TONY BLAIR suffered his biggest electoral setback since becoming Prime Minister last night when the Tories gained more than 500 seats in the council elections and Ken Livingstone headed for a comfortable victory in the battle to become mayor of London.
The Tories easily achieved William Hague's target of gaining more than 400 seats in the elections in 152 English councils. As Labour lost more than 500 seats, the Tories hailed a "spectacular victory" and said they were on course to win the general election expected next year.
But cold water was poured on Tory celebrations by the Parliamentary by-election in Romsey, Hampshire, where the Tories' majority of 8,585 at the last general election was unexpectedly overturned by the Liberal Democrats.
Lib Dem candidate Sandra Gidley's 3,311 majority - marginally over 50 per cent of the vote - represents a devastating blow for Mr Hague, going some way to eclipsing his success in the council elections.
Labour took comfort from the Conservative defeat in Romsey, saying it was a "disaster" for the Tories in one of their safest seats. Charles Kennedy, the Liberal Democrat leader, said his party had achieved "an absolutely spectacular result".
Mr Blair's embarrassment was deepest in London, where a BBC exit poll suggested Mr Livingstone would win 41 per cent of the votes, comfortably ahead of the Tory candidate, Steven Norris, on 25 per cent. Labour's Frank Dobson trailed a humiliating third on 14 per cent with Susan Kramer, the Liberal Democrat candidate, on 12 per cent. Mr Dobson's poor showing leaves the Prime Minister with a difficult dilemma over whether to compensate him with another job.
Mr Livingstone said early today: "It is a quite wonderful feeling. I never thought I would be back. He said it was now time to "draw a line in the sand" after the election and promised to "establish a system of government that sets a model for the rest of Britain as we move towards directly-elected mayors."
Ministers launched a drive to avoid a damaging confrontation with Mr Livingstone, who will have the biggest personal mandate of any politician in Britain. David Blunkett, the Education and Employment Secretary, said: "Let's say to Ken: Congratulations, if you've won. Let's work together."
In the town hall polls, Labour lost control in Oldham, Hartlepool, Chorley, Portsmouth, Worcester and Walsall, while the Tories won powerin Southend, Solihull, Eastbourne, Stratford-on-Avon and Rossendale.
The BBC predicted the Tories would win 37 per cent of the national vote on the basis of the council elections, ahead of Labour on 30 per cent and the Liberal Democrats on 28 per cent. This suggested a 10 per cent swing to the Tories since the last general election.
The town hall results suggested that many Labour supporters in the party's traditional strongholds were staying at home. The Tories made gains in Birmingham, where there was strong evidence that voters were punishing the Government because of the threat of huge job losses at the Rover plant at Longbridge.
Ministers will launch a fightback this weekend aimed at steadying the party's nerves. They will dismiss the results as a bout of the "mid-term blues" that afflict all governments.
Early returns suggested the turn-out in London would be between 30 and 40 per cent - a setback for Mr Blair's plans for directly elected mayors. He had been hoping more than 50 per cent of Londoners would vote.
Jack Straw, the Home Secretary, said the Government had to accept the voters' decision, but that Mr Livingstone had to accept "the very significant responsibilities that go with the job".
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