New language for Labour

Ms Alexander, the former enterprise minister, was the only candidate for leadership of the Labour group in the Scottish Parliament when nominations closed yesterday lunchtime.

Certain she will now replace Jack McConnell at the head of the Scottish party, Ms Alexander went to Stirling to announce her plans to reform and revive the party and said she was open to the transfer of new powers to the Scottish Parliament.

She said: "I welcome a debate about Scotland's constitutional future. Taking a fresh look at the settlement is not something that holds any anxieties for me."

This is a significant step for Ms Alexander and puts her on a collision course with Des Browne, the Scottish Secretary, who told The Scotsman earlier this week that he did not believe there was any need to change to the current devolution settlement.

Ms Alexander said she wanted to "strengthen the financial accountability" of politicians, indicating she supported the transfer of new financial powers to the Scottish Parliament.

Asked directly whether she was prepared to consider fiscal autonomy for Holyrood, she replied: "Yes. We need to look at how politicians are more financially accountable. This has to be a dialogue within the UK."

Ms Alexander has backed increased "fiscal federalism" for Holyrood before.

In 2004, she supported the findings of a paper written by two leading economists for the Fraser of Allander Institute. The paper suggested the Scottish Parliament be given the power to vary tax by 7 per cent across a range of different taxes, replacing the blunt 3p-in-the-pound income tax power which it has at the moment.

The academics also called for the Scottish Parliament to be given control of stamp duty, as well as betting and gaming taxes and possibly corporation tax.

Under their plans, Holyrood would also have the ability to borrow money on the international markets, which it cannot do at the moment.

Ms Alexander was supportive of the paper, and said she would back a Royal Commission to look into the case for this form of fiscal federalism.

She said at the time: "This paper demonstrates the way Scotland can take more responsibility for its own finances without abandoning the UK."

Fiscal autonomy takes many forms, from the full "fiscal freedom" advocated by the Nationalists - which would give Holyrood complete control over all the money it raises and spends - to more limited forms of "fiscal federalism", some of which would see only the transfer of individual taxes such as stamp duty to the parliament.

Ms Alexander is a "fiscal federalist" who believes in the transfer of some significant new powers to Holyrood. But she is strongly opposed to the complete hand-over of all tax-and-spend powers to Holyrood.

However, she does believe the Scottish Executive would be more accountable and would be able to do more to improve the lives of Scots if it had more control over revenue raising.

Ms Alexander is a close ally of Gordon Brown, the Prime Minister, and although she made it clear she would be her own leader and would not simply be a Downing Street spokeswoman in Scotland, it is inconceivable that Mr Brown was not aware of her views when she spoke out yesterday.

Any move on behalf of the Scottish Labour Party to call for more tax powers for the parliament would cause problems with senior figures in London and some in Scotland.

But Ms Alexander has clearly decided the Scottish Labour Party was left behind at the last election and needs to move on.

Her acceptance of the need for a debate on more powers for the parliament also demonstrates how far the debate in Scotland has moved on.

During the election campaign, the debate was about whether or not there should be more powers for parliament, now the debate is over which powers should be transferred.

The Liberal Democrats already back more powers for the parliament and the Tories are prepared to enter the debate.

With the new Labour leader-elect in Scotland now also on the same course, it seems as if Westminster will have no choice but to enter into the debate too.

Yesterday, Ms Alexander was not specific about her tax plans, but she did make it clear she was prepared to think about radical new directions for the party, including opposition to new nuclear power stations in Scotland, stating: "I have got an open mind on that debate."

Ms Alexander acknowledged that Scottish Labour no longer represents all parts of the country and has become increasingly confined to its heartlands in west and central Scotland.

She said: "If Labour is to once again be an all-Scotland party, then we must genuinely listen to the entire country. North, south, east, west, I want everyone to feel Labour represents their values and their ambitions."

She also stressed that under her leadership, the Scottish Labour Party would take full responsibility for all devolved policy matters - even if those policies run counter to the direction taken by the UK party in London.

She said: "I will lead the Scottish Labour Party. I am my own person with my own causes. I have always been that."

And Ms Alexander had a swipe at the SNP's pursuit of the independence agenda when she claimed that the electorate would give "short shrift" to politicians following their own agendas.

She said politicians had to "challenge the bureaucrats", "improve services" and meet "rising expectations" of the people. "That is the road on which I will lead the Scottish Labour Party and that is the road back to power," she declared.

The SNP, the Conservatives and the Liberal Democrats were all delighted with Ms Alexander's remarks yesterday, which signalled an apparent change in Labour's approach to the constitution.

Murdo Fraser, the deputy leader of the Scottish Tories, said: "We welcome the fact there appears to be a shift in the Scottish Labour position concerning more powers for the Scottish Parliament and they are now happy to engage in a debate we have wanted for a long time.

"I look forward to Wendy Alexander winning over Gordon Brown to her side of the argument, no doubt in the teeth of opposition from the Secretary of State for Scotland, who takes an entirely different view from her on this matter."

