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This week’s two by-elections had something for everyone – except Rishi Sunak’s Conservatives.

Sir Keir Starmer’s Labour Party has now broken into the record books with six by-election gains from the Conservatives, beating New Labour’s performance in the run-up to the 1997 Election.

Reform UK got more than 10% of the votes in both constituencies.

The Liberal Democrats lost two deposits, with less than 5% of votes cast each time. But even they have something to celebrate, according to one polling analyst.

Peter Kellner argues that their four by-election victories over the Tories since 2019 show that they are much better at concentrating their vote than they used to be – when they regularly clocked up 10% plus support across the country with nothing to show for it.

Reform could be falling into a similar trap with significant minority support spread nationwide, enough to damage the Conservatives without a sniff of winning a seat.

Damien Egan reacts as he is surrounded by his supporters, after he won the Kingswood Parliamentary by-election, at Kingswood Park.
Pic: Reuters
Image:
Damien Egan won the Kingswood by-election for Labour.
Pic: Reuters

Labour Party candidate Gen Kitchen celebrates with Labour MP for Chesterfield Toby Perkins after being declared winner in the Wellingborough by-election at the Kettering Leisure Village, Northamptonshire.
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Labour’s Gen Kitchen celebrates after being declared winner in the Wellingborough by-election. Pic: PA

No wonder Nigel Farage is talking about “uniting the centre-right vote” of Conservatives and Reform, without committing himself personally to fight in the approaching general election.

Jacob Rees-Mogg has taken up the call for the two right-wing groupings to come together.

Conservative MP Dame Andrea Jenkyns has leapt on the by-election defeats in Kingswood and Wellingborough to renew her call for Sunak to be replaced.

The prime minister must be wondering why his MPs keep inflicting damage on their party through their own behaviour.

All six of Labour’s by-election gains were precipitated by voluntary or forced resignations by Conservative MPs.

Prime Minister Rishi Sunak reacts to by-election results
Image:
Prime Minister Rishi Sunak reacts to last week’s by-election results

The tables will be turned in the next by-election in just 10 days’ time, when Labour is defending the constituency of Rochdale in Lancashire and the party is certain to be the victim of a technical knock-out because it no longer has a candidate.

Starmer’s discomfort in Rochdale and the continued agony of political death by many by-election cuts explain why there is growing speculation that the prime minister may call the general election sooner rather than later in the year, as he has suggested.

Rochdale is an unholy mess for Labour, which exposes one of the most painful divisions in the party.

Labour has held the seat since 2005. Tony Lloyd, who died last month, held it in 2019 with more than half the votes cast.

In its haste to make the best of a sure thing, Labour rushed to hold the vote to find a replacement MP.

Azhar Ali, a local council big wig, was chosen quickly as the Labour candidate. Too quickly, it turns out.

Labour candidate for Rochdale, Azhar Ali (left), is joined by Mayor of Manchester Andy Burnham in Rochdale town centre as he launches his campaign for the up-coming Rochdale by-election, triggered by the death of Sir Tony Lloyd. Picture date: Wednesday February 7, 2024.
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Labour’s former candidate for Rochdale, Azhar Ali. Pic: PA

The Mail on Sunday and then The Daily Mail exposed comments about the Israel-Gaza conflict which he had made at Labour gatherings, in clear violation of party policy.

Ali had embraced conspiracy theories that Israel allowed the 7 October attacks to happen and made accusations about Jewish influence in the media.

He later issued an “unreserved” apology, saying the comments were “deeply offensive, ignorant, and false”.

After an agonising weekend when Labour leaders tried to keep Ali as their official candidate, he was cut loose along with the candidate in neighbouring Hyndburn for similar comments.

It is easy to see why Starmer was reluctant to act. Nominations for the Rochdale by-election had closed.

Labour was stuck with Ali on the ballot paper as their candidate, come what may. It was too late to select a substitute.

Labour must sit it out for the remainder of the campaign, as Ali presses on as an independent. If he wins, he will not receive the Labour whip.

This will automatically exclude him from being the Labour candidate at the approaching general election.

The party leadership could then impose Paul Waugh as the Labour candidate.

In a move which surprised many, Waugh gave up a career as a top political journalist to stand for selection in this by-election – unsuccessfully as it turned out.

This awkward outcome is probably the best that Labour can hope for.

Two controversial ex-Labour MPs are also standing in the by-election.

Simon Danczuk won Rochdale for Labour in 2010 and then 2015. But he was suspended from the party shortly afterwards for sexting a 17-year-old girl. This time, Danczuk is standing for Reform UK.

The candidacy of George Galloway is of much greater concern.

