In a couple of weeks we will have a new Prime Minister, bringing an end to the strangest political summer of my lifetime. It has been a summer marked by excessive heat and drought which are themselves emblematic of perhaps the most important global political issue – if there are exceptions, they would be those of actual total war or possible nuclear war – of the lifetimes of anyone alive today. There is in any case an ongoing war in Europe, which many of us see as defining of a conflict between liberal democracy and nationalist authoritarianism. And that war has precipitated a global energy crisis and exacerbated a global economic crisis.
Multiple crises with no functioning government
Domestically, that means a rapidly worsening cost of living crisis. Inflation is at its highest since the early 1980s and still rising, with households facing their largest ever recorded fall in living standards, and the Bank of England predicts five continuous quarters of economic recession. There are multiple strikes in the rail network, the docks, the courts, the postal service and elsewhere, and more to come. With a growing ‘Don’t Pay’ campaign in the face of what for many will be impossible energy bills, talk of civil unrest and disobedience does not seem hyperbolic.
There are now chronic labour shortages in almost every occupation, so that even as food prices rise to a 40-year high there is food rotting in fields for lack of people to pick or harvest it. The NHS, and especially the ambulance service, is at breaking point, as, not unrelatedly, is the social care system. In fact it is hard to find any part of the public or private sector which is not, in some way or other, under alarming strain. The beaches are awash with sewage, like a metaphor. And, though you’d hardly know it, we are still living with the effects of a pandemic, including an estimated 1.6 million people in England alone living with Long Covid, and presumably the possibility of a new wave to come.
Throughout all this, the leadership contest means there has been, in effect, no functioning government. The notional Prime Minister, rather than acting as a responsible caretaker, has spent the summer alternating between sulking, holidaying and squeezing the last drop out of the perks of his office. Any chance Boris Johnson had of a final period of dignity to set against the depraved conduct that led to his ejection has been squandered. Most Prime Ministers end up being judged less harshly by history than they are at the time of their departure; I strongly suspect that Johnson will be assessed even more critically in the future than he is now.
Post-Brexit political instability set to continue
When this strange summer ends, it will not herald the end of the period of political instability any more than the events and crises of the summer are peculiar to the season. This isn’t a holiday that has gone horribly wrong, it’s the latest instalment of a reality there is no taking a break from. That political instability began with the 2016 referendum. Having a new Prime Minister is not going to finish, but is a part of, this post-2016 story. I don’t mean that there were no political problems before, but that since then there has been a particular sort of instability and for particular reasons.
It’s not a coincidence that the new Prime Minister will be the fourth in the six years since the referendum, the same number as held office in the thirty-one years between 1979 and 2010. Nor is it a coincidence that within those six years there have also been two general elections, massive churn in the holding of ministerial posts, an illegal prorogation of parliament, a unique judgment that the government was in contempt of parliament, numerous highly unusual constitutional events, a government openly threatening to break international law, massive stresses in the relationship between Westminster and the devolved administrations, significant pressures on the Good Friday Belfast Agreement, and perhaps the most significant rifts between ministers and the civil service in modern history. All these things reflect the way that Brexit has all but overwhelmed the capacity and norms of the UK state and political institutions.
The unleadable Tory Party
Centrally implicated in all this is the ongoing convulsion of the governing Tory Party, a convulsion now so long-lived, dating as it does to the 1992 Maastricht Treaty battles, that it should be considered chronic. This isn’t the place to discuss all of that, so here I’ll just talk about the present leadership contest. The most likely winner, Liz Truss, was not the first choice of MPs, whilst 55% of the party membership think that those MPs were wrong to have ousted Johnson, a view echoed by Conservative voters and floating voters (£). This means that Truss, assuming she wins, will not be starting with a groundswell of support even from within her own party ranks. Amongst the general public, she scores negatively in views of her ability to handle the major issues (as do Sunak and Johnson). It’s unlikely that she will experience more than short-lived political ‘honeymoon’, if that.
One of the features of Tory MPs, especially since the referendum, is how undisciplined they are. So, particularly as she isn’t their own choice, Truss will find her backbenchers prone to revolt and that will be all the more so if, as rumoured, she packs the cabinet with those from the hard Brexit right wing, very possibly including preposterous blowhard David Frost, to the exclusion of ‘Red Wallers’ and ‘One Nationers’. There are even rumours that the peculiar Thatcherite has-been John Redwood will be disinterred, a word which in this case would be almost literally true. A more broad-based administration would just bring the backbench schisms into the cabinet. Already there is speculation that the weakness of her position amongst MPs will force her to call an early election, risky as that would be.
The Northern Ireland Protocol Bill (NIPB) could be an early flashpoint, if she pushes ahead with it as she has promised. Apart from facing opposition from Tories in the Lords, it’s at least possible that some of the Tory MPs who understand the damage it will do will find the courage to vote against it. If she doesn’t push ahead then, almost certainly, the ERG will mount an immediate attack. The same is true if, as some commentators speculate, she ditches the generally hard right line she has taken during the leadership contest and once more re-invents herself as some sort of consensual centrist. As much as, if not more than, her predecessors she will be constantly vulnerable to ERG extremism, whether on Brexit or other issues.
Even without that ever-present pressure, Truss is extremely ill-equipped to deal with the multiple crises she will face. She shows little sign of having the intellectual or interpersonal skills needed, and her sub-Johnson boosterism is not going to carry her very far in the present context. Attacking doomsters, gloomsters and ‘declinists’ may have some appeal to party members. To a country feeling distinctly gloomy, if not doomed, and visibly declining, its appeal will be very limited indeed.
It may be that, as many expect, and as Rees-Mogg and David Frost amongst others are urging, she will launch into a libertarian, deregulatory frenzy, delighting the Tory right by ‘delivering’ on what they meant by Brexit. If so, that is very unlikely to appeal to a country – including many Tory voters – that sees an urgent need not for deregulation but for, at the least, stronger and better regulation of utilities, in particular, as well as for a bigger and more interventionist State. If energy prices continue to rise as predicted then the political pressure for the latter will be irresistible. It’s also much more difficult in practice to deliver deregulation than to talk airily about making a ‘bonfire of EU regulations’, for the reasons I outlined in my previous post, the more so in the absence of any explicit political mandate or much administrative bandwidth to do so. Yet some right-wing Brexiters, such as Allister Heath (£), writing in loose-sphinctered terror of “ultra remainers mobilising to cancel it”, are convinced that “Truss is Brexit’s last hope” and rely on her to show that it can “improve lives, bolster the economy and fix broken institutions”.
