Thomas Colson
Kezia Dugdale delivers her speech at the IPPP, December 7
In a speech at the Institute for Public Policy, Dugdale rallied against the Scottish National Party's "divisive" plans for independence, and said a federal solution could "save" the UK by giving its devolved administrations of Scotland, Ireland, and Wales far more power than they currently have.
Dugdale said that the 1707 Act of Union between Scotland and England still underpins the relationship between the two countries, and argued that a new Act was needed for the 21st century.
She said her plan would serve the "dual mandate" in Scotland of the majority who voted to remain in the UK and the EU, and whose interests weren't served by either the Conservatives or the SNP.
"We are now faced with a Tory government in Westminster which looks set to force hard Brexit on the whole of the UK, and an SNP government at Holyrood which wants to exploit the divisions to win independence," she said.
"This is the position that the majority of Scots - the moderate, pro-union Scots and also many former Yes voters - find themselves in.
"More than ever, we have two governing parties in Scotland that are out of step with what the majority of people in Scotland want. The Tories want Scotland in the UK and out of Europe, and the SNP want Scotland in the EU, but out of the UK."
Dudgale's proposals include abolishing the House of Lords to replace it with elected regional senates, giving devolved administrations control of major policy areas such as fishing and agriculture, and creating a "People's Constitutional Convention" whereby an assembly of citizens makes proposals for the shape of the new political system.
The speech represents a major policy intervention, and comes as Dugdale battles to arrest Labour's dramatic slide in the polls north of the border.
Pollster John Curtice told Business Insider last week that Labour's support had been "shredded" since the emergence of the independence question in the wake of Brexit, as "No" voters flock to the vocally pro-unionist Tories and "Yes" voters remain loyal to the pro-independence SNP.
Labour's position on independence, meanwhile, has been unclear, and it appears to have hurt the party. In February, Dugdale hinted that she might support Scottish independence, before backtracking and said she would always vote to remain in the UK.
Now, however, Labour's position on independence is now clear: Dugdale will call for Scotland remain part of the UK on the basis that it is the "single greatest force for redistribution [of wealth] that we have," but will seek a new arrangement based enough regional power that desire for full independence is quashed.