Brexit was an electoral earthquake that has transformed the British political landscape. It has given Theresa May the opportunity to reunite the Conservative Party and the wider centre-right spectrum of the electorate. Considering the splits over Europe of the last 30 years, the apparent unity around her Brexit manifesto is little short of astonishing.
The division over Europe opened in full when the Conservative Government took the UK into the ERM. When the announcement took place, I was standing next to John Major, the then Chancellor, in his office watching Sterling and the markets on a Reuters machine. The decision ignited an unstable political cocktail that brought together three of the most controversial issues in twentieth-century politics: monetary policy, the management of the exchange rate, and Europe.
The legacy of the ERM fiasco, alongside acrimonious debates over Maastricht, whether to enter the single currency, and membership itself, broke the Conservative Party as an effective instrument of government for a generation. The Brexit vote, and the way in which Theresa May’s leadership has given effect to it has not only healed this rupture, it has also given the Conservative Party a political opportunity to extend its base geographically and socially that it has not had since the post-war political settlement — given the disarray of the Labour opposition.
The lesson of the visceral debate on Europe within the Conservative Party and among the wider electorate is that neither group trusts any British government minister negotiating in Brussels. In 1962, the Lord Chancellor advised the Cabinet that Harold Macmillan’s government had to be candid about the constitutional implications of the UK’s application for EEC membership. The advice was ignored. Instead, successive governments adopted what Hugo Young came to describe as the approach of ‘mendacious reassurance’.
The opportunity to create a popular people’s party
At the time when Mrs Thatcher became Conservative leader in the mid-1970s, there were doubts about whether the Conservatives could win another election, and, if so, whether they could govern, given the hostilities of the trade unions. The party had to widen its appeal, which was then limited to the affluent middle and professional classes, and a narrowing base of working-class electors, which had voted less on class grounds, and more on identities rooted in religion, traditional patriotism, and constitutional conservatism. At the time, Ronald Butt, the eminent Times journalist and historian of parliament, argued that Mrs Thatcher had to turn the Conservative Party into a truly popular people’s party, similar to the successful post-war right of centre parties in West Germany and Austria.
Since becoming leader of the Conservative Party, Theresa May has taken up that challenge. It is about creating a popular party committed to realistic market economics, which support the social and other public services that the community needs. Freedom, democratic accountability, private property, and aspiration are central to it — but that does not extend to protecting powerful interest groups, which extract economic rents, or construct artificial business cartels by gaming regulation and competition authorities. This is seen in the approach to the modern industrial strategy (p.18 of the manifesto), which is about about bringing prosperity to the country as a whole. Policy Exchange has contributed to this debate through its recent conference on the topic, with a keynote address from the Business Secretary, Rt Hon Greg Clark MP; and our paper, Forging a New Industrial Strategy.
Giving effect to a “Clean Brexit”
The manifesto makes it clear that Brexit means that the UK will be out of the Single Market and the Customs Union, and that the supremacy of EU law, and the ECJ in giving effect to it, will be ended. The manifesto says that Britain will seek a trade agreement with the EU (p.15), but its objective is clear: that the UK will return to being a liberal free trade economy. This is a more significant matter than the question of what the UK’s approach to trade will be post-Brexit. This represents an important fillip to a potentially faltering liberal international trade regime that has been painfully constructed. This will be a ‘clean Brexit’, in the manner that Policy Exchange has argued for in Clean Brexit — with an emphasis on a liberal international trade agenda.
This alone is a huge policy agenda of massive significance. It ends a sixty-year chapter in British history, which will probably come to be perceived as an aberration. The significance of May’s place in political history will be equally assured by executing the UK’s departure.
A bold agenda that goes beyond Brexit
The manifesto, entitled Forward, Together: Our Plan for a Stronger Britain and a Prosperous Future, demonstrates that the Prime Minister has a much bolder agenda than simply making Brexit happen. Policy Exchange has emphasised that there should be much more to contemporary public policy than that — for all Brexit’s complexity, and the opportunity it offers to take a fresh look at many areas of policy, from fishing and farming to science funding and regional regeneration. Outside of specifically EU- and Brexit-related policy, there is a hugely important agenda, ranging from tax and public service reform to the future of social care.
