The latest British election of 7 May 2015 returned Conservative leader David Cameron to power, with an unexpectedly solid mandate. It was a disastrous night for the centre-left Labour party and the third party Liberal Democrats, whilst the secessionist Scottish National Party (SNP) swept Scotland. Here are five things we learnt from the results and the campaign.

The resident non-domiciled rule will stay

Labour made much of its proposal to abolish the 200 year old resident non-domiciled regime, whereby wealthy foreign individuals can opt for more generous tax treatment. Party leader Ed Miliband was open about the fact that there was no great financial gain from this; instead he said that this was a matter of principle that all individuals should pay tax under the same rules. Mr Miliband talked up this proposal as an example of how he would stand up for the ordinary working man and even said that this would be a red-line in any potential negotiations with coalition partners.

The non-domiciled rule has been tweaked regularly in the last decade and the Conservatives are likely to continue to review it. However, with the matter not resonating strongly enough with voters, there seems to be no reason for the Conservatives to fundamentally overhaul the regime. It should therefore be around a few years more at least.

Negative Campaigning Works

The Conservatives (led by chief strategist, Lynton Crosby) ran a tight, disciplined but negative campaign. Ed Miliband had ruthlessly “stabbed his brother in the back”, couldn’t be trusted to eat a bacon sandwich let alone run a country, and would preside over a weak economy whilst being trod upon by the social democratic SNP. Positive messages were thin on the ground.

The opinion polls didn’t budge over the entire campaign with eve of voting polls showing a deadlock. Many voters may have liked the sound of some of Mr Miliband’s policies centre-left policies in theory, but the privacy of the ballot box told another story. It is difficult to avoid the conclusion that in this safe haven and away from third parties, voters simply did not trust Mr Miliband and feared a potential Labour – SNP linkup. Mr Crosby’s campaign may not have been pretty; but, with the benefit of hindsight, it was undeniably effective.

The Union is Under Massive Pressure

When the SNP won a majority in the devolved Scottish Parliament in 2011, David Cameron had a plan. The SNP would be tackled head on; they could have their independence referendum but the unionists would win this comfortably and nationalism would be muted for decades as a result. The unionist did win the referendum; but, that fact aside, the plan backfired spectacularly.

The referendum was much closer than Mr Cameron anticipated, and, panicking on the eve of the vote, he promised further powers to the Scottish Parliament. Worse, the campaign ignited grass-roots politics all over Scotland. The SNP now has an astonishing 115,000 members (the Conservatives have barely more in the UK as a whole, despite a twelve fold population difference). And focus group tell pollsters that workers on building sites now talk about politics, rather than football, in their tea breaks. The SNP continued this momentum into the general election scoring a breakthrough of epic proportions.

The Conservatives will say that what matters is that they have a majority in the UK as a whole and constitutionally they are correct. Having 95% of secessionist MPs from a nation in the kingdom is clearly, though, a wretched situation for a unionist government. Scottish independence is not inevitable (yet); many “No” voters voted SNP out of admiration for their new leader Nicola Sturgeon or because they believed the SNP could best stand up for Scotland’s interests. But the situation is intensely delicate. Mr Cameron staggered from one mistake to another in his dealings with Scotland in his first term; he will need to up his game if he is not going to go down in history as the Conservative Prime Minister who failed to stem the move towards the break-up of the United Kingdom.

The EU Referendum Will be Brutal

At the tail end of his first term, under pressure from the anti-EU UK Independence Party (UKIP) and his own right-wingers, Mr Cameron promised to renegotiate the conditions of Britain’s EU membership and put it to a straight “in-out” referendum. This policy allowed him to kick the can down the road until after the election but will now return with a vengeance.

Some EU countries are, like Britain, keen to restrict the right to welfare benefits for EU citizens. Save this, there is limited appetite for changes and almost no other country wants meaningful treaty changes. Many countries’ constitutions demand approval of any renegotiated treaty by referenda. With sclerotic growth, high debt and mass youth unemployment rife, an unnecessary vote is a headache European leaders could do without. Realistically, Mr Cameron’s negotiations are going to yield little.

Then there is the matter of the referendum with opinion polls on the matter tight. Whilst big business clearly backs Britain’s EU membership, a straightforward message of repatriating lost powers to the UK and controlling borders may have an appeal in the current anti-politics mood. The Conservative party will be split down the middle with moderates (including, presumably, Mr Cameron) backing Britain to stay whilst right-wingers will view it as a historic chance to right what they view as a fatal mistake. One of the peculiarities of the British election system is how newspapers are incredibly active players in the political game. Some editors gave the Conservatives a helping hand with their negative campaigning in this election. Given their Euro-scepticism, these papers may view recent weeks as little more than a warm-up for the coming referendum campaign.

The Labour Party is at a Crossroads

Ed Miliband’s theme throughout his tenure as leader has been that the financial crisis has changed the terms of the political debate. The “neo-liberal model” had failed and government intervention was back on the scene. The energy market was in his sight, rent controls were proposed and flexible contracts would be limited. Money would be raised through higher top rate of taxes, a mansion tax and a banker’s bonus tax. Positioning himself as a 21st century Theodore Roosevelt, Mr Miliband would have been the most economically interventionist Prime Minister for decades.

It was not to be. The potential link-up to the SNP may not have helped Labour in the minds of floating voters, but there is no evidence that Britons warmed to his instincts not to trust the free market. The inquest will begin for Labour and the logical conclusion would be to revert to the position that, not long ago, won three elections in a row. Tony Blair did this by accepting the basic free market model inherited from the Conservatives and skimming just enough to invest more in health and education, whilst not frightening the top earners.

The answer may not be that simple though. Mr Blair’s relationship with his party is ambiguous and many feel that his policies were far from Social Democratic. In Scotland, Labour were attacked from the left by the SNP with many activists reporting that decades-long voters felt the party lost its soul under Mr Blair. In industrial northern England, UKIP polled solidly with dozens of second places. If Labour were to move to the centre, expect UKIP to position itself as anti-immigration and anti-EU but inherently statist on economic policy. In other words a direct appeal to disaffected working-class Labour voters.

The next leader of the Labour party faces a massive strategic choice; do they move to the centre to attract support in the South of England at the risk of alienating their traditional voters, or do they veer to the left to shore up the heartlands but accept that their appeal elsewhere will be limited.

Neil Smith, 8 May 2015