Inside story: Why did he bother?: Last week this man stood for Labour in the Christchurch by-election

TO THE bafflement of assorted English and German holidaymakers, Diana Maddock spent part of her first morning as MP for Christchurch posing for the cameras in a hotel play area, supposedly to illustrate the historic swing she had achieved. The humiliated Tory, Robert Hayward, made a more sombre appearance, batting away criticisms of his campaign. Her Majesty's Loyal Opposition was nowhere to be seen.

Alone among the main parties Labour had decided not to call a post-election press conference. At the other end of a dual carriageway, their candidate Nigel Lickley (left) was sleeping in before packing to leave his rather less grand hotel. By mid-morning, transformed from his blue-suit- and- polka-dot-tie candidate's outfit into thirtysomething casuals, Lickley wore the bravest of faces. Yes, he said, he had enjoyed the campaign and yes, he would do it all again. The party had fought a tough and effective campaign, attacking both the Tories and the Liberal Democrats and often setting the agenda. It had flown the Labour flag. It had called in the leader, John Smith, and assorted Shadow Cabinet big shots; Gordon Brown appeared three times.

All this is true, yet the reward was a paltry 1,453 votes, a loss of 9 per cent of Labour's general election support and - for the second by-election in a row - the forfeiture of the party's deposit. Why, Lickley must wonder when he returns to work at his legal chambers tommorrow, did Labour bother fighting the seat?

ON THE face of it, Labour's troubles in the South are awesome. The Liberal Democrats are emerging as the new party of southern opposition. A year ago, after a general election which saw his party's share of the vote and number of seats decline, the omens for Paddy Ashdown were not auspicious. Labour's modernisers privately plotted to shift on to Liberal Democrat terrain, absorbing the remaining centre-party support. Meanwhile Ashdown's Chard speech urging a new pluralism in politics provoked a backlash at an uneasy party conference where the 'sandal-wearing tendency' railed at the idea of having anything to do with Labour.

Yet in the wake of a series of Government disasters it has been the Liberal Democrats - not Labour - who have made gains in disintegrating Tory heartlands of the South and West. On 6 May they won a stunning by-election at Newbury. More significantly, Liberal Democrats captured a stake in the running of a host of former Tory-controlled councils in the South and Home Counties.

In Christchurch, the Liberal Democrats ruthlessly exploited their position as the party most likely to topple the Tories. On the doorsteps, the anger with the Government was, according to one seasoned campaigner, more acute than anything since 1981. The imposition of VAT on fuel and the perceived threat to pensions and free prescriptions for the over-65s provoked outrage among traditional Tories. When canvassers asked about John Major the words which came back were: 'wimp', 'indecisive', 'he doesn't understand' or 'he doesn't lead the Government'. Mr Hayward ran a fair campaign in impossible circumstances, hampered, rather than helped, by Cabinet ministers' appearances. He also retained his sense of humour in defeat, happily shaking hands with a rival dressed in a giant chicken outfit.

But according to Lord Holme, a senior Liberal Democrat, the bonds of loyalty, which traditionally united Conservatives had, disintegrated to a degree never seen before. The Liberal Democrats, experts at by-election tactics, saw their chance. They targeted wavering Labour voters with literature telling them that Labour couldn't win (see right).

According to John Braggins, Labour's senior organising officer, one elderly man who said he had voted Labour all his life admitted he was voting for Maddock this time 'because he wanted, before he died, to elect an MP for Christchurch who was not a Tory'. And, although Labour had recorded a decent vote at the general election, nothing could stop Labour supporters voting Liberal Democrat. The result was a rout for the Tories and a classic third- party squeeze for Labour.

Maddock, winner of the largest swing against the Tories since the war, likened her 'historic' victory to the last time a Liberal won Christchurch, in the landslide of 1906. Not to be outdone, Ashdown invoked the spirit of the Saxon warrior Hengist who, he argued (probably erroneously), invaded Britain at a point nearby.

Hyperbole apart, Ashdown has reason for satisfaction. Christchurch and Newbury may well return to the Tories at the general election, but the Liberal Democrat advance has returned the party to the poll ratings enjoyed by its forerunner, the Alliance, in the mid-1980s - this time with a much more concrete local government base. Four times more councillors sit for the centre party now than in 1980.

