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The New Tories
At the beginning of the financial crisis the Tories were riding high in the polls and Labour was staring into the abyss. Now the future for David Cameron and his party looks much less certain. Will the Tories win the next election under Cameron? If they do, what will be the character of his government? KEN DOUGLAS reports.
WHAT A ROLLERCOASTER ride it is to be the leader of the Conservative Party! Just over twelve months ago, before the 2007 Tory conference, Gordon Brown’s popularity was soaring and the mutterings over David Cameron’s lack of substance were growing. Former deputy leader, Michael Ancram, had publicly criticised him and published an alternative right-wing manifesto. Brown goaded the Tories with the threat of a snap general election. There was the real possibility that if he had gone to the polls then and won Cameron would have been finished and the Tory party could have remained unelectable for a few more years.
Brown dithered and the Tories, with little choice, regrouped around their leader during a successful conference capped by a bravura performance from Cameron, gazumping Brown with a pledge to reduce inheritance tax and stamp duty. Brown backed off from an early election and, from then on, he and Cameron’s fortunes were reversed.
In the run up to the Labour conference this year, cabinet ministers openly briefed against the prime minister as they jostled for position in the race to succeed the hapless and beleaguered Brown, who only looked likely to survive because Labour’s chances of winning the election looked no better with or without him as leader. Brown was like a punch-drunk boxer, reeling from blow after blow and unable to land any blows of his own. It increasingly looked like Labour was heading for a massive defeat. With the Tories recording a 20 point lead in opinion polls, it was forecast that New Labour could be wiped out by a bigger Conservative majority than even Margaret Thatcher achieved.
It was then that the tables began to turn. And it was the economic crisis which came to Brown’s rescue. Brown’s strategy was to emphasise his experience, of being the man to steer Britain through the world financial crisis, that this was "no time for a novice". This was as effective against the challenge of David Milliband within his own party as it was against Cameron. Tony McNulty, employment and welfare minister, said that when he heard the speech he could feel Cameron and shadow chancellor, George Osborne, shrinking back into short trousers. There was the hoped-for result and the Tory lead was cut six points to 9%.
Nevertheless, the 2008 Tory conference did show an upturn in the party’s fortunes. Big business had begun to return with 93 companies, including Microsoft, YouTube and other organisations, exhibiting at the conference, up from 76 the year before. Cameron ordered a strict ban on champagne celebrations and any form of triumphalism as they struggled to set a restrained tone in the face of the world financial crisis. Only London mayor, Boris Johnson, broke ranks with his boast of having "terminated" Ken Livingstone.
The Tories’ dilemma
HOWEVER, THE CONFERENCE was eclipsed by the meltdown of the markets. Cameron had considered postponing it when the US Congress initially rejected the Paulson plan and the stock exchanges went into freefall. His problem was how to appear statesmanlike and supportive of the attempts to prevent the system from going into freefall while, at the same time, differentiating himself from Brown. If he attacked Brown too much he risked being accused of undermining the attempted rescue package. If he was too supportive he was subscribing to the idea that Brown was the best man to pull the country through the crisis, undermining his own standing.
This was not easy terrain and the Tories were inept. Osborne, a key Cameron ally, defended the short-sellers who were enriching themselves in the crisis: "No-one takes any pleasure from people making money out of the misery of others, but that is a function of capitalist markets". (The Observer, 28 September) Incredibly, Johnson also defended subprime lending as it "allowed millions of Americans to own their own homes". (Telegraph, 23 September)
Even worse, it turned out that the Tories were being bankrolled by the very hedge funds which were being blamed for exacerbating the banking crisis, short-selling bank stocks such as HBOS. One, Michael Hintze of CQS, which shorted shares in Bradford and Bingley, gave £662,500 qualifying him for membership of the Leaders Group – where members who give at least £50,000 to the party are invited to dinners with Cameron, often at this home, to be briefed on the latest policy developments. In the light of this, it was not surprising that Osborne had defended the hedge funds.
This situation indicates the bind that the Tories are now in. The party of neo-liberalism, deregulation and privatisation of Thatcher and Keith Joseph is now called on to repudiate everything it had previously held dear. In 2006, Cameron was declaring the victory of capitalism, privatisation and liberalisation, and crediting the Tories, when they were in government, of ensuring the light regulation of the financial markets.
Brown himself had done the same thing, hailing in 2007 the "beginning of a new golden age" due, in no small part, to his light regulatory touch. But this was a continuation of Tory policies. As the prospect of a 1929-type crash loomed, both Brown and Cameron began to argue for tighter regulation and for a limit on extortionate salaries and bonuses. Andrew Rawnsley in the Observer pointed out: "David Cameron, who as recently as his party conference was inviting us to regard him as the son of Thatcher, is now denouncing ‘irresponsible capitalism’."
A sign of weakness
OSBORNE EVEN opportunistically attacked the government for bailing out greedy bankers with taxpayers’ money. The Tories opposed nationalisation, advocating the takeover by the Bank of England but, in reality, the taxpayer would still be the last resort. As the crisis deepened and it became clear that a massive bail-out package was necessary, Cameron suspended hostilities. In reality, this was a sign of weakness, that they had no alternative to nationalisation. It was an indication that a Tory government would be forced to nationalise in similar circumstances.
