04 Oct 2017

Blue Mood. The Conservative Party conference has been flat with a strong hint of fear about it

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The Conservative Party conference, which Theresa May is concluding now, has been a very strange occasion. The mood might best be described as flat but with a strong hint of fear about it.

This spirit was captured in one of the earliest fringe meetings held on Sunday afternoon. There were five speakers – all articulate, thoughtful and impressive MPs (tellingly, none of them ministers) – whose collective tone was such that one could have been forgiven for thinking that Labour had not only won the election on 8 June but done so with a majority of 100.

The broader audience of the party faithful have spent the past few days confused as to whether or not they should be celebrating an extension of their time in office or mourning the majority that they had so confidently expected but which was snatched away from them in the flick of an exit poll. Cabinet members have been no less uncertain in whether to rally the troops or attack the enemy. The auditorium was often unusually empty other than for the most senior figures in the government. If the party had been allowed to cancel the conference this year then, apart from those involved in its fundraising (and at times it feels that the main purpose of these events is financial), no one much would have objected to the idea.

Then there is the fear factor, unspoken but omnipresent. This comes in a variety of manners. There is the fear, even among those who were prominent backers of the Leave campaign, that the party may have bitten off more than it can chew in the Brexit process and could damage itself as badly as it did over the repeal of the Corn Laws in the mid-19th century and Tariff Reform in the earlier decades of the 20th century.

There is also fear about the party as an organisation itself. The real membership could be as low as 100,000 (or, put differently, on a par with the SNP) and the average age of a Conservative Party member is 72. This limits the extent to which modern social media techniques can be deployed as an alternative to traditional campaigning methodologies. The more cerebral end of the parliamentary party is acutely aware of its difficulties with younger voters with ‘youth’ in this case not merely being the under 25s but the under 35s and even the under 45s. The final fear is that Jeremy Corbyn and his camp followers may, for all their manifest extremism, be on to something with an electorate that is plainly bored and tired of the language of austerity. Yet all that the Conservative Party appears to be able to throw at him is the charge that he would ‘take us back to the 1970s’, not the most effective retort when no one under the age of 45 can remember the 1970s. The Tories might as well accuse him of wanting the country to be returned to the 1670s.

Despite this strange and surreal atmosphere, this is, nonetheless, the conference of the governing party. One that has been in office for more than seven years and which could endure to 2022 if that were required. Furthermore, as BVCA Insight observed last week, Labour and Mr Corbyn may well be very close to their peak with plenty of internal strife essentially inked in for next year. What has the Manchester conclave taught us about the interrelated issues of Brexit and the leadership question?

The ‘Florence Formula’ will almost certainly hold through the UK’s formal exit from the EU

One of the many curiosities of the past few days is that the address which the Prime Minister is delivering today is far less important than the oration she outlined in Florence on 22 September. For those of us who have become (sadly) professional Brexitologists, her text then was very revealing. It indicated that the UK was prepared to pay a substantial sum of money and compromise in a number of respects in order to buy (or perhaps more precisely to rent) a period of ‘about two years’ in which it would be in the supposed manner of Schrodinger’s Cat: out of the EU but sort of in it. Mrs May managed to sign the whole of her Cabinet up to this scheme, despite a very obvious wobble from the Foreign Secretary and no one truly departed it from it even in a highly coded fashion.

Not only that, but many in what would normally be regarded as the ‘awkward squad’ among backbench MPs chose not to oppose it stridently either, despite the obvious populist territory that could be taken. In Brexit politics this is enormously important. It suggests that by Christmas the UK and EU will have reached the point where each can agree that ‘sufficient progress’ has been made on the three opening areas of contention (the financial settlement, the mutual rights of EU citizens in the UK and the Irish border) and that the dialogue can move on to the future relationship, and by Easter there will probably be an accord around a transition /implementation period as set out in Florence. In providing a degree of short and medium-term certainty and stability this is extremely significant.

Yet the Florence Formula masks a substantial amount of disagreement within the Cabinet

The Florence Formula is at one level an artful example of splitting the difference and keeping all sides on board. The ‘softer Brexit’ contingent secured an outcome that is as close to EEA-lite as is practical, politically, to acquire. The ‘harder Brexit’ lobby won a transition at the shorter end of the viable spectrum, namely ‘about two years’ and not three, four or even five years as some inside the Cabinet would have wanted. Everyone can thus live with this arrangement until at least March 2019.

After that comes possible trouble. The softer Brexit faction conceded on the ‘about two years’ in part because they are putting a lot of faith in the flexibility of the word ‘about’ but mostly because they are convinced that the sheer pressure of practicality will force the transition period to become longer in reality. The complexities of new customs arrangements alone, allies of the Chancellor and Home Secretary will whisper late at night, will require more time than is presently envisaged. The harder Brexit brigade are aware of this and are as determined to scrub away at the ‘about’ part of the equation and mobilise the party around the ‘two years’ element of it. There will have to be a serious confrontation over this matter not next year or even 2018 but by late 2019 and surely 2020.

The stakes are so high in this regard because what every actor in this drama can agree on (in private if not in public) is that the longer the transition arrangement lasts, the more likely it is that the final settlement that is ultimately reached between the UK and the EU resembles that transition package. Or, to put it in the now familiar terms of BVCA Insight, a long transition suggests an outcome at the ‘Switzada’ part of the plausible range (closer to the Swiss-EU model than the Canada-EU one) while a short transition opens the door to ‘Canland’ (closer to the Canada-EU treaty than a Swiss-EU one). The struggle to come over the duration of the transition is hence a proxy for the final EU-UK bargain.

What does all this mean for the leadership question?

The Prime Minister remains vulnerable to events but difficult to eject if she does not want to go. The leadership question cannot thus be settled but will not disappear. This is an uncomfortable situation. None of the successors most often mentioned is strong enough to move against her without the risk that someone else will be the beneficiary of any challenge. The Cabinet and its most senior members are even more determined that Boris Johnson will not become First Lord of the Treasury, and having overplayed his hand in the past few weeks he has accidently aided and abetted Mrs May in her drive to remain in Downing Street.

A strange sort of collective leadership concept is emerging in which the Prime Minister really is ‘First Among Equals’ in an administration in which Philip Hammond, David Davis, and Damian Green are increasingly the central players, with Amber Rudd sometimes pivotal too but with the mercurial Mr Johnson obliged to sit on the sidelines, mulling his options (including resigning to make money again).

This is not a natural order for a party that is absolute monarchist (tempered by regicide) in instinct. Yet it is an innovation that may be destined to hold for some time.

Tim Hames
Director General, BVCA


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