Christchurch proved that any Labour talk of smashing the Liberal Democrats is a pipe dream. Moreover the 'South-west phenomeonon' gives Ashdown's party a regional base outside the Celtic fringes in which it has traditionally been concentrated. In an electoral system which rewards parties with a concentration, rather than a spread of backing, a rise of support in the South, from 23 per cent at the election to 35 per cent, according to Mori, is good news even if that means a slipping vote in urban Scotland. It threatens to establish the Liberal Democrats as the party of opposition where Labour is weak: in rural areas, in regions where the majority of the workforce is not unionised and where fewer people live in council houses.

Sitting in a noisy Christchurch pub, hours before the count, Chris Rennard, the Liberal Democrat director of campaigns and elections, happily expounded two significant sets of figures. A 6.5 per cent swing (a fraction of that achieved on Thursday) would deliver the Liberal Democrats a host of seats in the South and South- west, including St Ives, Falmouth and Cambourne, Cornwall South East, Devon West, Torbay, Taunton, Somerton and Frome, Bristol West, Wells, Portsmouth South and the Isle of Wight.

Labour's decline in the South was underlined by the Newbury by-election; in 1966 Labour won nearly 40 per cent of the voters there but in May's by-election that figure was down to 2 per cent. Such statistics have encouraged politicians in both parties to think aloud: to get the Conservatives out shouldn't Labour concentrate on its heartlands and leave the South to Paddy?

ONE OR TWO straws have blown in the wind of Lib-Lab co- operation. John Smith's election as Labour leader has given the two parties a new channel of dialogue via the Edinburgh cocktail party circuit. Not leader-to-leader contact, because Ashdown has a rather formal relationship with Smith, but Menzies Campbell, the former Olympic sprinter and Lib Dem defence spokesman, is an old family friend, and Smith visited Sir David Steel's house at Christmas. Lower down the hierarchies, contact is growing. In May a group of MPs, including Charles Kennedy, the Liberal Democrat President, Calum MacDonald, Labour MP for the Western Isles, and Tony Wright, the new Labour MP for Cannock and Burntwood, met for private dinner in Westminster.

Labour backers of proportional representation, the most senior of whom is Robin Cook, chat informally to Liberal Democrats. And, we can disclose, just before the Newbury by-election Lord Rodgers of Quarry Bank, the former Labour Cabinet minister and founder member of the SDP, wrote to Smith suggesting a new understanding between the two parties. Without anything as fixed as a pact, Rodgers argued, Smith might simply concede that there were many people who shared most of Labour's values and beliefs yet who found the Liberal Democrats a more suitable party. If Smith indicated that he respected that decision, the way would be open for Ashdown to reciprocate. The two parties might also, Rodgers argued, establish a joint think tank. Smith has not replied.

His silence does not mean that detailed work has not been done on co-operation, including electoral pacts. In a recent issue of Political Quarterly, Martin Dent set out a clear blueprint for how one might work at the next general election. Dent acknowledged that in both parties local constituencies have 'considerable autonomy' and that the pact should therefore be confined to marginal seats 'where it is necessary'.

It is nevertheless a sweeping proposal; Dent decided that in every marginal where the third party had less than 15 per cent of the vote, a pact would be appropriate. This meant the Liberal Democrat being asked to stand down in 110 seats and the Labour candidate standing down in 21 seats. In other words, while the system was fair on paper, it was hugely to the advantage to the Labour Party and, for that reason if for no other, politically unrealistic. Admittedly Dent envisaged that a full- blooded commitment to proportional representation by Labour would be needed to secure Liberal Democrat co-operation. But John Smith is committed only to a referendum on the issue - hardly enough to persuade Ashdown to agree to such a 'top-down' pact. In the words of one senior Labour MP eager for closer co-operation, 'in the real world any plan like that is a non-runner'.

