The party's second-in-command has indicated that Andy Burnham could have won the Gorton and Denton byelection, as she called for her party to make more use of the popular Greater Manchester mayor.
Overturning a sizable 13,000-vote Labour majority from the last general election, a local Green councillor, a local plumber, was elected as the party's fifth MP on Friday. This happened in an area that had consistently returned Labour MPs for almost one hundred years.
The Reform Party's Matt Goodwin finished second, just ahead of the Labour candidate, Angeliki Stogia.
The unexpected outcome has sparked fresh debate of the party's choice to prevent Andy Burnham from contesting the seat last month.
In an interview with the BBC, Labour's deputy leader, Lucy Powell, remarked, "Andy Burnham probably would have held the seat. I think definitely the Greens wouldn't have targeted the seat in the same way that they did."
Powell was the only member of Labour's top decision-making body to vote in favour of allowing Burnham to stand, with the majority, including leader Keir Starmer, opposing the move.
However, she stated she understood "the group's decision" for the ruling, citing concern about triggering a mayoral byelection in Greater Manchester.
Powell also emphasized that her party must learn from the reasons for Burnham's strong support in the region. She said people "see in him someone who is on their side, someone who is implementing those Labour values and party pledges."
"We have to utilise that insight, leverage Andy Burnham, but also draw on that and consider how we could do that better nationally," she continued.
Andy Burnham is understood not to have ruled out another attempt at returning to parliament. One ally said, "With all the chaos and turmoil, who knows what might happen. It would be unwise to say he would never."
So far, Burnham himself has yet to comment on the byelection result. Meanwhile, Keir Starmer has vowed to fight on despite labelling the poll result "disheartening."
Angela Rayner, a key figure on Labour's left, called the byelection result "a wake-up call" for the party.
Meanwhile, the Home Secretary is set to caution about the party moving to the left in response to the defeat. This comes as the government proposes legislation for tougher immigration measures next week.
An insider was quoted as saying, "The party should not learn the wrong lessons from its recent byelection loss. The idea that we are alienating support over immigration is just plain wrong."
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