A FEDERAL UK with sweeping new powers for Scotland would be the best way to deliver a fairer, more equal society, a group of influential trade unionists and left-wing thinkers has concluded.

In a new book set to reinvigorate the referendum debate, the Red Paper group calls for extensive "fiscal devolution" for Scotland along with new powers to nationalise land and industries. The group rejects independence as a "blind alley" and is highly critical of the SNP's vision for a go-it-alone Scotland, claiming Alex Salmond's pledge to slash corporation tax and other measures would "ensure the continuation of austerity policies".

However, The Red Paper on Scotland 2014: Class, Nation and Socialism is equally scathing about Labour's approach to the referendum.

It says the party's alliance with the Tories and LibDems in the Better Together campaign has "alienated much of the Labour movement", adding: "Labour is in danger of losing the support of key opinion leaders among trade union and community activists."

In a stinging assessment of the choice facing Scots next year, the book's co-editor Pauline Bryan writes: "The SNP are not fighting the referendum on a platform of radical change and the Labour Party is not defending the Union by offering the possibility of radical change - they are both in their own ways defending the status quo."

The Red Paper group includes many of Scotland's leading trade unionists and left-wing academics and politicians. Contributors include Labour MSP Neil Findlay and MP Katy Clark, deputy general secretary of the STUC Dave Moxham, Eric Shaw, of Stirling University, and Dr Muir Houston, of Glasgow University.

The book follows in the tradition of previous Red Papers on Scotland, the first compiled by Gordon Brown in 1975. Its vision for a socialist Scotland within the UK influenced a generation of Labour MPs and MSPs.

The latest Red Paper on Scotland puts forward a radical vision in which the UK would remain the most effective vehicle to share wealth around the UK, but extensive extra powers would be devolved to Scotland, Wales and Northern Ireland.

It says: "Now that we have the Scottish Parliament, Welsh and Northern Irish assemblies we have the basis for a federal arrangement with power devolved within the UK, but with the strength of a single Parliament dealing with macro-economic issues and international relations. This dual approach allows variations in policy within the constituent parts, but can provide the combined strength to operate within the global economy."

It argues that piecemeal additions to Holyrood's powers being considered by Labour, including the full devolution of income tax, are unlikely to produce a lasting constitutional settlement in the event of a No vote next year.

It says Holyrood should have more wide-ranging tax powers and should be able to borrow well beyond the £2.2 billion limit set out in the Scotland Act, due to come into force in 2015. The move would end the need to use mortgage-style deals with private firms for major infrastructure projects, such as public private partnerships and the SNP's version, non-profit distributing schemes.

In a proposal likely to prove controversial, it says Holyrood should also have the right to create nationalised industries.

It adds: "A Scottish Government should be able to create publicly owned enterprises to rebuild Scotland's industrial base on green technology, renewable and high-value manufacturing; addressing unemployment blackspots and creating a more prosperous future for the people, especially the young people, of Scotland."