The document is well written and couched in the idiom of the great reforming state papers of Winston Churchill’s wartime coalition government, which laid down the road map for post-war reconstruction. The five giant evils identified in Lord Beveridge’s report on Social Insurance and Allied Services are evocatively reprised in the five ‘giant challenges’ that the manifesto identifies for contemporary Britain.
Realistic empirical conservativism that makes problems tractable
May’s manifesto makes it clear that she has a bold vision for the country, which will be given effect in a series of practical policy recommendations. At its heart is a sense of realism about the economy (p.13). Public spending has to be controlled, yet an aging society means there are a whole range of pressures that will necessitate increased spending on health and social care.
The key issue in the public finances is managing and controlling the level of public spending. How that is financed is a second order matter. The government’s borrowing should not proceed at a faster pace than the rate of growth on average over the economic cycle, but there is no need to achieve a balanced budget in any particular year. The manifesto’s proposal to relax the Treasury’s fiscal target is sensible (p.14). The tax system is too complex, and a review of businesses taxes including business rates will be worthwhile. The manifesto commitment to raise allowances, and to up the threshold for paying the 40 per cent rate of tax (p.14) would mean that the tax burden would not simply be allowed to drift up by stealth, through fiscal drag being used to accommodate higher discretionary spending — which was the big mistake of New Labour.
In the past, Prime Ministers — who see a lot of the captains of industry — have been too readily persuaded that what works for a particularly large company also works for Britain. That was the great error of Tony Blair, Gordon Brown, and the New Labour era. The manifesto’s concern for the consumer (p.60) and the shareholder has plainly drawn blood from the corporate business lobbies. The Manifesto makes clear that the interest of the consumer should be heard, rather than the producer and business lobby. Many private investors and savers, for example, will welcome constraints on executive pay. Not least the claim that the ‘examination of the use of share buybacks, with a view to ensuring these cannot be used artificially to hit performance targets and inflate executive pay’ (p.18).
Forward, Together provides a comprehensive agenda to improve public policy in practical ways. It has an ambitious programme of public service reform in education, digital government, and public services, as well as important changes for the NHS internal market, and the pay and contracts of hospital consultants and GPs (p.68). Technology and digital innovation will play a central part in public service reform (p.68).
The proposal to build more houses is welcome, but so is the recognition that the quality, design, and style of the buildings needs to improve, and that the whole character of modern housing needs to be more attractive (p.71). Indeed, this will be at the heart of the work of the new Housing Unit that Policy Exchange is setting up under Richard Blakeway, the former Deputy Mayor of London.
The agenda of education reform is maintained in the manifesto, with proposals for a knowledge-rich curriculum (p.30), giving effect to Policy Exchange’s ideas in Knowledge and the curriculum. The manifesto places a welcome emphasis on vocational education, with proposals to improve choices for those sixteen year olds who chose not to go to university (p.52), in the way that Policy Exchange suggested in The skills we need and why we don’t have them.
A changed political landscape, and an emerging political culture gives Theresa May fresh opportunities
Last year’s referendum result has changed the British political landscape in a manner that few people expected. There is an emerging political culture that places greater emphasis on national identity, sovereignty, and control of borders and migration. This public mood, evident from the electorate, is well captured by David Goodhart — the Head of Policy Exchange’s Demography, Immigration, and Integration Unit — in his seminal recent book, The Road to Somewhere: the populist revolt and the future of politics. His ‘anywhere-somewhere’ taxonomy captures the contemporary Zeitgeist. But the devil will be in the detail, as yet to be settled.
An interesting feature of the manifesto is the attention it gives to constitutional questions. It is the most unapologetically unionist manifesto since John Major’s from 1997; it is significant that the word ‘Unionist’ appears on the front cover of the document. In promising to enhance what was little better than a dog’s breakfast of constitutional change made in the 1997 referendums in Scotland and Wales, it promises an end to the ‘devolve and forget’ approach. After twenty years of incoherent constitutional meddling, it provides a confident reassertion of British constitutional practice and institutions. The ‘first past the post’ electoral system will be extended to police commissioners (p.43), and the fixed-term parliament act will go (p.43).
The election has also exposed a political landscape that is more polarised between the centre right and the left. The campaign appears to be exhibiting a revival of the two party model. The Prime Minister is a fortunate politician: she now has a united party, and she faces an opposition led by a leader and parliamentary leadership as ineffectual as any since George Lansbury, in the 1930s. Effective politicians are not just lucky, they also create their own luck.