But Cameron and Osborne were lambasted by Ancram and the right of the party for their approach: "They couldn’t bring themselves to attack the policies that exacerbated this mess because for the most part they supported them… Now they are not taking on the government’s handling of this crisis because they haven’t got a clue what they would do differently", wrote Simon Heffer in the Daily Telegraph.
Johnson at least appeared to respond with an instinctive grasp that a more populist approach may be needed in his column in the Telegraph, when he welcomed the possibility of big infrastructure projects as a way of giving a Keynesian boost to the economy. He recalled a visit to the Hoover Dam, built under the Roosevelt administration during the Great Depression, and linked it to the benefits that infrastructure projects in London, such as the Crossrail link between the City, Heathrow airport and the Thames Tideway tunnel, would bring in jobs to London. These are all existing projects with which he is linked as mayor of London and he is cutting spending in other areas but he, at least, acknowledges that there has to be some sort of concrete response to the crisis.
In a desperate bid to show clear blue water between him and Brown, Cameron has since declared that the truce is over, branding Brown’s policies a complete and utter failure. He is careful, though, to point out that he is attacking Brown’s economic record, not his handling of the crisis, accusing him of "irresponsible capitalism and irresponsible government".
However, the government is still improving in the polls. A recent BBC poll found that 42% trusted Brown and chancellor Alistair Darling to tackle the economic problems, compared to 31% for Osborne and Cameron (down three points). "The tide may be turning. I used to think we were definitely going to win; now it is less clear", commented a senior Tory.
Thatcher’s toxic legacy
WHEN CAMERON WON the Tory leadership, he had a group gathered around him including Osborne and Michael Gove, shadow schools secretary. His most influential advisor is Steve Hilton, formerly of Saatchi and Saatchi, and a veteran of the 1992 election campaign. Hilton is said to be profoundly influenced by Philip Gould’s account of New Labour’s return to power, The Unfinished Revolution: How the Modernisers Saved the Labour Party. Their aim appeared to be to emulate Blair and Peter Mandelson and their rebranding of the Labour Party into New Labour. The key question was whether they could overcome the Tories’ apparent unelectability: the toxic legacy of Thatcherism and their reputation, memorably coined by shadow leader of the Commons, Theresa May, as the ‘nasty party’. Could they draw a line under the sleaze of the Thatcher and Major years and, at the same time, win the backing of Rupert Murdoch and big business that they were a better bet than New Labour to carry on the neo-liberal project begun by Thatcher and built on by Tony Blair?
They turned Cameron from an old Etonian into ‘Dave’, who is metropolitan, environmentally aware and cycles to work. They attempted to show the Tory party as modern, green and compassionate. Their attempt to rebrand the Tories as progressive also drew on the way that Karl Rove and George Bush rebranded Republicanism as ‘compassionate conservatism’ in the 2000 US presidential election. Looking at Bush’s record subsequently it seems incredible that they could have done so and indicates that the new ‘compassion’ does not run so deep in the Tory party either.
Cameron’s mantra is that the Tories are the "true champions for progressive ideals" in Britain. In reality, however, there is nothing progressive about their ideas. A Guardian survey of Tory candidates in the 200 most-winnable seats in the next election shows that 83% think the upper limit on abortion should be reduced, 85% that married couples should get tax breaks, and all said that low taxes were a Conservative principle. These are all classic right-wing Tory policies, yet all the candidates when asked regarded them as progressive.
This attempt to change their image has been done before. William Hague famously began his stint as Tory leader by wearing a baseball cap and attending the Notting Hill carnival. He paraded the shadow cabinet in jumpers on their way to attending a weekend away to reformulate policy. By the 2001 general election he had returned to endeavouring to shore up the party’s core support by returning to the right’s themes of cuts in public spending, tax cuts, anti-immigration and opposition to the European Union. Iain Duncan-Smith and his replacement, Michael Howard, attempted the same thing, albeit much less convincingly, but returned to the core themes prior to the general election.
Cameron has also moved to the right. He has attacked the government over ‘uncontrolled immigration’, moved the Conservative group in the European parliament further to the right, called for a referendum on the Lisbon treaty, and pledged spending cuts and lower taxes. The shadow home secretary, Dominic Grieve, recently attacked multiculturalism, saying that it had left a terrible legacy, and warned against downplaying Britain’s ‘Christian heritage’.
Cameron portrays his new regime as meritocratic; Osborne’s parents even voted Labour. However, Osborne’s father is a multi-millionaire whose baronetcy goes back to the reign of Charles I! Cameron himself is a millionaire, old Etonian, his father a Tory stockbroker from the shires. Hague had difficulties enough with his Tory-boy image – and he was a commoner from Rotherham!