It's here that a central feature of the rolling post-referendum political instability becomes obvious. One aspect of this is that although not all of the current crises are attributable to Brexit, many of them, including the interlinked ones of inflation, lack of growth and labour shortages, are at least partly connected to it. Truss will not be able to admit that, but nor will she be able to show it ‘improving lives, bolstering the economy or mending institutions’. Heath and other diehard Brexiters still don’t grasp it, and probably never will, but there is simply no way that Brexit can do any of those things. The problems and costs it has entailed already are not, as he has it, “implementation failures”, they’re what Brexit means in reality. Truss can’t tell them that, either.
The more fundamental issue is that this detachment from reality has now infected Tory politics more generally. So what defines post-Brexit politics is not just that the government can’t tell the truth about Brexit but that it can’t tell the truth about anything. Instead, just as with Brexit, all the bad news and forecasts of worse to come are dismissed as a new kind of Project Fear, as pessimism spread by ‘experts’ and the media. So even as they berate ‘remainers’ for failing to differentiate between Brexit and non-Brexit causes of the UK’s multiple problems, they themselves adopt an undifferentiated approach to those problems.
The unleadable in pursuit of the impossible
These three features of post-referendum political instability – the overwhelming of the institutions of the State and politics, the unleadability of the Tory party, and the inability to tell the truth – are obviously linked. They are linked in the impossibility of putting into practice the false and contradictory promises of Brexit. More generally, they are linked in the way that the Tory Party has reached a point where the things most of its members and many of its voters want are impossible.
Fundamentally, what they want are not just the impossible illusions of Brexit but a string of impossible illusions that go with it. These are at once less facile and more unattainable than blue passports and Imperial measures. They want a country that resembles an imagined past of stability, homogeneity and greatness. For all that they talk of love of country, they profoundly dislike the country as it actually is and want the government to provide them with another one, preferably located a long way from Europe, but it’s one which never existed and can’t be created now. Worse, the very policies it draws them to – most obviously Brexit – actually reduce such stability, homogeneity and greatness as exists.
They’re not completely crazy, and know the Empire has gone for good, but they still think in unrealistic terms about ‘the Anglosphere’ and the Commonwealth. They are now primarily an English party and, though they remain notionally pro-Union, they still think in unrealistic terms of it being one in which the non-English parts ‘know their place’. They want to visit stately homes without hearing about the realities of where the money came from to build them, and to enjoy a spell of hot weather without hearing about the realities of climate change. They want to be ‘free to say what we think’ without accepting the reality that others have the freedom to criticise what they say. Above all, they want a country of common sense and simple solutions and, though they aren’t unique in wanting that, they want it in a particular way, wherein complex reality is not just an irritant to them but a plot against them.
Brexit was a pivotal moment because it seemed to be a portal not just to leaving the EU, but to delivering all this and more. The ‘silent majority’ had finally spoken and been heard. But it has turned to ashes. Not only have none of the wider illusions been delivered (indeed many of them are further away than ever) but the reality of Brexit itself proved to be entirely different to what they thought it would be. That is why so few celebrate it, although they may still cling to the hope that the dream will eventually be realised. Meanwhile, they have simply added remainers and saboteurs to the long list of enemies within, along with ‘lefty lawyers’, the BBC, and the more amorphous ‘human rights brigade’, ‘metropolitan elite’, ‘Woke’ Establishment, and ‘the Blob’; and added Brexit betrayal to their long list of unassuageable grievances.
In that framing, Sunak is now depicted as ‘soft’ on Brexit, for apparently having urged some caution over the NIPB and extensive regulatory divergence when he was Chancellor. That’s linked to him being seen as captured by the ‘Treasury Blob’, and it’s notable that he has couched his (failing) message of ‘fiscal prudence’ in the terms that ‘you can’t have your cake and eat it’. The first shows just how hard line the party members have become on Brexit itself, whilst their rejection of what, to them, used to be unquestionable fiscal orthodoxy shows how deeply they have embraced the Johnsonian cakeism that Brexit was sold on.
By contrast, Truss has convinced them that she might make Brexit a success, and offers the ‘simplist’ prescription of tax cuts as a cure-all, whilst gleefully lashing out at the ‘enemies within’. Above all, she has not challenged the impossibility of their illusions in even the mildest of ways. Hence they favour her as their leader, although neither candidate is the Thatcher-Johnson-Farage amalgam they crave.
Ironically, if the Tories could find someone with the genuine leadership qualities that both the country and their party actually need, that person’s first task would be to tell them that what they want is undeliverable. In the absence of that, they will eventually denounce any leader as being – as they said of David Cameron, as well as of May and even of Johnson – ‘not a real Conservative’. And, indeed, who could be, for as long as a real Conservative leader means someone who will make the impossible become real?
What happens now?
None of this is entirely new within the Tory Party (anyone remember ‘the Monday Club’? Or, more obscurely, ‘Selsdon Man’?), but what is new is that there is now almost nothing else within the Tory Party, which also opens up a schism between the party itself and some parts of its core vote. How its hapless condition will play out in the long-term is difficult to know.
One possibility, especially as the economic crisis gets worse, is that it gathers force and becomes more vicious, gaining new recruits, and perhaps even forging links, if only informal, with the street-fighting hard Right. It’s not a very long walk from that to Ur-Fascism. More optimistically, it reflects a mainly ageing demographic which in the not-too-distant future will become a political irrelevance. Or perhaps – more likely in opposition than in government, and certainly not under Truss or Sunak, neither of whom has the vision or character needed to do it – the Tory Party will remake itself in the somewhat more pragmatic mould that has arguably characterised most of its history.
But for the immediate future, we can only expect the post-Brexit instability to continue. None of the things being discussed in the leadership contest remotely speaks to the scale of the country’s problems, or to the deep causes that most of them have. Certainly there is no recognition of the realities of Brexit, how these intersect with the other problems, or of the damage Brexit is doing to just about every sector even without those other problems. Still less is there any glimmer of recognition of how diminished the UK’s standing in the world is as a result of Brexit and of the politics it has brought in its wake, or how widely Truss is distrusted by many of the UK’s key allies.