But the reasons for that are more deep-seated and complex than the arguable unfairness of this particular system. First, it is a commonplace among senior figures in both parties that the presence of Labour in constituencies where it runs a poor third is not necessarily unhelpful to the Liberal Democrats. For the Labour candidate to pull out invites the Tories to attack the Liberal Democrats as a 'Trojan horse' for Labour - even as the 'Labour Party in disguise'.

On polling day in Christchurch, Steve Billcliffe, Labour's defeated candidate at Newbury, was manning Labour's town centre office. If Labour had not stood in Newbury, he argued, the Liberal Democrats would not have won. This is not merely idle speculation, as an ICM poll in May showed. ICM asked voters two days before the by-election how they intended to vote. Their finding was close to the actual result, showing the Liberal Democrats would win by 64 per cent to the Tories' 26. The voters were then asked how they would vote if Labour and the Liberal Democrats put up a joint candidate. That produced a much narrower win of 48 per cent to 45. One in four Liberal Democrats said they would not vote for a candidate tainted with Labour support.

Second, while it can be safely assumed that most Labour votes would automatically transfer to the Liberal Democrats rather than the Tories, the reverse is much more doubtful. In some constituencies a majority of Liberal Democrat voters might actually opt for the Tory.

And third, there are fears that it could be fatal for Labour to incur the charge that it is no longer a national party, that it is basically a northern party, fearful of challenging in the South. Just how serious that would be is illustrated by figures swiftly produced for Margaret Beckett, deputy leader of the Labour Party, on Friday. Anxious to dispel the idea that the Liberal Democrats had supplanted Labour as the main party of opposition in the South, Beckett's aides pointed out that the number of southern seats in which Labour is trailing the Tories by less than 5,000 votes exceeded the number of southern seats where Liberal Democrats are trailing the Tories by the same margin by 26 to 9. These include Dover, Slough, Southampton Test, Harlow, Swindon and Gloucestershire West. Any idea that Labour might as well give up in the South outside London is scarcely rational.

That is one reason why Labour MPs such as Calum MacDonald, and one of the Labour figures in the vanguard of closer co-operation with the Liberal Democrats, dismiss formal pacts as unrealistic. Instead MacDonald was one of the organisers of a Guardian conference on full employment, attended by both Labour figures and Liberal Democrats. He envisages next a joint conference on 'quality public services'. Key participants would be councillors from local authorities which fell to joint Labour/Liberal Democrat control in May.

'In any other political system,' says MacDonald, 'the national convergence between the two parties' philosophies would have resulted in more co-operation. But in the Westminster culture of 'My dad is bigger than your dad' it doesn't necessarily apply.' He argues that closer co-operation of this kind could well lead to some local electoral agreements but at the same time closer co-operation would lay the basis for co-operation in the event of a hung parliament. MacDonald is not alone in seeing a convergence between the philosophies of Labour and the Liberal Democrats. As one of his Labour parliamentary colleagues put it: 'I read both manifestos in the last election and the only differences I could see were over the independence of a European Central Bank and the 1p increase in income tax for education, which it might not have done us any harm to adopt.'

NONE of this leaves a clear and easy way for the opposition parties to eject the Conservatives from government. There have been concrete gains over the past year for the forces ranged against Conservatism, the most significant of which may be the coalitions in operation in county councils. Labour's Social Justice Commission has also given an opportunity for a Liberal Democrat presence and Kennedy and Frank Field, one of Labour's most creative thinkers on social policy, plan a joint submission. And Smith's adoption of the constitutional reform agenda has been taken to heart by Liberal Democrats.

But there are no quick fixes in Labour's battle to make itself a party acceptable to swathes of opinion in the South of England. That can only be done through further reforms of policy and organisation and greater distancing from the unions through one member one vote. Without that, fear of Labour could return to haunt the South as it did at the 1992 election, when wavering Liberal Democrat voters switched back to the Tories at the last minute. As one Labour source put it: 'Whether it thinks it can win a majority or whether, at least surreptitiously, it believes it will have to rely on Liberal Democrat votes for a minority administration, the bottom line for Labour is the same: reform.'

In the meantime Labour candidates such as Lickley face humiliation in the South, even in the Government's darkest hour.

(Photograph omitted)