New leader Johann Lamont has to develop a coherent political and constitutional alternative to the SNP - but what it is?
Johann Lamont woke up this morning leader of a party which has lost all sense of itself. Over the last six or seven years, Scottish Labour has watched as the SNP has gradually appropriated much of its traditional left-of-centre agenda. Now, with a nationalist majority at Holyrood, Labour finds its ideological identity absorbed into a new Scottish consensus, with little or no space to build a distinctive progressive alternative.
Lamont's over-arching task is clear. She has to demonstrate that Labour amounts to more than just the anti-independence party; that it has a coherent political and economic vision for Scotland.
This will be more difficult than it sounds. If she shifts the party to the centre, she will run it straight into an electoral brick-wall. A large part of the SNP's success can be attributed to the sense of frustration many Scots came to feel with New Labour's neo-liberal project. Alex Salmond understood this and, despite his own baffling fixation with Ireland's low-tax, light-touch economy, developed a package of policies - including free university education and an integrated health service - which adhered more closely to the broad social-democratic instincts of the Scottish electorate.
On the other hand, if Lamont tries to outflank the nationalists on the left Labour's support will be reduced to a shrinking core vote in its central belt and west coast heartlands. Lamont has already tested this approach - at the elections in May - and it produced disastrous results. That's not to say there isn't room for Labour to attack Salmond from the left - the First Minister's plans to lower corporation tax and his close relationship to some members Scotland's disgraced financial elite leave him open to charges of fiscal conservatism. In order to be effective, though, such attacks would have form part of a wider strategy which draws in sections of society beyond the party's trade union and public sector base.
Lamont faces a similar dilemma when it comes to the constitution. The break-up of Britain terrifies Labour, so much so, in fact, that its response to the SNP's May victory was to retreat into a kind of extreme, reactionary Unionism. In recent months, senior Labour figures have described the nationalists as "neo-fascist", accused them of trying to "rig" the referendum ballot and made repeated - and usually unsubstantiated - claims about online smear campaigns run by pro-independence activists. Yet the angrier Labour has become and the more aggressively it has rejected real constitutional reform, the lower its poll ratings have sunk.
What should be absolutely clear is that the status-quo - which here refers to both the current devolutionary settlement and Calman's loaded exchange of fiscal powers - is a non-starter. Scottish public opinion demands more and, by now, Lamont must have realised that. But she must also be aware that were she to embrace either devo-max or full-fiscal autonomy, she would be conceding 90 per cent of the case for independence. A federal Britain would see the Scottish Parliament gain responsibility for all aspects of government in Scotland except defence and foreign affairs. That means the case for the UK would rest on Trident, a seat on the UN Security Council and not much else. Is that the role Labour really wants to play in Scotland, as the principal defender of Britain's dangerous, redundant and hugely expensive nuclear missile system?
Whatever road Lamont decides to take her party down, she should be in no doubt that its future hangs in the balance. As her defeated opponent Tom Harris warned during the leadership contest, Scottish Labour has reached a pivotal moment in its history and failure to live up to the challenges ahead will result in "well-deserved obscurity and irrelevance". Serious shock therapy is needed to resolve this crisis of identity - who knows if Lamont is capable of administering it.