One particularly serious economic consequence of this continuing instability is that, as has been the case ever since the Brexit vote, vitally needed business investment and foreign direct investment will continue to be much weaker than it would have been. This, as well as pressure on sterling, will be exacerbated if the row with the EU over the NIPB continues and worsens: just as in the years since the referendum, why invest when uncertainty hangs over the future terms of around half of the UK’s trade? The EU reaction to such a row, I assume, would be to ‘play it long’, partly because the continued uncertainty hurts the UK more than the EU, partly in the hope that this government only has two years to run.
An era ending?
Of course if the Tories not only get through the next two years but also contrive to win the next election then all bets are off, for the EU as for all of us. But to me it feels – and a feeling is all it can be until it happens, when it becomes truism – that something fundamental is shifting. It seems rather like the tail-end of the Wilson-Callaghan government of 1974-1979 or of the Major government of 1992-1997. In both cases there was a sense of not just the government but a political era dying, and I think it’s there again now.
There’s already some polling evidence for that shift, but much depends on the Labour Party being able to capitalise on it, including the extent to which they are willing to get real about the damage of Brexit. That’s possible, if only because it would reflect the settled, indeed growing, view of the general public that Brexit was a mistake. It’s also reported (£) that both right and left wings of the party are now pressuring Keir Starmer to take a “softer” Brexit position. More broadly, Labour will need to develop a convincing policy on the economic crisis in whatever form it exists by the time of the next election. Again, there are already some signs of that. What is still missing compared with 1979 or 1997, and much harder to create, is a wider narrative of a desirable and deliverable future, rather than just a crisis management plan.
What links the Brexit policy and the wider policies that Labour need is the requirement to meet the challenge that the Tory Party manifestly can’t: to break with the culture of fantasy and lies, the denial of, and active hostility to, reality. That is the poison that Brexit exemplified and bequeathed which has to be sucked out of the body politic. It won’t be at all easy given how widely it has spread and how deep the wells from which it draws, not least the bottomless one of the pro-Brexit media.
As to what happens in the meantime, about the best that can be hoped for is that not too much more damage is done under Truss. It could be considerable. But, precisely because the only certainty is continuing instability, it is perfectly possible that events may quickly unfold, and in ways very different from those that anyone expects.
This is intended as the last post before the election of the next PM, so unless something unexpected happens I won’t blog next Friday. After that, I’ll be on holiday for two weeks so will unfortunately miss the start of the new regime, and the next post will be on Friday 23 September.
Friday, 26 August 2022
Friday, 12 August 2022
What the leadership contest tells us about Brexit
Against the backdrop of a serious, growing, and multi-faceted economic crisis, the Tory leadership contest grinds on. The two contenders have little to say that matches the scale of this crisis and even less about Brexit, which is not only one of its components but the one most obviously unique to the UK. Nor do they speak of the immediate political problem Brexit will pose for whichever of them wins, namely the Northern Ireland Protocol Bill (NIPB). Yet, for all the silence, Brexit lurks beneath the contest; a ghost, a proxy, an indelible tattoo.
The leadership contest
One proxy is the candidates’ stoking of the anti-woke culture war. For the Brexit vote coded many things including the division between social liberals and social traditionalists and, in the mind of the Brexiters, those who ‘talk the country down’ and ‘those who love Britain’. Like much else about Brexit, this division wasn’t created in 2016 so much as given new zest and, despite existing in a different context, is a continuation of the decades-long whining about ‘political correctness’, the UK version of post-1960s backlash politics.
Indeed, there’s a dated feeling to the entire contest, especially in the constant invocations of Margaret Thatcher, perhaps reflecting the age and political reference points of the selectorate that will choose the next Prime Minister. It’s reminiscent of the way Conservatives still argue about whether Thatcher would or would not have supported Brexit, still vying for the imprimatur of the Iron Lady, or perhaps just for mummy’s approval. Equally, albeit again in a different context, the contest reveals the same contradiction of espousing free market, global free trade economics alongside social traditionalism and nationalism as that within Thatcherism. A similar contradiction, in fact, to that within the voting coalition of globalists and nativists that gave us Brexit.
Of course the many ways in which the context is different to the 1970s and 1980s only serve to reinforce the sense of a disconnect between this political discussion and current realities. The nature of the economic crisis is radically different. The geo-politics of the post-Cold War world are different. The politics of the Union are different. The now inescapable climate crisis is very different. Thoughtful Conservative commentators, such as Tim Pitt (£), warn that “cheap imitations of Thatcherism will not help the next prime minister tackle [these] formidable challenges”, but thoughtful Conservatism is long out of fashion, again in large part because of Brexit and its fallout.
It's not just that today’s issues are different to the 1970s and 80s. So too is political demography: in appealing to the ‘backlash generation’ the Tories have, apparently deliberately, chosen to set themselves against the young, the university-educated, and the urban. Yet, at the same time – and again it continues a trend that began under Thatcher but was spiced up by Brexit – contemporary Conservatives also despise the ‘traditional elites’ of the civil service, judiciary and business that used to form part of their heartlands.
All these groups, and more, are now disparaged in the new, omnipresent insult of ‘the Blob’ and its cognates ‘the remainer Blob’, ‘the Woke Blob’ (£) and ‘the Left Blob’, along with endless sub-variants like ‘the NHS Blob’ (£). It’s a terminology which, in the UK, is one of the many noxious legacies of Dominic Cummings who, when an advisor to the then Education Secretary Michael Gove, coined ‘the Education Blob’ as a term to disparage all those who actually knew anything about education. As such, it bears a family relationship to Gove’s notorious ‘we’ve had enough of experts’ line during the referendum campaign. It has now become a lazy catch-all term of abuse, as well as an excuse for governmental failures.
The (self-)importance of Frost
Woeful though they are, these terms of reference may well be adequate, and perhaps even unavoidable, in a contest pitched at the party membership, although it remains an open question whether they are a viable framing for the general election campaign that must come within two years. They certainly lack any discernible intellectual coherence or merit. But cometh the hour, cometh the man. A hero to many in the Tory Party, he is rumoured to be in line for a significant role if Liz Truss, the current favourite and his preferred candidate, wins. And he has stepped forward in a bid to provide just the coherence that is wanting.