File photo dated 02/07/21 of George Galloway who has said he is confident a judge will hear his legal challenge against the Batley and Spen by-election result, despite the initial deadline for challenging his defeat having now passed. Issue date: Friday August 6, 2021.
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George Galloway. File pic: PA

Since his first election in 1987, Galloway has been an MP in four constituencies: Glasgow Hillhead/Kelvin for Labour, and Bethnal Green & Bow, and Bradford West, for the Respect Party.

Galloway is pugnacious and articulate, and he specialises in fighting highly charged by-elections.

He is highly litigious and willing to take on his critics. He takes a close interest in the Middle East and is pro-Palestinian.

There have been allegations of antisemitism against him – claims he has strongly denied and even once labelled “outrageous”.

Roughly a third of the population in Rochdale has a Muslim background. As Ali’s comments showed, the Israel-Gaza conflict has already inflamed passions.

Opinion polls show that a clear majority of the British public does not take sides in the current conflict.

Of the remainder, around 20% each sympathise with Israel and the Palestinians. But the balance among Labour activists favours the Palestinians.

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Starmer: ‘People want change’

Rooting out the antisemitism which characterised Labour during Jeremy Corbyn’s far-left leadership is one of Starmer’s signal achievements.

Rough justice has meant that figures such as Corbyn, Diane Abbott and now Ali have been kicked out of the party.

But tensions have mounted as Israel’s high-casualty counteroffensive continues.

Read more from Sky News:
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In the past, Labour has benefitted from strong support in British Pakistani and Bangladeshi communities. In a handful of constituencies, this has been decisive.

Starmer is not pleasing many in his party by lining its Middle East policy up close to the government’s own position.

The Conservatives certainly are not going to give him any credit for backing them up.

Even without the divisive return of Galloway, Conservatives are already saying that the developments in Rochdale reveal that it is the same old Labour Party underneath, for all the changes supposedly wrought by Starmer.

Rochdale means chronic by-election pain for Starmer. There is no end to agony in sight for Sunak either.

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How Labour’s latest row unfolded

There is another by-election in the offing in Lancashire in the marginal constituency of Blackpool South

The Commons Standards Committee has recommended a potentially by-election-triggering 35-day suspension for the Conservative MP Scott Benton over lobbying and corruption allegations.

Voters do not like by-elections in grubby circumstances. They are inclined to punish the incumbent, but the reputation of all politics takes a hit.

The excuses Sunak gave this weekend for the Tory defeats in Kingswood and Wellingborough do not stand up.

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With the general election imminent, these were not “midterm by-elections”. Nor was turnout exceptionally low for such contests. The exception was the massive scale of the drop in the Conservative vote.

The quickest way to make it stop would be to call that general election.

In the past few days, keen observers report an upsurge in activity by those involved in running the Tory campaign.

While Starmer is mired in Rochdale, a giveaway budget on 6 March as the springboard to a May election must remain a distinct possibility – before it gets any worse.

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‘Hong Kong’s FTX’ victims win lawsuit, bankers bash stablecoins: Asia Express

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‘Hong Kong’s FTX’ victims win lawsuit, bankers bash stablecoins: Asia Express

Victims of ‘Hong Kong’s FTX’ take aim at $29M seized by police, central bankers bash stablecoins, crypto scammers busted over luxury condo.

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Pound falls sharply and government gilt interest rates up after major budget tax rises

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Pound falls sharply and government gilt interest rates up after major budget tax rises

The pound has fallen sharply after the chancellor announced the biggest tax rises in a generation.

Over the last three days, sterling has dropped by 1.2% (in trade weighted terms) – the biggest fall in 18 months.

Between around 1.30pm and 5.30pm today, versus the dollar, it dropped from about 129.9c to the pound to about 128.6c. In the same period, against the euro, it went from 119.3c to the pound to about 118.4c.

In addition, yields for 10-year UK bonds – the cost or interest rate charged for long-term government borrowing – have gone past 4.5% for the first time in a year.

Ed Conway, Sky News’s economics and data editor, said those yields are “pretty much halfway towards the danger zone” – a zone identified by the Office for Budget Responsibility (OBR).

However, he said other European bonds had risen, too. “But the UK does seem to be moving faster than most of the others,” he added.

While cautioning that the budget is still very new, Conway said the “upshot” is that Rachel Reeves’s “room for manoeuvre” is already diminishing “because of market moves”.

Markets are reacting in “quite a violent way”, Conway said.

“It’s really unusual to see this after a budget, and that will have a bearing on how much this government will be able to afford in the future,” he added.

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‘Raising taxes was not an easy decision’

A sudden rise in the yields of 10-year UK bonds followed Liz Truss’s disastrous “mini-budget” of September 2022, which led to a surge in the cost of borrowing for ordinary consumers, while the pound slumped to a 37-year low against the dollar.

