For decades Labour has regarded itself as the natural party of government in Scotland, the party that embodied the Scots instinct for decency and fairness.

It is a measure of just how low Labour's fortunes have fallen in the wake of its drubbing in the Holyrood elections that in The Herald today one of the party's senior figures describes the current state of Scottish politics as tantamount to one-party rule by the Scottish National Party.

This morning, as the winner of Scottish Labour's leadership election is finally announced, the party stands at a crossroads. Under the right leadership, it could regroup, reconnect and rise again or it could drift off into the political wilderness.

The municipal elections in 2012 will be a key test. If Labour fails to hold on to its power base in Glasgow, many will be writing the party's obituary. So the new leader, whether it is MP Tom Harris, MSP Ken Macintosh or, the favourite and current deputy leader, Johann Lamont, has to galvanise the party and do so quickly. The latest opinion polls put popular support for the SNP at 51% and Labour on just 26%. That is a reflection of the SNP's success in occupying the centre ground. In every debate, the Nationalists appear to be able to win both ways. If Scotland seems to be doing marginally better than the rest of the UK, they take credit for making the difference. If it does worse, then everything is blamed on Westminster and used as an argument for handing more levers of power to Holyrood. Recent unemployment figures are a case in point.

Meanwhile, the long interregnum after the Westminster elections before Ed Miliband's election, allowed a simplistic narrative to take hold. This maintained that the UK's economic woes were all the fault of Gordon Brown's government. Another attenuated leadership campaign, this time in Scotland, made matters worse.

Now Labour must pick itself up. The Scottish party has certainly lost the sense of entitlement that lingered on dangerously after the 2007 Holyrood elections. And, following the review by MSP Sarah Boyack and MP Jim Murphy, it has realised the mistake of Labour devolving politics without devolving its own party structure.

As a result, for the first time, the new leader's remit covers the whole of Scottish Labour, rather than simply MSPs. This better equips him or her to take forward the argument about devolution within the Union. Having accepted, as Donald Dewar did, that devolution is a stage in a story, the Scottish Labour Party must now plant its standard somewhere along the road to devo max and attempt to rally support from those who oppose the break-up of the Union. And Labour must now take on the SNP, not only over the constitution but also on its handling of the economy, education and health. Healthy democracies rely on robust opposition.

The new leader would be unwise to rely on verbal gladiatorial combat with the First Minister: a recipe for failure. Rather that leader must bring together Labour's strongest players at Westminster and at municipal level, as well as in the Scottish Parliament and take the fight to the SNP. The alternative could be the fate of Shelley's once mighty Ozymandias, that now lies buried in the sand.