Unfortunately, that man turns out to be David Frost who, with his habitual and limitless self-importance, this week published his Policy Exchange “essay” aspiring to exactly the big picture analysis that would enable the new leader to solve all the nation’s problems. Never one to understate anything, expect perhaps his own mediocrity, he boastfully presents this as an undertaking akin to the ‘Stepping Stones’ report that set a path for – yes, of course – the Thatcher administrations.
Apparently this is an effort that has been many years in the making but which his governmental duties had precluded writing. Now the truth can be told. Yet, for all the years of Frost’s tongue-between-teeth intellectual toil, it is, as the tagging of Thatcher prefigures, for the most part a reheat of her policies of lower taxes and a smaller state. If it differs from the intellectual pitch-rolling 1970s thinktanks undertook for Thatcher, it is mainly in lacking any kind of detailed prescriptions, relying instead on evergreen banalities such as calls to “reform our disgraceful prisons” or to “modernise the NHS”. On the newer challenge of climate change, the dangers of this constituting an ‘emergency’ are loftily dismissed as not being supported by the evidence.
What of Brexit?
One important implication of all this ‘back to Thatcher’ maundering is that almost nothing proposed here, or by the leadership candidates, actually requires Brexit. Indeed the first “pillar” of Frost’s proposals is that “the public must come to feel that we have taken a wrong path and to react against it”. But, hold on, isn’t that exactly what the public had been told, and responded to, in 2016? Wasn’t Brexit the new path? Must we now, just six years later and less than two years since the end of the transition period, embark on yet another new path?
The answer, it seems, is that “Brexit in itself creates neither huge economic advantage nor disadvantage”. Alas, this is not what leave voters were guaranteed in 2016. And puzzlingly, despite this apparent neutrality of Brexit, in the same paragraph Frost asserts that “leaving the EU has already hugely shaped our politics and political economy”. Indeed it is a “huge discontinuity” and yet, apparently, only the prelude to the next one, which will sustain the “Brexit Revolt”. The theme of revolt permeates the essay and presumably informs his grandiose choice of Lenin’s “What is to be done?” as the title of the prescriptive chapter, hard as it is to picture ‘the Rt Hon Lord Frost of Allenton CMG’ chugging wheezily up the steps of the Winter Palace.
In reality, this call to a new path is a tacit admission that Brexit has failed. Not only are there none of the huge advantages that had been promised, but Frost is forced to concede it has come with “some costs” which he downplays as not “material” and not amounting to the “disasters” predicted. This is the now boilerplate Brexiter position that forgets the promises of ‘sunny uplands’ in favour of the rather more modest definition of success being the avoidance of total disaster. Thus ‘Project Fear’ is supposedly discredited since the effects of Brexit haven’t been as bad as some of the Brexiters’ own hyperbolic renderings of the most extreme warnings, and it is taken as read that all the ‘Establishment’ forecasts have been discredited.
In fact, the Treasury long-term forecast of 2016 for the scenario of Brexit with a UK-EU trade deal, whereby after 15 years GDP is in the range of 4.6%-7.8% lower than it would otherwise have been, now looks as if it will be fairly accurate, with the latest NIESR projection being for 5%-6% lower over 15 years. Those are still projections, but they are consistent with actual performance so far, with the latest CER calculation suggesting that at the last quarter of 2021 GDP was between 4.9% and 5.2% lower than it would have been. By any normal meaning of the term that is, indeed, a huge, and ongoing, economic disadvantage. As for all the reports of other damages of Brexit across just about every sphere of life that have accrued, these are airily dismissed by Frost as “rarely justified by reality”. The running sore of the Northern Ireland Protocol that he negotiated gets even shorter shrift, as no more than an “issue” that “must be resolved”.
Brexit’s coy revolutionaries
The grudging recognition that Brexit has been an economic failure has been growing amongst the Thatcherite Brexiters for a year or so, and I discussed it in detail in a post last December. The proposition it leads to is one re-iterated by Frost. His suggestion is that the problem is the “psychological hangover” of EU membership, which means “the EU is still a reference point for too many issues and policies”. He means, in particular, that this has hampered deregulation and “supply-side reforms”. Yet Frost is very coy about giving any details. The same is true of Sunak and Truss, as well as numerous others, like Mark Sedwill (£) who this week trotted out yet another of the interminable articles in the pro-Brexit press about cutting EU red tape without specifying which rules would go.
So what are the ‘supply-side reforms’ that Frost and the leadership candidates envisage? It’s a loose term, and to talk as they do of deregulation and supply-side reforms is unhelpful as the latter term usually includes the former, alongside free trade and tax cuts. As regards tax cuts, such reform is often associated with the largely discredited ‘Laffer Curve’, which, in brief, suggests that, at least to a certain point, cutting taxes will increase tax revenues and also promote growth. This seems now to the be the basis of both Sunak’s and Truss’s tax plans (itself based, again, on a selective reading of Thatcher-era policies). But since, whatever its dubious virtues, such a policy could be pursued with or without Brexit, and given the particular flagging of the term, it’s obvious that deregulation is a central issue.
The mirage of deregulation
The vagueness about what this deregulation is to consist of is because of a number of inter-related reasons, all of which in different ways relate to the incoherence of the Brexit project. It might refer to regulatory divergence from the EU on things like product standards or data protection. The problem here is that, as the government has already found, such deregulation is unpopular with businesses because it reduces rather than extends the scope of their markets. Indeed that is hardly surprising – these shared regulations are the essence of the single market, and one of the reasons Thatcher herself was a single market enthusiast.
Moreover, in the current global economy, they are very often adopted well beyond the EU single market or, just as often, the EU standards themselves derive from other global bodies. For any one country, especially one that does half its trade with the EU and which is bound, by virtue of proximity, to continue to do a high volume of its trade with the EU, setting its own standards just doesn’t make economic sense. Nor is it compatible with the ‘free trade’ aspect of supply-side reform.
What has happened is that the latter-day Thatcher imitators have mistaken different kinds of regulation and deregulation. Some regulation, including that of the single market, is market-making. In those cases, deregulation reduces rather than extends the market. More than that, in the case of leaving the rules of the single market (and the customs union), it re-instates the regulation that otherwise exists. Hence Brexit has massively increased the ‘red tape’ (or regulatory) burden on trade with the EU even without any regulatory divergence (a common Brexiter myth is that having the same standards ought to mean trading as before, but it doesn’t absent of being part of the regulatory and legal eco-system of the single market: this was the myth that underpinned Liam Fox’s ‘easiest deal in history’ foolishness). Adding regulatory divergence to this will further increase, not decrease, those barriers to trade.
