spotted is that the Scottish Government does not for the most part require an Act of the Scottish Parliament in order to hold the referendum, assuming it has got the cash to pay for it within the Scottish Consolidated Fund (a prerequisite whether or not there is an Act of the Scottish Parliament authorising the referendum).
Put more shortly, the holding of a consultative referendum to elicit the views of people in Scotland seems to me to exceed neither the Scottish Government's existing powers, nor the Scottish Parliament's powers to pass a "window-dressing" Act, but the result would only be consultative and the power to sever the union rests solely with the UK Parliament. A consultative referendum is political rather than legal in nature: it exerts political pressure but not legal sanction. (Of course, inaction by the UK Parliament on the matter in the event of a referendum result in favour of independence might lead to a unilateral declaration of independence.)
This article sets out why that is the case.
The Scottish Parliament
Any amendment of the Union with Scotland Act 1706 and the Union with England Act 1707 can only be made by the UK Parliament. By virtue of section 29 of the Scotland Act 1998, the Scottish Parliament may only make laws (that is, pass Acts) within its legislative competence, and:
"(2) A provision is outside that competence so far as any of the following paragraphs apply—An Act amending the Articles of Union would arguably infringe paragraph (a) and certainly infringe paragraph (b), because paragraph 1 of Part 1 of Schedule 5 to the 1998 Act provides:
(a) it would form part of the law of a country or territory other than Scotland, or confer or remove functions exercisable otherwise than in or as regards Scotland,
(b) it relates to reserved matters,
"1 The following aspects of the constitution are reserved matters, that is—At this point it is worth noting that the later provisions of Part 1 of the Schedule set out exceptions to the constitutional reservations (that is sets out constitutional matters which are devolved), one of which is relevant when it comes to looking next at the powers of the Scottish Executive, and is in these terms:
(b) the Union of the Kingdoms of Scotland and England,
(c) the Parliament of the United Kingdom,
"2 (1) Paragraph 1 does not reserve—
(a) Her Majesty’s prerogative and other executive functions,
(b) functions exercisable by any person acting on behalf of the Crown, or
(c) any office in the Scottish Administration."
The Scottish Executive
The Scottish Executive is established by section 44 of the 1998 Act as follows:
"44 (1) There shall be a Scottish Executive, whose members shall be—Since the SNP took power as the party with the most seats in the Scottish Parliament in 1997 the Executive has called itself the Scottish Government.
(a) the First Minister,
(b) such Ministers as the First Minister may appoint under section 47, and
(c) the Lord Advocate and the Solicitor General for Scotland.
(2) The members of the Scottish Executive are referred to collectively as the Scottish Ministers."
Sections 53 and 54 made provision for the transfer of ministerial functions from the UK government to the Scottish Government where relating to devolved matters, as follows:
"53 (1) The functions mentioned in subsection (2) shall, so far as they are exercisable within devolved competence, be exercisable by the Scottish Ministers instead of by a Minister of the Crown.The two devolved competencies of the Scottish Government (as executive) and the Scottish Parliament (as legislature) are therefore, as one would expect, tied together. The answer to the question "is holding a consultative referendum within devolved competence" is the same when speaking of either the Scottish Government or the Scottish Parliament.
(2) Those functions are—
(a) those of Her Majesty’s prerogative and other executive functions which are exercisable on behalf of Her Majesty by a Minister of the Crown,
(b) other functions conferred on a Minister of the Crown by a prerogative instrument, and
(c) functions conferred on a Minister of the Crown by any pre-commencement enactment, but do not include any retained functions of the Lord Advocate.
54 (1) References in this Act to the exercise of a function being within or outside devolved competence are to be read in accordance with this section.
(3) In the case of any function other than a function of making, confirming or approving subordinate legislation, it is outside devolved competence to exercise the function (or exercise it in any way) so far as a provision of an Act of the Scottish Parliament conferring the function (or, as the case may be, conferring it so as to be exercisable in that way) would be outside the legislative competence of the Parliament."
So does the Scottish Government require new law, namely an Act of the Scottish Parliament, in order to hold the referendum? It seems to me that it does not because as mentioned above Scottish Ministers have acquired from UK ministers all the prerogative and other natural powers of the Crown, as well as statutory powers, with respect to matters within devolved competence. I covered earlier what the natural powers of the Crown comprise, but they would it seems to me include the power to hold a consultative referendum, assuming the money for it is voted in one of the annual Appropriation Acts.
The only legal requirement for obtaining legislative backing that I can forsee would arise if the Scottish Government considers it needs additional powers to compel relevant local authorities to make their premises and staff available for the count and to appoint returning officers. However, that is not to say that an Act of the Scottish Parliament may not be useful as political window dressing: it would show that the proposal has the consent of the majority of elected members as well as of the executive.
After the referendum
As mentioned above, the reason why I conclude that the holding of a consultative referendum is within devolved competence is that it is only consultative and has no direct legal sanction or effect. The wording proposed by the Scottish Government for the consultative referendum puts the question, whether the Scottish Government should negotiate a treaty with the UK government for Scotland to become an independent state.
One question arising from this is whether, after the negotiations which would follow a successful consultative referendum, a further referendum is required within Scotland approving the terms before the union is severed. The answer to this is that legally speaking it is entirely a matter for the UK Parliament when making the legislation repealing the Acts of Union. The Scottish Government says not, but the only influence that it could exercise on this is political and rhetorical. It seems doubtful that it would attempt a unilateral declaration of independence at this point, but that would be its only recourse if the UK government and UK Parliament were to press for a further post-negotiation referendum which the Scottish Government feared it might lose.
Of course, the relationships between England and Scotland may have become so damaged by the time the first referendum has passed and negotiations completed that the union may be beyond repair anyway, so making the question of a second referendum relatively insubstantial; and Alex Salmond would certainly be doing all he could to help the process of disrepair along. We do not yet know how far the patience of people in the remainder of the UK can be tested.