There are serious policy cleavages underpinning Tory turmoil, but a leadership contest won’t resolve them
Don't expect the Conservative Party leadership election to provide a guide to what kind of Prime Minister the next leader will turn out to be
Boris Johnson is leaving office as a result of his own incompetence, malice, and corruptible nature. But there are also emerging policy differences across the Conservative Party underpinning opposition to Johnson’s leadership. Many of these relate to major economic challenges which are becoming increasingly acute, and a failure to address them would have undermined Johnson as he pursued a second term.
Left and right
The differences cannot really be boiled down to left and right, although this is a good place to start. While the self-styled ‘Brexity Hezza’ has flirted with one-nation conservatism, a large proportion of his cabinet are true-believing Thatcherites.
In triggering the stampede of resignations earlier this week, both Sajid Javid and Rishi Sunak made the case for fiscal conservatism, albeit a neoliberalised version of the ‘Treasury view’ where public spending is inherently risky but tax cuts are inherently virtuous. In allying with Sunak in order to secure a victory in June’s confidence vote, Johnson had already largely accepted that reducing taxation would become his flagship economic policy, with levelling up and green industrial policy marginalised.
One of the immediate policy consequences has been a watering down of planned investment in social care. The recent rise in National Insurance contributions was ostensibly to pay for a cap on care costs for individuals, as well as short-term funding to address a local capacity crisis exacerbated by COVID-19. Yet most of the additional revenue has been diverted to deal with the NHS backlog. And a series of operational decisions has undermined the relief the cap will provide for existing care recipients.
Ability to govern
The understanding that existed between Johnson and Sunak unravelled rapidly. Its fate was sealed when Sajid Javid resigned, for the second time, on Tuesday evening. The odds on Johnson being forced out ahead of schedule instantly shortened. We know that Sunak has been plotting his leadership campaign for at least several months, and since Sunak and Javid occupied largely the same political and ideological space, he could not allow Javid to move ahead in the succession race by starting to put distance between himself and Johnson’s doomed premiership.
Both men will have to promise tax cuts in order to win the party leadership. This agenda is of course wildly incompatible with the growing demands for public services, irrespective of the need to invest in service quality after a decade of austerity. The state will increasingly be required to intervene in the foundational economy, to fix dysfunctional utility markets and restore depleted social infrastructures.
Tax cuts will not improve the UK’s economic performance, and may add to inflationary pressures while failing to provide cost-of-living support to those who need it most. Simply, the Conservative Party’s determination to choose this direction will undermine its ability to govern for a generation.
Hegemony
In theory, Johnson had substantial policy autonomy, both from Treasury orthodoxy and his party’s longstanding preoccupations, having helped to engineer a partial realignment of UK electoral politics before and after the Brexit vote (resulting in a substantial parliamentary majority). A commitment to higher levels of public spending was one of the features.
Of course, Johnson’s fiscal policy cannot be untangled from the experience of COVID-19, which necessitated unprecedented state intervention in the economy. And we can question whether he had the work ethic or far-sightedness necessary to embed a new policy orthodoxy across government (and ironically he was hampered by his own cabinet in this regard, which was organised primarily around the mission of completing and commending EU withdrawal).
Overall, however, Johnson was comfortable with a larger state. This was not a redistributive or collectivist state, but rather a substitutive one, whereby the state intervenes to replicate or supplement activities usually reserved for the market, in order to sustain the profitability of the private sector. But the promise of additional public funding for economic development, even if most gains would accrue to corporate interests, was enough to win the support of many communities in deindustrialised areas, and the co-operation of local leaders across both main parties.
(It should be noted that Johnson was occasionally keen to cut back the state too. He was planning to sell publicly-owned Channel 4, for instance, despite its healthy finances.)
Clientilist practices have perhaps been the defining feature of Johnson statecraft. He allowed favoured firms to extract revenue from public services, or extract value from public assets. This is obviously abhorrent. But it is also politically savvy, if you can get away with it – part of how the Johnson hegemony was built and secured, albeit ephemerally. And it is hardly more regressive in impact than the influence the City of London traditionally exercises upon UK economic policy – an influence which will be fully restored with Sunak or Javid as Prime Minister.
Broken
If it ain’t broke, why fix it? Well, because it will be broken soon enough. The populist anti-establishment and anti-immigration sentiment that Johnson rode to power would not have survived its own impact on living standards and public services much longer. Johnson saw the economy – like everything else – as something to be moulded to serve his political interests. But without a sustainable model of economic growth, and a plan for addressing major economic challenges, this project was always bound to be short-lived.