By contrast, some of the Thatcher-era deregulation was market-making. For example, changes to financial services law in the 1980s removed the restrictions on services that Building Societies could offer (e.g. cheque accounts and unsecured loans) so that they could compete with banks. The desirability of that, and other parts of 1980s financial services deregulation, can be debated, of course, but the present point is that this deregulation did indeed extend rather than reduce the market (more precisely, it re-regulated to do so). Thatcher’s Brexiter imitators, including Frost, Rees-Mogg, Sunak and Truss, have wrongly concluded that removing EU regulations from the UK statute book is akin to this kind of deregulation, when in fact it is the opposite. It’s more like getting rid of the laws that enabled building societies and banks to compete, and reverting to the barriers that previously existed so as to segment their markets.
The other aspect of this, and the reason for the coyness about specifics, is that many kinds of deregulation are likely to be highly unpopular not just with businesses but with voters once the implications are known. That applies not just to product and environmental standards but, perhaps even more, to reductions of employment and other rights if, as seems likely, this is the agenda that remains unspoken. Many voters, including many who supported Brexit, will not support that and, depending exactly what is envisaged, it could again militate against free trade aspirations, especially if it violated the level playing field clauses of the Trade and Cooperation Agreement.
There’s obviously nothing new about these ideas in British politics, nor about the idea that one significant strand of Brexiter motivation was to enact them. But it was only one strand, and as a result Brexit doesn’t give enough cover for it, reflecting the perennial Brexit problem that the 2016 vote was not a vote for any particular meaning of Brexit. Many parts of the leave-voting coalition would bitterly oppose this deregulatory agenda – not just some ‘Red Wall’ nationalist traditionalists but also some ‘Blue Wall’ One Nation liberals. Since this is the same coalition that supported Johnson in 2019, a government under either contestant would struggle to deliver it just as he did. Certainly, it is, at the very least, unclear that they could retain that coalition in a general election fought explicitly upon such a manifesto.
Two faces of Brexit
All of this serves to illustrate the misnomer of the subtitle of Frost’s ‘essay’, “Reality-based politics and sustaining the Brexit Revolt”. For the ‘Brexit Revolt’ was never a singular movement, and it only briefly maintained a coalition of diverse discontents by the denial of reality; by insisting that it was possible to ‘have our cake and eat it’, a cost-free Brexit and one which could deliver all of the contradictory promises made for it. Those false promises have already been exposed, not least in relation to Frost’s own bugbear, the Northern Ireland Protocol.
This means that Frost’s ‘third pillar’ for the future, a reclaimed national identity “to bed in the view irreversibly that leaving the EU was the necessary precursor to achieving this” has already failed. Brexit has already further divided the union, and it has bitterly divided the population at large. There is absolutely no recognition from Frost, or from any other Brexiter, of this, still less any responsibility taken for it. There is not the tiniest suggestion that he and they are to any degree at fault for what has happened. Instead, the idea is to push on even harder in the same direction, once again treating the 2016 referendum as a mandate for things never put to the electorate and yet, in a grotesque political spoonerism, claimed as a triumph of democracy.
These ongoing divisions of Brexit actually permeate the leadership election, despite Brexit not being mentioned much, and not in itself constituting a dividing line between the candidates. For one way to think about the Truss-Sunak contest is as being between treating Brexit as a kind of Year Zero, instigating a permanent revolution against established realities of economics, geography, law or convention, and a more orthodox, pragmatic pre-Brexit though pro-Brexit, Conservatism.
Despite how they themselves voted in the referendum Truss is firmly the candidate for the former camp, being almost Johnsonian in her relationship to truth, and Sunak represents the latter. It’s not surprising, and doesn’t bode well for Sunak’s chances given their smaller numbers, that whereas opinion polls suggest he narrowly leads (53-47) amongst Tory Party members who were remain voters, Truss massively leads (81-19) amongst those who voted leave (figures exclude don’t knows/ won’t votes).
Both are equally committed to Brexit, so that isn’t the point at issue. What is at issue is the contradiction between Brexit as a ‘reality-based’ policy agenda to be delivered by government and ‘Brexitism’ as a campaigning, insurgent mood of permanent ‘revolt’. Truss embodies that mood, albeit less vividly than Johnson, whereas Sunak’s belated efforts to do so appear uncomfortable and he is already being attacked (£) for his technocratic caution having ‘frustrated’ Brexit.
It’s a contradiction we’ve seen before. Theresa May treated Brexit as a policy to be enacted, and was destroyed by those who wanted the mood and the campaign, and didn’t like the reality at all. Johnson provided the mood and the campaign, but couldn’t enact the policy to the satisfaction of Brexiters. This wasn’t just about their individual failings, considerable as those were, it was about the impossibility of doing both.
The unavoidable impossibility of post-Brexit politics
So Frost’s call for “Reality-based politics and sustaining the Brexit Revolt” misses the fact that there is actually a choice: reality-based politics or sustaining the Brexit Revolt. A ‘revolt’ can’t also be a government. It also misses the fact that whichever of the two is chosen, it will not satisfy Brexiters for long. The ultimate cakeism of Brexit is their refusal to make that choice, the ultimate tragedy for the country is that winning the referendum forced it upon them. It’s that impossible dynamic which is still ongoing, lies silently at the heart of the current leadership campaign, and will persist whoever wins.
So if Truss wins, it won’t be long before the complaints start that she is lightweight, prone to empty gestures and u-turning under pressure, talks the talk of Brexit but doesn’t walk the walk. She certainly doesn’t have a strong track record of policy delivery. And it’s notable that although the original basis of her popularity with the party membership was her flashy announcements of ‘getting trade deals done’, providing them with at least the illusion of Brexit being delivered, the hard-core free marketers see the deals she has agreed with Australia and New Zealand as far too timid, and as having given in to UK producer interests (of course UK producers don’t see it that way, nor, apparently, does Sunak). She’ll have a go at the deregulatory fantasy, but nothing much will come of it for the same reasons as nothing much has come of it under Johnson. No doubt her one-time support for remain will be recalled. As time goes on, sustaining the revolt won’t be enough without providing the reality of what the Brexiters think is possible. A salesperson with nothing to sell. Johnson 2.0.
