The prime minister's chief of staff, Morgan McSweeney, fears Nigel Farage. He has good reason to be. One of the most significant politicians in recent British history is Farage. We should take him seriously. In the end, though, I believe he will hurt the Conservatives more than Labour, and he might be the key to Keir Starmer's reelection to a second term.

Farage with Elon Musk and Nick Candy, his party's new treasurer, in front of a portrait of Donald Trump at the US president-elect's Mar-a-Lago resort on Monday was the most startling picture in British politics this year. The idea of a wall of Musk's money hanging over Westminster sent a chill down the spines of both Labour and Tory supporters.

McSweeney scrambled to erect some sea defences. There is talk in No 10 of reinforcing the ban on foreign donations in accordance with the spirit of the original law, by requiring donations from UK-registered companies to come out of profits made in the UK.

The sums of money being bandied about could certainly make a difference to British politics, although we should bear in mind the negative effects on Reform support of Farage accepting large amounts not just from a foreigner, but one who is unpopular here.

But the real reason for taking Farage seriously is that his message appeals to a lot of voters. McSweeney takes him seriously because, although most of Reform’s support in the general election came from former Conservative voters, Farage has a track record of appealing to Labour voters too.

If Labour is fighting a defensive battle at the next election to hold on to as many of its 2024 voters as possible, it has to worry about defections to Farage as much as or more than defections to the Tories, Lib Dems, Greens or Independents.

Hence Starmer’s strident language about immigration in his speech at the end of last month. “Nearly one million people came to Britain in the year ending June 2023. That is four times the migration levels compared with 2019,” he said, which is true.

But he went on: “A failure on this scale isn’t just bad luck. It isn’t a global trend, or taking your eye off the ball. No – this is a different order of failure. This happened by design, not accident. Policies were reformed, deliberately, to liberalise immigration. Brexit was used for that purpose, to turn Britain into a one-nation experiment in open borders.”

This is foolish talk, likely to feed conspiracy theories. The idea that Boris Johnson “deliberately” used Brexit as an experiment in liberal immigration policy makes no sense, compared with the actual explanation, which is that Johnson was an incompetent prime minister with inconsistently liberal instincts.

But it confirms that Starmer and McSweeney are determined to fight Farage on his own ground. On immigration, they will be greatly assisted by the numbers coming down year by year, as they are projected to do, although the small boats will remain a visible and insoluble problem.

And Labour have less to worry about in Farage than the Tories do. True, there are 89 Labour MPs who had a Reform candidate in second place in their constituency in July – but in most cases Reform was a distant second.

Farage poses a more serious threat to Kemi Badenoch: by taking votes from the Tories he is a roadblock to Tory recovery. While Labour has a story to tell on immigration – that the new government is regaining control of our borders – the new Tory leader has to explain why she can be trusted now when she was a member of the government that lost control. I simply do not see how she does that, except by waiting about 10 years and hoping people will forget.

So Farage will continue to compete with Badenoch for the same votes. He will be forced by the first-past-the-post voting system to try to replace the Tories as the main opposition party. Most Tories don’t seem to be as afraid as they should be that he might succeed.

Meanwhile, Labour MPs seem to be more afraid than they need to be. If Farage takes enough votes from the Tories to break through and win more seats than Badenoch, it could mean Labour winning a majority on an even lower share of the vote than the record low it won this year.

One Labour adviser from the Blair years observed to me after Tony Blair’s Christmas reception on Wednesday: “Keir Starmer is an accidental leader.” He is a “lucky general” who has succeeded in spite of himself, benefiting from the failures of his opponents – although to be fair to him, he has ruthlessly exploited those failures.

It seems extraordinary that he should have won such a sweeping victory with a mere one-third share of the votes. What could be more remarkable is that, thanks to Farage continuing to divide his opponents, he could win the next election on an even smaller share.