Jared O’Mara, the once and future Labour MP for Sheffield Hallam, has been reinstated to the party after an eight-month suspension over allegations that he used sexist and transphobic language in an outburst at a constituent in the weeks before he was elected.

The decision not to expel O’Mara and instead issue him with a formal warning and mandatory diversity training has been a long time coming – several cases of alleged misconduct by MPs referred to Labour’s ruling national executive committee in the months since his suspension have already been resolved. But what does it actually mean?

Though much is made of the fact that O’Mara has yet to make a maiden speech, his reinstatement changes very little in parliamentary terms. When he has turned up, he has studiously obeyed the Labour whip, especially on big votes like those on the EU Withdrawal Bill. Returning his red rosette doesn’t change anything in SW1 for now.

For politics in S11 and the other postcodes that make up O’Mara’s constituency, however, the decision is of real significance. It is a boon for the Liberal Democrats. The party held the seat for two decades before O’Mara’s shock victory and are prime favourites to take it back again.

The party has already selected its candidate, local aid worker Laura Gordon. She will be confident that she can overturn Labour’s slender majority of 2,125. Every one of the seat’s constituent wards was won by the Lib Dems at the local elections in May. It's worth remembering, too, that O'Mara's brief tenure has been an aberration in more ways than one: 2017 was the first time the seat had been won by Labour in its 132-year existence.

How could Labour avert a loss? O’Mara’s constituency party – many of whom opposed his selection by the NEC in the first place – could always deselect him ahead of the next election, but the process would not be straightforward and is likely to get mired in factionalism. Plus, even if it were successful, it would effectively limit Labour’s new candidate to a standing start in a race that had allowed their main rival a long run-up.

In that respect, the O’Mara case isn’t closed, regardless of the decision to reinstate him. For both his local challengers and Labour, it will remain open as long as he is in parliament, and its likely resolution is already clear.

There is also the potential for the ruling to cause trouble internally too. Discontent is growing at Labour's handling of complaints against its MPs and the strength of its disciplinary measures, which will only be fuelled if the perception that O'Mara has gotten off lightly takes hold. At Southside and in Sheffield, the party's problems could yet get worse.