Well, I disagree. It was certainly a bad night for nationalism. The SNP got off relatively lightly because the echo chamber of Scottish politics, the UK media, is really only interested when the SNP is winning. But the Nationalists should be in no doubt about the significance of the defeat.

Every generation or so, the SNP persuades itself that it has found the key to electoral success in west-central Scotland. After Glasgow East – won by the Nationalists on a 22% swing – the party finally thought it had arrived.

Now, in Glasgow North East, it is back where it started. By rights, Labour should never have won this by-election.

In Gordon Brown’s darkest days, in the midst of an unpopular war, after an epic expenses scandal in which the local MP, Michael Martin, played a leading role, voters in one of the most deprived and neglected constituencies in the country still turned out to support the party that has apparently done so little for them. The SNP has no excuses here. It may mutter about intellectually-challenged Glasgow voters, but the people have spoken, even with the lowest turnout in Scottish by-election history, and the SNP needs to listen.

The scale of Labour’s victory – 8000 votes – was a profound shock to the SNP and, following the Glenrothes debacle, people are already betting on how long Alex Salmond will remain as leader. His critics will round on him for his obsession with an independence referendum that was never going to happen and for his vainglorious forecast of “hanging Westminster from a Scottish rope”.

More worrying for the SNP, Glasgow North East shows that Labour is capable of regaining its soul – reasserting its claim as the “national” party of Scotland. Willie Bain showed that a good local candidate, prepared to speak his own mind and depart from the Labour party line, is all but unbeatable in west-central Scotland – especially if he has strong union backing.

In Glasgow East, Labour lost through incompetence and poor organisation. A capable Scottish Secretary, Jim Murphy, has put that right, and Labour won’t throw seats away again in a hurry.

The timing of Glasgow North East is as important as the actual vote. The morning after the May General Election, Scotland will suddenly remember what we’ve all forgotten in the hazy, crazy years since 2007: that Labour remains the dominant political force in Scotland.

The vast majority of Scottish MPs next May are always going to be Labour – but now they could be in the running for a Caledonian landslide: the Scottish Tories are going nowhere, the Liberal Democrats are becalmed and the SNP is going backwards on its showing in Glasgow North East. The SNP’s setback obscured the scale of the defeats suffered by Scotland’s other major parties. Even with their best candidate in years, Ruth David­son, the Tories were still left vying with the BNP at the scary end of the poll, actually losing votes on their 1997 showing. Their only consolation was that the Liberal Democrats did even worse, coming behind Tommy Sheridan.

Tory hopes of winning a Scottish breakthrough in the General Election died last week – which leaves David Cameron with the uncomfortable prospect of winning in Westminster and losing his mandate north of the border. But the surprise will be that it may well be Labour that is leading the charge against London rule.

In opposition, Scottish Labour will be liberated from the dead hand of the New Labour’s London leadership. Labour activists – those who are left – will no longer have to bite their tongues over the latest disastrous policy pronouncement from London or the latest disastrous war. Scottish Labour will be free to start sounding more nationalist, with a small “n”, than it has since the days of the Scottish Constitutional Convention 20 years ago.

We will be reminded that, since the days of Keir Hardie, Labour has been the main vehicle for Scottish home rule aspirations; that it was Labour which set up the Scottish Constitutional Convention, and which the SNP boycotted; and that it was a Labour government that delivered the Scottish Parliament. Labour’s pitch at the General Election campaign is already clear.

If it has any sense, it will set aside cold turkey Unionism and offer a better Holyrood with added powers. It will claim that Labour, and only Labour, can defend Scotland against the Tories. Labour has already accused the SNP of being in bed with the Tories, and in Holyrood there has undoubtedly been Nationalist collaboration with the old class enemy.

No, this doesn’t mean that the SNP is going to lose power in the Scottish Parliament in 2011 – the Scottish voters may still split their ticket, judging that the Nationalists have shown themselves in office to be the most able party of government in Holyrood. But it will be close. Labour only lost last time by one seat, and the Scottish Liberal Democrats will be much more inclined to form a coalition with Labour than they were in 2007, when they were fed up being the rump of the Lib/Lab donkey. With the Tories in power in Westminster, Labour will be able to claim that the SNP is irrelevant to the real struggle against Cameron’s cuts.

So, what does the SNP do to counter the resurgence of Scottish Labour? Dump Salmond? No, he is still a formidable political asset, a powerful leader who is still immensely popular in Scotland, but he has to stop sounding like the spokesman for the Edinburgh banking community.

Dump independence? Well, it could do with laying it to rest after their referendum Bill is defeated. It is beginning to look like an obsession and a distraction.

Give up? Well, if it can’t win in west-central Scotland, it can’t really expect to command Scotland.

The SNP needs a new formula for social democratic nationalism, if it isn’t to end up, once again, bitter and divided, and on the sidelines of Scottish politics. It has happened before, and, after Glasgow North East, I fear it could happen again.