If Sunak wins, he may well make a serious attempt to enact Brexit: to make it a reality. He too will find himself ensnared in the illusions of deregulation but perhaps he will push on anyway, in which case the economic crisis will get worse. Perhaps he won’t, and will be lambasted by Brexiters for that. He may well, as Truss also promises, plaster his beloved freeports all over the country (though, given a conspiracy theory which seems to currently be gaining traction, it’s worth mentioning that there are no plans to create Charter Cities in the UK and that these are radically different to freeports on any normal meaning of either term). But still the Brexiters will say he has not delivered real Brexit, either in terms of the general economy, for freeports are not an economic panacea, or in terms of what many leavers thought they were voting for as regards secure and well-paid jobs and improved public services. No doubt his background as a globalist, ‘citizen of nowhere’ investment banker will be recalled. As time goes on, the reality will collide with revolt. Tarnished goods offered by someone with no sales skills. May 2.0.
These categorisations are probably overly stark, and in practice each of them will mix ‘reality’ and ‘revolt’ (as did May and Johnson) but still skewed in one or the other direction. But either will have to decide which way to go quite quickly on one key issue, because of the choices they will face over the NIPB. Again there is no solution here which will satisfy both the desire for perpetual revolt and the reality-based politics of economic and governmental rationality. That circle can only be squared by insisting that ‘the Blob’, rather than the government, is in charge, so they are still insurgents who, if they win, can deliver the promises of Brexit. It’s unclear, though, for how long an electorate facing multiple crises will support a government whose central message is its inability to govern.
The leadership contest
One proxy is the candidates’ stoking of the anti-woke culture war. For the Brexit vote coded many things including the division between social liberals and social traditionalists and, in the mind of the Brexiters, those who ‘talk the country down’ and ‘those who love Britain’. Like much else about Brexit, this division wasn’t created in 2016 so much as given new zest and, despite existing in a different context, is a continuation of the decades-long whining about ‘political correctness’, the UK version of post-1960s backlash politics.
Indeed, there’s a dated feeling to the entire contest, especially in the constant invocations of Margaret Thatcher, perhaps reflecting the age and political reference points of the selectorate that will choose the next Prime Minister. It’s reminiscent of the way Conservatives still argue about whether Thatcher would or would not have supported Brexit, still vying for the imprimatur of the Iron Lady, or perhaps just for mummy’s approval. Equally, albeit again in a different context, the contest reveals the same contradiction of espousing free market, global free trade economics alongside social traditionalism and nationalism as that within Thatcherism. A similar contradiction, in fact, to that within the voting coalition of globalists and nativists that gave us Brexit.
Of course the many ways in which the context is different to the 1970s and 1980s only serve to reinforce the sense of a disconnect between this political discussion and current realities. The nature of the economic crisis is radically different. The geo-politics of the post-Cold War world are different. The politics of the Union are different. The now inescapable climate crisis is very different. Thoughtful Conservative commentators, such as Tim Pitt (£), warn that “cheap imitations of Thatcherism will not help the next prime minister tackle [these] formidable challenges”, but thoughtful Conservatism is long out of fashion, again in large part because of Brexit and its fallout.
It's not just that today’s issues are different to the 1970s and 80s. So too is political demography: in appealing to the ‘backlash generation’ the Tories have, apparently deliberately, chosen to set themselves against the young, the university-educated, and the urban. Yet, at the same time – and again it continues a trend that began under Thatcher but was spiced up by Brexit – contemporary Conservatives also despise the ‘traditional elites’ of the civil service, judiciary and business that used to form part of their heartlands.
All these groups, and more, are now disparaged in the new, omnipresent insult of ‘the Blob’ and its cognates ‘the remainer Blob’, ‘the Woke Blob’ (£) and ‘the Left Blob’, along with endless sub-variants like ‘the NHS Blob’ (£). It’s a terminology which, in the UK, is one of the many noxious legacies of Dominic Cummings who, when an advisor to the then Education Secretary Michael Gove, coined ‘the Education Blob’ as a term to disparage all those who actually knew anything about education. As such, it bears a family relationship to Gove’s notorious ‘we’ve had enough of experts’ line during the referendum campaign. It has now become a lazy catch-all term of abuse, as well as an excuse for governmental failures.
The (self-)importance of Frost
Woeful though they are, these terms of reference may well be adequate, and perhaps even unavoidable, in a contest pitched at the party membership, although it remains an open question whether they are a viable framing for the general election campaign that must come within two years. They certainly lack any discernible intellectual coherence or merit. But cometh the hour, cometh the man. A hero to many in the Tory Party, he is rumoured to be in line for a significant role if Liz Truss, the current favourite and his preferred candidate, wins. And he has stepped forward in a bid to provide just the coherence that is wanting.
Unfortunately, that man turns out to be David Frost who, with his habitual and limitless self-importance, this week published his Policy Exchange “essay” aspiring to exactly the big picture analysis that would enable the new leader to solve all the nation’s problems. Never one to understate anything, expect perhaps his own mediocrity, he boastfully presents this as an undertaking akin to the ‘Stepping Stones’ report that set a path for – yes, of course – the Thatcher administrations.
Apparently this is an effort that has been many years in the making but which his governmental duties had precluded writing. Now the truth can be told. Yet, for all the years of Frost’s tongue-between-teeth intellectual toil, it is, as the tagging of Thatcher prefigures, for the most part a reheat of her policies of lower taxes and a smaller state. If it differs from the intellectual pitch-rolling 1970s thinktanks undertook for Thatcher, it is mainly in lacking any kind of detailed prescriptions, relying instead on evergreen banalities such as calls to “reform our disgraceful prisons” or to “modernise the NHS”. On the newer challenge of climate change, the dangers of this constituting an ‘emergency’ are loftily dismissed as not being supported by the evidence.
What of Brexit?
One important implication of all this ‘back to Thatcher’ maundering is that almost nothing proposed here, or by the leadership candidates, actually requires Brexit. Indeed the first “pillar” of Frost’s proposals is that “the public must come to feel that we have taken a wrong path and to react against it”. But, hold on, isn’t that exactly what the public had been told, and responded to, in 2016? Wasn’t Brexit the new path? Must we now, just six years later and less than two years since the end of the transition period, embark on yet another new path?
