On Monday David Miliband warned about the growing subterranean strength of a new politics based on flag, soil, and mono-culturalism. In a poll commissioned by Searchlight 47 per cent of those surveyed wanted a politics based on varying degrees of anti-immigrant, anti-European, and anti-multiculturalist politics. In Barnsley the votes for the BNP and UKIP showed that politics has roots.

Of course Labour held the seat. Unlike the 1980s when by-election candidates were often eccentric, reflecting a left-lurching party base, the new MP for Barnsley, Dan Jarvis is a former Parachute Regiment officer with service in the Balkans and Afghanistan. Unite and Unison tried to push their candidates into Barnsley but in contrast to the 1980s, the unions have less and less say, let alone control of constituency parties. Labour under Ed Miliband's steady leadership remains a centrist ready-for-future-government party.

10 months ago the Lib Dems came second to Labour. Now they got fewer votes than the BNP. There is a South Yorkshire element to this. Nick Clegg is now known locally as the "Sheffield Fraudmaster" after the decision of his Lib Dem colleague, Vince Cable, to axe a £80 million loan to the Sheffield Forgemasters firm. One of the top DBIS officials told me last night that the loan had been fully approved by civil servants and was not political. It would be repaid with interest and would help the firm make the components for the next generation of power plants in Britain.

The decision to axe it, on the other hand, was wholly political and a disaster for Clegg who has paid a hard price. In Sheffield and neighbouring Barnsley the Sheffield Forgemasters row is associated with Clegg and the Lib Dems. Sheffield is still - just - under Lib Dem control. But in the May elections most South Yorkshire observers see a total Lib Dem wipe-out. The consequence is likely to lead to the Lib Dems being like Labour in 1981 - facing a split as a new Liberal Party emerges willing to take on the government on its illiberalism, its foreign policy blunders, and its harsh social policies. Nick Clegg's association with AV must also worry the Yes2AV camp as they look to the May plebiscite.

But the other political consequence from Barnsley is the 2,953 votes gathered by UKIP, who got more than the Conservatives, and the BNP who overtook the Lib Dems as well as a smaller nationalist party. The view that the BNP is on the point of disintegration may be true in terms of the party's internal organisation, Nick Griffin's incoherence, and financial costs following court tussles with the Equalities and Human Rights Commission. But in terms of voting popularity the BNP is still solidly there. So too is UKIP which is becoming as anti-Muslim as it is anti-Europe. Nigel Farage is a far more attractive TV personality than the sweating Nick Griffin. Tory MPs were told 2005-2010 that David Cameron would lead a Eurosceptic government. But in office Cameron has turned into a Euro-realist unable to offer a referendum on the Lisbon Treaty, repatriate powers, or do more than deploy delaying tactics over prisoner voting rights. The universities are up in arms about visa bans on students as is business on being able to import key foreign workers. EU residents here are as entitled to UK benefits just as British citizens in Europe cannot be denied social rights in countries where they live and work.

All this is grist to the mill of nationalist, identity politics. David Cameron sought to placate this constituency with his speech attacking multiculturalism in Munich. But Nick Clegg said the opposite in Luton yesterday. Tory MPs would like more audible dog-whistles, an updated version of Powellism-lite. Otherwise the politics of Kipling's "One land, one law, one throne" will surface in new forms. Jonathan Reynolds, one of the smartest of the new Labour MPs has already noted that the Barnsley result signals the end of two-party politics. He is right.

Denis MacShane is the MP for Rotherham and a former Europe minister.