UK's Labour suffers setback as leader in Scotland quits

By William Schomberg LONDON (Reuters) - The head of Britain's opposition Labour party in Scotland has unexpectedly quit, further unsettling the party in one of its heartlands and posing a new problem for leader Ed Miliband ahead of national elections in May next year. Johann Lamont told a newspaper she was standing down with immediate effect. She slammed "dinosaurs" among Labour's leadership in London who were out of touch with how Scotland had changed even though voters had rejected independence last month. Some Labour officials in Westminster "do not understand the politics they are facing" she told the Daily Record, adding the Scottish Labour Party was being treated like a "branch office" by its national leadership. Labour has traditionally dominated Scottish politics and won 41 of Scotland's 59 seats in Britain's parliament in the last national election in 2010. But it has struggled to respond to the rise of the Scottish National Party which has won over support from many former Labour voters. Lamont was named Labour's leader in Scotland in 2011 after the SNP unexpectedly won a majority in Scotland's devolved parliament. The nationalists seized on her resignation as a sign of Labour's "complete meltdown" in Scotland. "Labour were already a party in crisis, and Johann Lamont's resignation - caused by infighting and deep division - has plunged them to a new low," the SNP's leader-in-waiting, Nicola Sturgeon, said in a statement. The current head of the SNP, Alex Salmond, announced his resignation shortly after the campaign for independence was defeated on Sept. 18. British media have speculated about candidates to take over Labour in Scotland, including former prime minister Gordon Brown who played a prominent role in the 'No' campaign, and Jim Murphy, a Labour lawmaker in the British parliament who toured Scotland to speak out against independence. Across Britain as a whole, Labour have a narrow lead in opinion polls over the Conservatives of Prime Minister David Cameron. But Labour leader Miliband scores poorly when voters are asked to assess his suitability as Britain's next leader. The Daily Telegraph newspaper reported on Saturday that former Labour prime minister Tony Blair had confided to friends that he thought the party under Miliband had not made a strong enough case with voters to win in May. Blair issued a denial of the story. "The Telegraph story does not represent my view. Ed Miliband and the Labour Party can and will win the next election," he said on Twitter. (Writing by William Schomberg, editing by William Hardy)