The answer, it seems, is that “Brexit in itself creates neither huge economic advantage nor disadvantage”. Alas, this is not what leave voters were guaranteed in 2016. And puzzlingly, despite this apparent neutrality of Brexit, in the same paragraph Frost asserts that “leaving the EU has already hugely shaped our politics and political economy”. Indeed it is a “huge discontinuity” and yet, apparently, only the prelude to the next one, which will sustain the “Brexit Revolt”. The theme of revolt permeates the essay and presumably informs his grandiose choice of Lenin’s “What is to be done?” as the title of the prescriptive chapter, hard as it is to picture ‘the Rt Hon Lord Frost of Allenton CMG’ chugging wheezily up the steps of the Winter Palace.
In reality, this call to a new path is a tacit admission that Brexit has failed. Not only are there none of the huge advantages that had been promised, but Frost is forced to concede it has come with “some costs” which he downplays as not “material” and not amounting to the “disasters” predicted. This is the now boilerplate Brexiter position that forgets the promises of ‘sunny uplands’ in favour of the rather more modest definition of success being the avoidance of total disaster. Thus ‘Project Fear’ is supposedly discredited since the effects of Brexit haven’t been as bad as some of the Brexiters’ own hyperbolic renderings of the most extreme warnings, and it is taken as read that all the ‘Establishment’ forecasts have been discredited.
In fact, the Treasury long-term forecast of 2016 for the scenario of Brexit with a UK-EU trade deal, whereby after 15 years GDP is in the range of 4.6%-7.8% lower than it would otherwise have been, now looks as if it will be fairly accurate, with the latest NIESR projection being for 5%-6% lower over 15 years. Those are still projections, but they are consistent with actual performance so far, with the latest CER calculation suggesting that at the last quarter of 2021 GDP was between 4.9% and 5.2% lower than it would have been. By any normal meaning of the term that is, indeed, a huge, and ongoing, economic disadvantage. As for all the reports of other damages of Brexit across just about every sphere of life that have accrued, these are airily dismissed by Frost as “rarely justified by reality”. The running sore of the Northern Ireland Protocol that he negotiated gets even shorter shrift, as no more than an “issue” that “must be resolved”.
Brexit’s coy revolutionaries
The grudging recognition that Brexit has been an economic failure has been growing amongst the Thatcherite Brexiters for a year or so, and I discussed it in detail in a post last December. The proposition it leads to is one re-iterated by Frost. His suggestion is that the problem is the “psychological hangover” of EU membership, which means “the EU is still a reference point for too many issues and policies”. He means, in particular, that this has hampered deregulation and “supply-side reforms”. Yet Frost is very coy about giving any details. The same is true of Sunak and Truss, as well as numerous others, like Mark Sedwill (£) who this week trotted out yet another of the interminable articles in the pro-Brexit press about cutting EU red tape without specifying which rules would go.
So what are the ‘supply-side reforms’ that Frost and the leadership candidates envisage? It’s a loose term, and to talk as they do of deregulation and supply-side reforms is unhelpful as the latter term usually includes the former, alongside free trade and tax cuts. As regards tax cuts, such reform is often associated with the largely discredited ‘Laffer Curve’, which, in brief, suggests that, at least to a certain point, cutting taxes will increase tax revenues and also promote growth. This seems now to the be the basis of both Sunak’s and Truss’s tax plans (itself based, again, on a selective reading of Thatcher-era policies). But since, whatever its dubious virtues, such a policy could be pursued with or without Brexit, and given the particular flagging of the term, it’s obvious that deregulation is a central issue.
The mirage of deregulation
The vagueness about what this deregulation is to consist of is because of a number of inter-related reasons, all of which in different ways relate to the incoherence of the Brexit project. It might refer to regulatory divergence from the EU on things like product standards or data protection. The problem here is that, as the government has already found, such deregulation is unpopular with businesses because it reduces rather than extends the scope of their markets. Indeed that is hardly surprising – these shared regulations are the essence of the single market, and one of the reasons Thatcher herself was a single market enthusiast.
Moreover, in the current global economy, they are very often adopted well beyond the EU single market or, just as often, the EU standards themselves derive from other global bodies. For any one country, especially one that does half its trade with the EU and which is bound, by virtue of proximity, to continue to do a high volume of its trade with the EU, setting its own standards just doesn’t make economic sense. Nor is it compatible with the ‘free trade’ aspect of supply-side reform.
What has happened is that the latter-day Thatcher imitators have mistaken different kinds of regulation and deregulation. Some regulation, including that of the single market, is market-making. In those cases, deregulation reduces rather than extends the market. More than that, in the case of leaving the rules of the single market (and the customs union), it re-instates the regulation that otherwise exists. Hence Brexit has massively increased the ‘red tape’ (or regulatory) burden on trade with the EU even without any regulatory divergence (a common Brexiter myth is that having the same standards ought to mean trading as before, but it doesn’t absent of being part of the regulatory and legal eco-system of the single market: this was the myth that underpinned Liam Fox’s ‘easiest deal in history’ foolishness). Adding regulatory divergence to this will further increase, not decrease, those barriers to trade.
By contrast, some of the Thatcher-era deregulation was market-making. For example, changes to financial services law in the 1980s removed the restrictions on services that Building Societies could offer (e.g. cheque accounts and unsecured loans) so that they could compete with banks. The desirability of that, and other parts of 1980s financial services deregulation, can be debated, of course, but the present point is that this deregulation did indeed extend rather than reduce the market (more precisely, it re-regulated to do so). Thatcher’s Brexiter imitators, including Frost, Rees-Mogg, Sunak and Truss, have wrongly concluded that removing EU regulations from the UK statute book is akin to this kind of deregulation, when in fact it is the opposite. It’s more like getting rid of the laws that enabled building societies and banks to compete, and reverting to the barriers that previously existed so as to segment their markets.
The other aspect of this, and the reason for the coyness about specifics, is that many kinds of deregulation are likely to be highly unpopular not just with businesses but with voters once the implications are known. That applies not just to product and environmental standards but, perhaps even more, to reductions of employment and other rights if, as seems likely, this is the agenda that remains unspoken. Many voters, including many who supported Brexit, will not support that and, depending exactly what is envisaged, it could again militate against free trade aspirations, especially if it violated the level playing field clauses of the Trade and Cooperation Agreement.