It is “certainly not like that at the moment”, Conway said.

Nonetheless, market movements will be “enough to really concern people at the Treasury”, he added, “because it suggests that a lot of traders are looking at how much money this government is borrowing, and they’re saying: ‘Hang on, maybe we’re going to charge you more’.”

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The pound has weakened and gilt yields – the cost of borrowing by the UK government – has increased in response to the budget, which saw Rachel Reeves introduce the biggest tax hike in a generation.

While Conway said it does not feel like a “crisis point”, he said the “calculus for this government” may be changing.

Jack Meaning, UK chief economist at Barclays, said market reaction was “materially different” to what happened in 2022.

Bond yields since Ms Reeves’s budget are up by about 0.3%, while in 2022 the rise was about 1.5%, he said.

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Reeves acting like ‘compulsive liar’

The conversation Barclays is having with its customers is also different to that in 2022, Mr Meaning added.

At that time, people were wondering whether a “big crisis point” had been reached.

This time, he said the focus is on comments from the OBR about a potential rise in inflation, and the potential knock-on effect as the Bank of England makes decisions on interest rates in the next few months.

Read more:
Chancellor defends £40bn tax rises
Is the farmers’ inheritance tax the new pasty tax?

The prime minister’s official spokesperson refused to talk about bond prices.

“We don’t comment on market movements,” they said.

“The chancellor has been very clear that first and foremost, this budget has been about restoring fiscal stability, and she’s outlined two new robust fiscal rules, which put public finances on a sustainable path.”

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Budget 2024: Chancellor Rachel Reeves defends £40bn tax rises – ‘everything has to be paid for’

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Budget 2024: Chancellor Rachel Reeves defends £40bn tax rises - 'everything has to be paid for'

Rachel Reeves has defended raising taxes by the highest amount since 1993 as she said “everything has to be paid for”.

The chancellor announced £40bn worth of tax rises in Wednesday’s budget, with the lion’s share coming from a £25bn increase in employers’ National Insurance contributions.

She told Sky News’ Breakfast With Kay Burley that, unlike the previous Conservative government, she has included everything ministers will spend in their forecast, including £11.8bn compensation for victims of the infected blood scandal and £1.8bn for victims of the Post Office accounting scandal.

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Ms Reeves insisted the tax rises would “fix the foundations and wipe the slate clean” and that this would be a one-off budget.

She added: “As a result of what we’ve done, we’re not going to have to come back and ever do a budget like this again, because we’ve brought everything out into the open.”

The chancellor also admitted growth “is largely unchanged” in the next five years, as revealed by the Office for Budget Responsibility’s (OBR) report on the budget.

But she said that is because she is looking at the economy in the long-term.

She said: “For the first time, the OBR are now looking at economic growth over a longer time frame.

“And that’s really important because often politicians make short-term decisions rather than things that are in the long term interests of the country.”

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‘Raising taxes was not an easy decision’

Ms Reeves said she had to make the tax rises she did, despite promising not to raise taxes beyond Labour’s manifesto, because of “the circumstances that I inherited” from the Conservatives as she repeated they left a £22bn black hole.

“I could have swept that under the carpet and pretended it didn’t exist, or try and raise a bit of money this year and a bit more next year,” she said.

“I didn’t want to do that.

“I wanted to be open and honest, to wipe the slate clean, to put our public finances on a stable trajectory, to make sure that our NHS is properly funded so we can bring down those huge waiting lists.”

Read more:
Reeves promised to be the iron chancellor – but her first budget brings dramatic change

Chancellor’s hefty tax and spending plans are a huge gamble

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UK’s economic growth forecast

Ms Reeves’ predecessor, the Conservative Party’s Jeremy Hunt, said Wednesday was a “bad day for trust in British politics” and said it will mean “lower pay, lower living standards, higher inflation, higher mortgages” for ordinary families.

He told Sky News: “Because 30 times this year before the election, the chancellor said she had no plans to increase tax outside of what was explicitly written in the Labour manifesto.

“And we had the biggest tax raising budget in British history.”

The shadow chancellor said a Conservative budget would have taken “the harder path” by cutting the number of people on benefits to 2019 levels to fund public services, which he said would release £34bn a year.

He added he does not think “anyone actually believes this £22bn number… but she didn’t increase taxes by £22bn, she increased them by £40bn”.

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“This was not about her legacy. This was a choice,” he added.

“This was the budget that she wanted to do all along. And it’s a legitimate choice. It’s one I disagree with. But if she’d wanted to do that, she should have told us before the election we could have had the debate.”

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