A recent Channel Four Dispatches programme also exposed Cameron’s claims that the Tory party is now open about party funding and has drawn a line under the Tory sleaze of the Thatcher and Major years. He had pledged to "expunge the impression that influence, access and honours can be bought by wealthy institutions… and individuals". But the deputy chairman of the party, Lord Ashcroft, is still channelling millions of pounds into the party from a number of other companies that can be traced back to an anonymous company in Belize. Lord Laidlaw, who received a peerage on condition that he would cease to be a tax exile, is still living in Monaco and continues to bankroll the party to the tune of about £3 million. The furore over whether Osborne solicited a donation from billionaire oligarch, Boris Deripaska, exposes the circles that the Tories, and New Labour, move in – Nat Rothschild, Osborne’s friend, is a multi-millionaire hedge fund owner.
Fundamentally the same
IN REALITY, CAMERON is trying to square the circle of retaining the Tories’ core supporters, who demand tax cuts, cuts in public spending and light regulation. At the same time, they are trying to appeal to Labour voters who still remember the last Tory government, who still support public services and have little appetite for income tax cuts at their expense.
If Cameron has had difficulty changing the party’s image, then he has been able to do little to repair the fault lines that run through the party, particularly on the issue of membership of the EU. He beat the pro-European champion, Ken Clarke, in the leadership contest and, on the libertarian right, the likes of Ancram, who has attacked Cameron over his non-aggression treaty with Brown, and David Davis, former shadow home secretary. Davis drew a line in the sand between himself and Cameron when he resigned over the government forcing through 42 days detention for terrorist suspects with the help of the Democratic Unionist Party, and he remains a threat.
Osborne had a meal with Mandelson in a taverna in Corfu prior to visiting Deripaska’s yacht during the summer. All the talk since has been about the leaks from the meeting but it is significant for other reasons. Like Blair, with his overtures to the Liberals before the 1997 election, Cameron’s supporters are also attempting to draw key New Labour figures into their orbit. Gove has reportedly singled out transport minister, Andrew Adonis, local government minister, Hazel Blears, and work and pensions minister, James Purnell, for possible inclusion in a future Tory cabinet.
Mandelson subsequently identified a key difference between the Cameron revolution and Blair’s following that conversation. Although Mandelson conceded that Cameron and Osborne had managed to change the Tories’ image, it was not in the fundamental manner in which he and Blair had done in the transformation of Labour into New Labour. There had been no Clause Four moment; New Labour was based firstly on the battle against and the expulsion of Militant by Neil Kinnock in the 1980s and then the abolition of Clause Four in the Labour Party constitution, which called for nationalisation of industry and the banking and finance sector.
Cameron has been unable to forge the high degree of party unity that Blair managed with New Labour. This may be significant if a Tory government is elected and has to formulate policy under the pressure of the financial crisis and recession. Cameron has already hinted that he may not be able to cut taxes in the first term of a Tory government. But will he be able to carry significant sections of the party with him?
No 1979 re-run
THE REALITY IS that the high poll ratings for the Tories do not necessarily reflect an upsurge in their popularity but are more a reflection of Brown’s dismal performance and the unpopularity of New Labour. It is anti-incumbent, a trend that has been apparent in European elections in recent years. French president, Nicolas Sarkozy, benefited from this effect, actively campaigning against and standing apart from his own party. Deeper analysis of the polls at the time of the Tory conference indicated that 55% of those who expressed a preference for Cameron did so not because they particularly supported the Tories but because they were against Brown and New Labour.
The transformation of New Labour may have convinced big business to back it, but the reality was that, by 1997, Labour would have smashed the Tories whoever had been Labour leader. The same may be true of the Tories at the next election. Voters may be prepared to punish New Labour at the polls and they may either not vote at all or vote Tory as the best means to do so. Despite public support for Brown’s handling of the banking crisis, a poll for the Mail on Sunday has shown that if this is removed from the equation then the Tory ratings rise to 46% with Labour’s falling to 30%.
It may be that the Tories win the next election, but whether they have a working majority or will be forced into some sort of coalition is difficult to determine at this stage. What is certain is that it will be a government in the interests of big business. Cameron makes vague phrases about healing our ‘broken society’ but his response to the financial crisis was to immediately attack the ‘something for nothing culture’ – benefits, in other words – and health and safety regulation of business. He is already laying the ground for attacking the conditions of the working class.
This will not be straightforward, however. In contrast to Thatcher, who came to power promising to curb the power of the ‘over-mighty trade union barons’, this time it is the bankers who have brought the economy to its knees. The Tory government that may come to power in the next two years is being forced to at least adopt the language of curbing the power of those bankers.
This is a very different scenario to 1979. Then, the Tories carried out a Thatcherite neo-liberal programme of tax cuts, cuts in public spending, privatisation and deregulation of the banking and finance sector. Neo-liberalism has been smashed by the world financial crisis, but a party that still sees itself as Thatcherite to its core may be taking over at a time when there is a large budget deficit as a result of the Labour government’s borrowing and the rescue of the banking sector.
The next Tory government will be a government of crisis. It may carry out a neo-Keynesian programme but will do so in the interests of big business and the rich. The extent to which it is able to do this, while carrying out a programme of cutting public spending and attacking benefits, will ultimately be determined by the working class and its preparedness to struggle, to push out of its way the trade union leaders who have held them back so far and create a new party that can advance its interests and challenge the three big-business parties.