All of Britain's messy politics go on display in one little by-election

In his blue suit and silvering hair, Mike Greene looks at home on the cathedral square in this English city where he grew up. Squint at his blue rosette as he shakes hands with voters and you might think this self-made millionaire and first-time candidate is stumping for the center-right Conservative Party, the party of Margaret Thatcher.

But the rosette Mr. Greene wears is turquoise, not blue, and he is standing for the Brexit Party, the newest disruptor in Britain’s fractious politics.

On Thursday, the party came within a whisker of taking Peterborough, a bellwether of national politics, from the opposition Labour Party. The margin of victory was 683 votes, and both Labour and Conservative saw double-digit falls in their share of the vote.

The by-election wasn’t the knockout blow that some had predicted after the Brexit Party – which arrived on the scene in February – came first in European Parliament elections last month. But its ability to pry voters here away from the ruling Conservatives shows vulnerability of Tory members of Parliament in seats that voted to leave the European Union and are furious that the job is unfinished.

“You should respect the will of the people,” says Melissa Walker, a banker on her lunch break. She said that the Conservatives’ handling of Brexit had “put her off for life” voting again for the party.

Thursday’s vote may also have broken a psychological barrier for voters who hitherto stuck with the two main parties, says Rob Ford, a professor of politics. Before, they were afraid of wasting their ballot on smaller parties that are seen as unable to break the Tory-Labour duopoly.

“You don’t have to hold your nose in a general election and vote for the Conservatives,” he says. “It can become a self-fulfilling belief.”

Breaking that barrier could make it harder for any party to command a future majority in Parliament and force them to build coalitions. This is the norm in European parliaments elected by proportional representation, where electoral caucuses tend to map onto national polls, says Mr. Ford, who studies populist parties in Europe.

That becomes much trickier in the British system, in which the MP who receives the most votes in a constituency – even if he or she does not get a majority – represents it. That produces results like that in Peterborough, where Labour received less than a third of the votes cast on Thursday. “Under our system, the effects [of multiparty voting] are much more unpredictable and chaotic,” Mr. Ford says.

May Day

For Theresa May, who steps down today as Conservative leader while remaining as prime minister until a new leader is selected next month, it’s another low point. Ms. May agreed last month to leave under pressure from party rivals, including former Foreign Secretary Boris Johnson, who is seen as the front-runner to replace her. Along with many in her party, Mr. Johnson opposed Ms. May over the deal she negotiated last year with the EU for Britain’s formal exit from the bloc, though he later voted for it in Parliament.

Some Conservatives see Mr. Johnson, despite his checkered record, as the only politician capable of outflanking Nigel Farage, the ebullient leader of the Brexit Party, on the basis that it takes an anti-EU populist to beat one. “The conviction among Euroskeptics in the party is that the big existential threat to the party comes from the Brexit Party,” says John Curtice, a professor of politics at Strathclyde University in Glasgow, Scotland.

Mr. Johnson already has the endorsement of President Donald Trump during his state visit this week, saying he would “make a great prime minister.” The president also praised Mr. Farage, a political ally, and suggested that he should take part in Britain’s future negotiations with the EU.

That Mr. Farage’s new party didn’t land its first seat in Parliament in Peterborough won’t calm Conservative nerves, given that its candidate, Paul Bristow, came in third with 7,243 votes. Lisa Forbes, the Labour candidate, got 10,484 votes, edging out Mr. Greene who polled 9,801.

“Nigel Farage’s leverage does not arise out of his ability to win seats,” says Mr. Curtice. “He’s the most influential politician in British politics even though he’s never won a seat.”

Wayne Fitzgerald, the chairman of the Peterborough Conservative Association, told Sky News that Parliament needed to take Britain out of the EU with or without a deal, and that any Conservative MP who refused should be replaced. If not, he said, “Mr. Farage will sweep to 450 seats in the next general election.”

‘Democracy is broken’

Brexit Party activists say their run at Peterborough, a city of 200,000 that voted 61% to “leave” in the 2016 referendum, was a steep one since they had no voter data and relied on volunteers from outside the district to knock on doors. As the name suggests, the party’s message was laser-focused on Brexit; it issued no manifesto, as political parties routinely do in elections.

Interviews with a dozen or so voters showed the strength of feeling about the most divisive of issues, particularly among Conservatives angered by Ms. May’s broken promises.

“It looks like democracy is broken. I want to send a message to the government that we must leave the EU,” says Stuart Bowman, a retired IT professional.

Mr. Greene, the Brexit candidate, is a longtime Conservative supporter who has donated to local candidates. He said the party lost him on March 29, the day that Britain was due to leave the EU. “Democracy was taken away in that moment,” he says.

In April, European leaders agreed to extend Britain’s deadline to Oct. 31, while insisting that Ms. May’s withdrawal deal won’t be reopened. Among Brexit supporters, including a majority of Conservative members in national polls, there is strong support for Britain to leave by that date, with or without a formal agreement. Many MPs see a no-deal exit as a self-harming leap in the dark; Brexiters argue that Britain can switch to World Trade Organization rules.

Mr. Greene, a property investor and local philanthropist, takes this position. “We’ve been humiliated so much as a country, our position in negotiations have been so undermined that the only real basis that we can move forward is WTO and no deal,” he says.

Labour’s fence-sitting

Thursday’s by-election was triggered by the recall of Labour MP Fiona Onasanya, who won in 2017 with a similarly narrow margin against an incumbent Conservative. She was jailed for lying in court about a speeding fine.

Holding Peterborough may be seen as a vindication of Labour leader Jeremy Corbyn’s attempt to straddle the fence on Brexit, resisting pressure from “remain” voters to back a second referendum. Labour activists focused on local social and economic issues, not Brexit.

But other parties are snapping at Labour’s heels and making hay from its dithering on Brexit. The centrist Liberal Democrats, who support a second referendum, came in fourth with 4,159 votes, up 9% from the previous election; the Green Party, which polled well in the European Parliament election, also got more than 1,000 votes from disaffected left-leaning voters.

“I feel the Liberal Democrats have a clear ‘remain’ agenda,” says Lizzy Standbrook, a charity worker in Peterborough, after she cast her ballot in a leafy suburb. She previously voted Labour and expressed disappointment in its lack of leadership on Brexit.

While Labour should not be complacent, the bigger threat is to the Conservatives since more of their supporters are willing to switch, says Mr. Curtice. He put the rate of defection to the Brexit Party in the European Parliament election at over 75%, compared with around 40% of Labour voters who swung behind the Liberal Democrats or Greens, both of which are pro-remain.

Among both Brexit Party supporters and detractors, there was general agreement that the “leave” vote in 2016 was driven by concerns over immigration and a perceived strain on public services. Migrants have been moving to Peterborough for decades; Italians came after the war to work in brickyards, and South Asians moved here starting in the 1960s. More recently migrants have come from Eastern Europe, part of a trend that began in the 1990s.

“It’s not about closing our doors to people as much as looking at, can we give people the proper infrastructure,” says Mr. Greene. Asked what is the right level of migration, he hesitates, and his press officer stops the interview, saying that’s a national policy that’s still to be decided.

Not all Brexit supporters lean right on the political spectrum. Roy Leonard, a retired broadcaster, said he was previously a Liberal Democrat activist and political candidate. Standing on the square waving a Brexit flag, Mr. Leonard said he saw Britain’s newest party as a viable alternative, beyond its core issue of EU membership, that could appeal to left and right.

“Politics in this country, if it’s not broken then it’s severely injured,” he says. “We’re going to look at how we can change that.”