There’s obviously nothing new about these ideas in British politics, nor about the idea that one significant strand of Brexiter motivation was to enact them. But it was only one strand, and as a result Brexit doesn’t give enough cover for it, reflecting the perennial Brexit problem that the 2016 vote was not a vote for any particular meaning of Brexit. Many parts of the leave-voting coalition would bitterly oppose this deregulatory agenda – not just some ‘Red Wall’ nationalist traditionalists but also some ‘Blue Wall’ One Nation liberals. Since this is the same coalition that supported Johnson in 2019, a government under either contestant would struggle to deliver it just as he did. Certainly, it is, at the very least, unclear that they could retain that coalition in a general election fought explicitly upon such a manifesto.
Two faces of Brexit
All of this serves to illustrate the misnomer of the subtitle of Frost’s ‘essay’, “Reality-based politics and sustaining the Brexit Revolt”. For the ‘Brexit Revolt’ was never a singular movement, and it only briefly maintained a coalition of diverse discontents by the denial of reality; by insisting that it was possible to ‘have our cake and eat it’, a cost-free Brexit and one which could deliver all of the contradictory promises made for it. Those false promises have already been exposed, not least in relation to Frost’s own bugbear, the Northern Ireland Protocol.
This means that Frost’s ‘third pillar’ for the future, a reclaimed national identity “to bed in the view irreversibly that leaving the EU was the necessary precursor to achieving this” has already failed. Brexit has already further divided the union, and it has bitterly divided the population at large. There is absolutely no recognition from Frost, or from any other Brexiter, of this, still less any responsibility taken for it. There is not the tiniest suggestion that he and they are to any degree at fault for what has happened. Instead, the idea is to push on even harder in the same direction, once again treating the 2016 referendum as a mandate for things never put to the electorate and yet, in a grotesque political spoonerism, claimed as a triumph of democracy.
These ongoing divisions of Brexit actually permeate the leadership election, despite Brexit not being mentioned much, and not in itself constituting a dividing line between the candidates. For one way to think about the Truss-Sunak contest is as being between treating Brexit as a kind of Year Zero, instigating a permanent revolution against established realities of economics, geography, law or convention, and a more orthodox, pragmatic pre-Brexit though pro-Brexit, Conservatism.
Despite how they themselves voted in the referendum Truss is firmly the candidate for the former camp, being almost Johnsonian in her relationship to truth, and Sunak represents the latter. It’s not surprising, and doesn’t bode well for Sunak’s chances given their smaller numbers, that whereas opinion polls suggest he narrowly leads (53-47) amongst Tory Party members who were remain voters, Truss massively leads (81-19) amongst those who voted leave (figures exclude don’t knows/ won’t votes).
Both are equally committed to Brexit, so that isn’t the point at issue. What is at issue is the contradiction between Brexit as a ‘reality-based’ policy agenda to be delivered by government and ‘Brexitism’ as a campaigning, insurgent mood of permanent ‘revolt’. Truss embodies that mood, albeit less vividly than Johnson, whereas Sunak’s belated efforts to do so appear uncomfortable and he is already being attacked (£) for his technocratic caution having ‘frustrated’ Brexit.
It’s a contradiction we’ve seen before. Theresa May treated Brexit as a policy to be enacted, and was destroyed by those who wanted the mood and the campaign, and didn’t like the reality at all. Johnson provided the mood and the campaign, but couldn’t enact the policy to the satisfaction of Brexiters. This wasn’t just about their individual failings, considerable as those were, it was about the impossibility of doing both.
The unavoidable impossibility of post-Brexit politics
So Frost’s call for “Reality-based politics and sustaining the Brexit Revolt” misses the fact that there is actually a choice: reality-based politics or sustaining the Brexit Revolt. A ‘revolt’ can’t also be a government. It also misses the fact that whichever of the two is chosen, it will not satisfy Brexiters for long. The ultimate cakeism of Brexit is their refusal to make that choice, the ultimate tragedy for the country is that winning the referendum forced it upon them. It’s that impossible dynamic which is still ongoing, lies silently at the heart of the current leadership campaign, and will persist whoever wins.
So if Truss wins, it won’t be long before the complaints start that she is lightweight, prone to empty gestures and u-turning under pressure, talks the talk of Brexit but doesn’t walk the walk. She certainly doesn’t have a strong track record of policy delivery. And it’s notable that although the original basis of her popularity with the party membership was her flashy announcements of ‘getting trade deals done’, providing them with at least the illusion of Brexit being delivered, the hard-core free marketers see the deals she has agreed with Australia and New Zealand as far too timid, and as having given in to UK producer interests (of course UK producers don’t see it that way, nor, apparently, does Sunak). She’ll have a go at the deregulatory fantasy, but nothing much will come of it for the same reasons as nothing much has come of it under Johnson. No doubt her one-time support for remain will be recalled. As time goes on, sustaining the revolt won’t be enough without providing the reality of what the Brexiters think is possible. A salesperson with nothing to sell. Johnson 2.0.
If Sunak wins, he may well make a serious attempt to enact Brexit: to make it a reality. He too will find himself ensnared in the illusions of deregulation but perhaps he will push on anyway, in which case the economic crisis will get worse. Perhaps he won’t, and will be lambasted by Brexiters for that. He may well, as Truss also promises, plaster his beloved freeports all over the country (though, given a conspiracy theory which seems to currently be gaining traction, it’s worth mentioning that there are no plans to create Charter Cities in the UK and that these are radically different to freeports on any normal meaning of either term). But still the Brexiters will say he has not delivered real Brexit, either in terms of the general economy, for freeports are not an economic panacea, or in terms of what many leavers thought they were voting for as regards secure and well-paid jobs and improved public services. No doubt his background as a globalist, ‘citizen of nowhere’ investment banker will be recalled. As time goes on, the reality will collide with revolt. Tarnished goods offered by someone with no sales skills. May 2.0.
These categorisations are probably overly stark, and in practice each of them will mix ‘reality’ and ‘revolt’ (as did May and Johnson) but still skewed in one or the other direction. But either will have to decide which way to go quite quickly on one key issue, because of the choices they will face over the NIPB. Again there is no solution here which will satisfy both the desire for perpetual revolt and the reality-based politics of economic and governmental rationality. That circle can only be squared by insisting that ‘the Blob’, rather than the government, is in charge, so they are still insurgents who, if they win, can deliver the promises of Brexit. It’s unclear, though, for how long an electorate facing multiple crises will support a government whose central message is its inability to govern.
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