Two things: the coalition's candidate was beaten by a decisive margin; and the BNP lost their deposit in a constituency where they made one of their first national breakthroughs almost a decade ago. Last night's win for Labour in Oldham East & Saddleworth will be seen as a blow mainly to the Liberals. To an extent, it is, inasmuch as this has been a Lib/Lab marginal since 1995, and the Liberals should probably have enjoyed a slight majority in the 2010 general election were it not for Phil Woolas' race-baiting. But the Liberal share of the vote was slightly higher than at the general election, at 31.9%. I would estimate that Elwyn Watkins got his core vote out - that being centrist middle class voters - while replacing lost votes on the left with gained votes from the right. Tactical voting by Tories, encouraged by the Conservative Party and The Times newspaper, ensured that this would happen. As a consequence, the Tory candidate lost 13.6% of the vote, and Labour gained 10.2%, putting its vote share slightly higher than in 1997. The momentum of opinion against austerity is doing Labour's job for them, rebuilding their voting base in record time. It's not just about austerity, of course, but the issue cuts across so many other pressing social dilemmas, as we'll see.

The lost Tory vote didn't just break away to the Liberals. Maybe a fraction went to Labour, but a seemingly marginal development worth noticing is that UKIP have seen their vote share rise gradually since 2001, from about 1% to 3.86% in May 2010 and have added almost 2 percent points since the general election, to push them to 5.8%. They keep their deposit for the first time in this seat. Partly, this will be because of the protracted decline of the BNP, to which we'll return in a moment. But I think it will be due also to dissatisfaction from the right with Cameron's leadership of the Tories. UKIP's problems in the middle of the decade, partly caused by the Kilroy-Silk's split which saw votes siphoned to his new (and now late) Veritas party, were probably an interruption in a secular trend. A section of the hard Thatcherite right is slowly seceding from the Conservative Party, staking out independent territory on Europe, the pound, immigration, and crime. Another way to put this is that the alliance between big business and the petit-bourgeoisie, on which crucial axis the Conservative Party rests, is in crisis.

The BNP has seen its vote share painstakingly eroded by anti-fascist work since 2001, when it made a shock breakthrough in Oldham by getting 11.3% of the vote. They gained 5.72% in May 2010, and 4.5% last night. Usually the far right would expect to see its vote share increase outside of a general election, as voters for the main parties decline to turn out. If you were so minded, you could amuse yourself by scanning the dejected reactions on fascist web forums. The interesting question is whether this signals a real, lasting resolution of the acute social problems that brought the BNP to prominence in Oldham in the first place.

This most centrally involved institutional racism in local government, which systematically declined to hire representative numbers of people from ethnic minorities, de facto segregation in housing [pdf] and education [pdf], and constant conflict between police and local Asian youths, underpinned by the collapse of local industries such as textiles. This toxic combination had fed into a series of political interventions by police and local media designed to scapegoat and demonise local Asians for the area's social problems. The result, which the Ritchie report [pdf] described at the time, had been a surge in racist abuse from white neighbours such that many Asian residents felt unable to leave their homes after dark. Some of this has abated. The acute crisis of 2001 has not returned, and patient community work has helped undermine fearmongering over local mosques, for example. But the chronic problems remain as they were. There was some investment in amenities, some government-sponsored cross-community work, but the main response from the authorities was to blame Asians for self-segregating. The local MP, Phil Woolas, claimed that the main problem was unacknowledged 'anti-white racism'. The government's Prevent strategy, moreover, has helped undermine those progressive initiatives launched under the rubric of 'community cohesion' by enforcing a disciplinarian agenda through 'community gatekeepers', and by singling out Muslims as the source of 'violent extremism' while ignoring the far right. The race-baiting by Phil Woolas before the 2010 general election, and more recently by Jack Straw, suggests that a section of the Labour Right still thinks that there is mileage in tapping resentment toward Asians, and Muslims in particular.

And here it becomes very dangerous. People like Woolas and Straw never believed that Labour should offer a real alternative to the Tories on cuts. That's why they think you have to play with racism. But if the Tories succeed in imposing the cuts without a serious fightback, then places like Oldham are fucked, and Labour will pay the price. Unemployment is rising across the borough, which contains the seats of Oldham East and Saddleworth, and Oldham West and Royton (Michael Meacher's constituency). However, it is not concentrated in Liberal redoubts like Saddleworth north and south, or the Tory areas like Chaddleton north, but chiefly in the central wards like Alexandra and Werneth. Youth unemployment is especially concentrated in Alexandra, the ward with the highest percentage of Asian constituents, some of which was added to the Oldham East and Saddleworth constituency in 2010. It's true that over the last decade the Liberals have built up their support by wooing Labour voters in poorer wards like Coldhurst, St Marys and Waterhead. But the Liberal retreat from those areas will probably be accompanied by growth in Tory wards - bearing in mind that many of the current Liberal strongholds were won from Tory control back in the Nineties. Those wards will suffer from the cuts, but not as much as elsewhere. Labour's base in the organised working class, already suffering from the destruction of the manufacturing core, is about to suffer most terribly, as public sector employees are laid off. And what has been particularly worrying about the fascist vote has been the way in which it was able to build in the poorest working class areas like Alexandra because of racism and de facto segregation. Throw in soaring unemployment, and the further destruction of Labour's base, and you've got the potential for another conflagration, much more serious.

So, Labour's victory is a positive sign. It shows that the core working class constituencies in this area want to fight the cuts. There was realistically no other way, electorally, for them to express such a desire. The Greens were the only left-of-Labour alternative, and they have no tradition of significant support in Oldham East and Saddleworth. The decline in the BNP vote is good, because it throws the party into further disarray, and adds to the dissatisfaction with Nick Griffin's leadership. But all of this is contingent on whether the trade union movement in these areas is ready to put up a fight. Nothing short of a protracted social and industrial struggle is going to stop the destruction of communities like those in Oldham.