Nicol Stephen, leader of the Scottish Liberal Democrats, said: "I welcome Labour's change of tack. Wendy Alexander may want to ensure that Des Browne also agrees with her position.

"Liberal Democrats have led the campaign for more powers for the Scottish Parliament. Labour's change of heart is good news for those of us who want change and not independence."

He added: "There is now a great opportunity to deliver a stronger, more effective Scottish Parliament. I am convinced this is what most people in Scotland want to see."

John Swinney, the SNP finance secretary, welcomed Ms Alexander to her new role and to "the national conversation" on the future of Scotland which was launched by Alex Salmond, the First Minister, last week.

He added: "Last week, Wendy said she would take part in the debate to give more powers to the Scottish Parliament; this week the Secretary of State has flatly contradicted this by claiming the powers were adequate.

"It seems that Scottish Labour policy changes day-to-day depending on who is speaking.

"Labour has lost touch with the people of Scotland and the absence of a credible contest about the future direction of Labour means the party will remain out of touch with Scottish opinion."

WHAT WENDY SAYS – AND WHAT SHE MEANS

"We need to meet voters on their ground. Out of touch is out of power."

An honest recognition that Labour is now behind, not ahead of, the expectations of voters in Scotland. The consequences of being in that position is that the party lost the last Holyrood election because, in Ms Alexander's view, the SNP were better able to capture the mood of the nation. As she says, if a party loses touch with the voters it soon loses power and could remain out of office until it reconnects with the electorate.

"As Scottish Labour leader, I will be uncompromising in my support for change"

Put simply, the status quo is not an option for Labour. Ms Alexander does not believe in what, at Westminster before Tony Blair became leader, was called the "one more heave" strategy - keeping things more or less the same and hoping that voters return to the party.

She believes voters do not want the constitutional change of independence, but that her party must prove it recognises there has to be a devolved government which recognises the pace of change in modern society.

"Labour will reform, renew and reconnect"

It is widely accepted that in the May election Labour's organisation, on the ground and nationally, failed to compare to the Nationalist's well-oiled and well-financed machine. This also clearly signals that the party programme will be up-dated with a root and branch review in the run-up to the next Holyrood election. New policies will be adopted and an attempt made to better engage with voters who have deserted Labour for the Nationalists or other parties.

"We will offer a new progressive, radical and reforming vision."

Harking back to Labour's past radical tradition, which is necessary to stem suspicions over policy direction among the party's grassroots. The word "progressive" is often used by centre-left politicians in the US and Europe who do not want to use the term "socialism". It was often used by Tony Blair and Bill Clinton.

"We need to look at how politicians are more financially accountable."

Being prepared to think about greater tax powers for Holyrood, to improve the accountability of politicians. Ms Alexander has in the past spoken out in favour of what has been called "fiscal federalism", where Holyrood would raise more of the money it spends, perhaps having control over more income tax and corporation tax. That does not mean she is in favour of full "fiscal autonomy", where the parliament raises all the money it spends.

"I want Scottish Labour to champion the optimism of our country"

An obvious reference to the view that the SNP captured a positive spirit in Scotland, in contrast to Labour's grim warnings over independence. Since 1999, when Labour warned "divorce is an expensive business", the party has, by and large, used claims over the supposed dire consequences of independence in its election campaigns. This suggests Ms Alexander may back away from that in favour of a more optimistic view of Scotland, as espoused by the SNP.

"Developing Scottish solutions for Scottish aspirations"

A deliberate departure from the phrase "Scottish solutions for Scottish problems" which Labour has used in the past. The words are aimed at empathising with voters' increasingly higher expectations, which Ms Alexander believes that the Scottish National Party tapped into during the recent elections for Holyrood. The message is positive, countering the idea that Labour has put too much emphasis in the past on negative campaigning.

"Empowering people and communities and not institutions"

Giving local people real power over public services, rather than allowing remote quangos or other bodies make policies. John Swinney, the cabinet secretary for finance, is considering giving more powers to local authorities in Scotland over areas like the enterprise network. However, Ms Alexander's words imply a more direct involvement of people - below the levels of or by-passing councils - in deciding how public services are delivered to their communities.

"Consumer not producer-focused public services"

Concentrating on what pupils, patients or council-tax payers want, not bowing to the demands which suit the providers of the services and their trade unions. This is the kind of phrase that Jack McConnell, who Ms Alexander is succeeding, would not have uttered for fear of antagonising trades union leaders. Alex Salmond, likewise, would not use this phrase as it also implies that there could be more use of the private sector to provide public services.

"A competitive yet compassionate economy"

Pro-business policies to support economic growth alongside helping the poorest in society through education, including early intervention for pre-school children, and skills training to get people to move from welfare benefits and into work. The words have echoes of the phrase used by Henry McLeish, the former Labour First Minister, who used to speak of building a "confident, compassionate and competitive Scotland".