Sunak and Javid will instead pitch a return to neoliberal normality; this is probably every bit as fantastical, but will appeal to a sizeable portion of the Tory selectorate. It remains to be seen whether other frontrunners such as Ben Wallace and Nadhim Zahawi (who are both more ideologically malleable), are able to present themselves as a more acceptable face of Johnson largesse without being accused of fiscal recklessness. Sometime activist favourite Liz Truss is already pitching to the right of Sunak on tax and regulation, while promising to deliver on levelling up. As the least credible candidate, she has a great chance of winning.
Wicked problems
The leadership election will solve the Johnson problem, but hardly anything else. The process is likely to skirt around a series of policy dilemmas that will need to be addressed by whoever wins:
Poverty. The UK is unusually tolerant of poverty, even among children. But the combination of inflation, low pay and meagre benefits means poverty is about to increase to a level even the Conservative Party will not be able to ignore. Hollow rhetoric about levelling up will not be enough, and magical thinking about creating evermore jobs will fool nobody. Above all, the next Prime Minister is going to be confronted with a moral question about how much poverty is justifiable in a large, wealthy economy. It is not clear that any of the candidates have an answer.
Immigration. There are few ways for the UK to sustainably finance and deliver public services without a higher level of immigration. Expect every leadership candidate to pretend otherwise.
Monetary policy. The next Prime Minister will be the first for a very long time to enter office with interest rates rising, as the Bank of England quite deliberately tries to take demand out of the economy. The impact on the mortgage market will almost certainly make home-ownership less affordable for the foreseeable future – yet home-ownership has been central to the Conservative Party’s political economy for a very long time, in terms of both instilling conservative values throughout society, and encouraging suburban growth to redraw the UK’s electoral map in the party’s favour. It is in this context that Johnson recently floated the possibility of 50-year mortgages, with children inheriting their parents’ debt. No candidates will endorse this idea, but they will be desperate for alternatives.
Climate change. This issue might be aired during the leadership election, despite climate denier Steve Baker bowing out to instead support Suella Braverman. It is also an area where we might find Sunak and Javid diverging. As a wannabe libertarian, Javid will be able to march onto the Baker territory with some credibility. Sunak takes climate change more seriously – although he is far too optimistic about the ability of capital markets to find and fund the solutions we need without the state’s direction. Expect to be infuriated by everything you hear (or don’t hear) about climate change in the next few months.
Northern Ireland. Braverman is probably the only candidate who will defend the Northern Ireland protocol bill, through which the UK will unilaterally defy an international treaty. This is why she has Baker’s support. In practice, this is not a bill any of the more likely victors will take forward. Even Liz Truss, its parliamentary protagonist, will instead claim there is a newfangled way to protect trade between Northern Ireland and the British mainland without breaking international law. Cakeism is back, baby.
COVID-19. As catastrophic as Johnson’s handling of the pandemic was, it could have been worse. In the absence of vaccines, lockdowns and other restrictions were eventually accepted, despite Johnson’s reluctance, and countless lives were saved. But no future Tory leader will be able to repeat this, irrespective of the epidemiology. The next Prime Minister will also be confronted with the reality of Long Covid, as well as the political necessity of denying this reality.
Geopolitics. For all the horror of the war in Ukraine, it has been politically advantageous to the Conservative Party. But it will end, eventually, and Russia will be reintegrated into the international community. This will be a fraught process. The possibility of another Trumpian president in the United States (if not Trump himself) will place great strain on what currently appears now to be a settled foreign policy consensus.
If the Conservative Party is unable to forge a clear path forward for the UK economy, it is because the capitalist class it serves is dazed and divided. In stagflationary conditions, the fractions of capital are only going to become more, well, fractious. The early tremors in this regard were precisely what allowed a ‘political illusionist’ like Johnson to come to power, using the rupture of Brexit to build an alliance between various domestically-constituted rentier interests relatively immune from its impact.
It was never going to hold over the long term. The UK no longer really has a plan for what kind of capitalist economy it wants to be. The Conservative Party leadership election will expose this, if the fact that Boris Johnson was permitted to attain the highest office in the first place wasn’t exposure enough.
The Labour opposition is beginning to outline its own plan for growth, but its pitch to the electorate at the moment still consists mainly of a promise to control the chaos more competently than the Conservative government have done. The Tories can pre-empt this offer by electing Jeremy Hunt or Tom Tugendhat, who both offer a pragmatic, managerialist approach, promising fewer self-inflicted wounds as they muddle through the mayhem.
Whoever prevails now, however, will be faced with the intensification of several, overlapping crises, requiring novel policy responses. The platform they present to the Conservative Party in the months ahead might end up being a rather poor indicator of what kind of Prime Minister they turn out to be.