04 Jul 2019

Tory Transition. What has the Conservative Party leadership election revealed so far?

7756E4ED-B9BD-4F4F-A76510C6DD69B761.jpg

It is almost two weeks since the final two names emerged from the parliamentary stage of the Conservative Party leadership election. In three weeks’ time Theresa May will conduct her last Prime Ministers’ Questions and depart to Buckingham Palace to tender her resignation. Her successor will then be asked to assume her position. A Cabinet will be formed and other ministerial appointments made. In little more than a day after Mrs May’s departure, the House of Commons will enter its summer recess. It is not scheduled to return to work again until 3 September. Even when it comes back, it will be for a brief encounter. After a mere seven sitting days (on current timings) it will shut up shop again not to be seen once more until after the party conference season on 8 October.

What have we learnt so far about the second and final ‘membership’ element of this competition?

Boris Johnson is a clear favourite but a potentially vulnerable one

Conventional wisdom has long held that if Boris Johnson could make it to the membership segment of the contest then he would be extremely difficult to defeat. Indeed, it was mused in advance, the only candidate who could actually knock him out of the race was himself. This thesis has held true. If it had not been for the mysterious incident of the domestic dispute in a flat early one Friday then this would by now have been dismissed as a very dull election.

The hustings have produced nothing of note. Nor has anything that either Mr Johnson or Jeremy Hunt has said or done moved the dial. The closest information that we have to opinion polls indicate that the ex-Foreign Secretary is ahead of the existing Foreign Secretary by around a two to one margin. If it had not been for one careless glass of red wine then the whole affair could be dismissed as at least seemingly inconsequential.

This understates the extent of concern inside the Johnson camp about that incident and how it may legitimise media interest in ‘the character issue’. It forced an unwanted change of strategy. It had obviously been Mr Johnson’s intention to try to lower the profile of the election, ration his television appearances to minimise the chances of making mistakes and run down the clock until voting ended.

He instead found himself in a place where the profile of the election had been raised, not lowered. He had to submit himself to a set of interviews to demonstrate that he was not avoiding interviews. Just running down the clock did not look viable. The switch in approach has steadied nerves and it looks as if Team Boris is back in control of matters. The whole episode did, though, expose the fact that he is a clear but vulnerable favourite. There is time (just) for another twist in the political plot.

Fear of Nigel Farage and The Brexit Party has been fundamental to the election

The Australian election guru Lynton Crosby may be the hand behind the Boris Johnson campaign but it is Nigel Farage who will really deserve the credit if Mr Crosby’s client arrives in 10 Downing Street.

A mere three months ago, The Brexit Party did not exist. Its performance since then has completely warped the Conservative Party and this leadership battle. It led to a virtual stampede towards Mr Johnson by Conservative MPs, including many who six months ago thought that he stood little to no chance of victory. The need to put Mr Farage ‘back in his box’ has become the first priority of the new leader. It is Mr Johnson’s single most compelling strength over Mr Hunt.

This ‘Farage Factor’ still has life in it as the man himself showed again by stealing the headlines in turning his back on the EU anthem as the new European Parliament convened yesterday. Every day that the UK is still legally within the European Union is a further opportunity for The Brexit Party to hammer home its core message of a referendum result in 2016 that has since been betrayed by the mainstream political class. If the next Conservative Party leader and hence Prime Minister cannot drown out that charge then what they might say or do about Labour and Jeremy Corbyn will seem immaterial. Farage is calling the shots.

There only appears to be a market for a date on Brexit and no other detail has a constituency

As a result of the above, both Mr Johnson and Mr Hunt have been obliged to commit themselves to the new departure date of 31 October, and imply that they would accept no-deal if it were not possible to meet that deadline with an agreement. This is despite the fact it is obvious there is a clear majority in the House of Commons against the no-deal scenario, and there are a range of procedural weapons which could be deployed to prevent a Prime Minister and Cabinet imposing a no-deal exit on Parliament, not to mention that the EU would plainly be willing to offer an extension (albeit at a political price).

The two contenders insist that they can ‘re-negotiate’ the present Withdrawal Agreement, when at best all they can do is repackage it. Even if better branding were enough (which in fairness it might be), they are still insisting that they can legislate for this new solution through both the House of Commons and the House of Lords and have it approved by the European Parliament by 31 October. This is not quite impossible (although Parliament would probably need to sit on a number of Fridays and even Saturdays to have a chance of making it) but it is extremely challenging. There can rarely have been an election in a democracy in any place where the central claim made by all the candidates involved is so obviously out of keeping with reality.

Yet there is no reason why this might change before the result is announced on 23 July. Any hint at a reversal, a rowing back, or a qualification to that principal pledge (such as a refinement that the House of Commons would have voted through a withdrawal agreement by the end of October), would be seized upon by the other contender, the media and Mr Farage as a signal of weakness. Some sort of retreat after the leadership election is over is close to inevitable. But not until then.

There will be an Autumn Budget with a significant tax cut package as its central component

Philip Hammond participated yesterday is what even he acknowledged will almost certainly be his last Treasury Questions as Chancellor. Sajid Javid, the Home Secretary, is the most likely figure to enter 11 Downing Street, with Matt Hancock and Liz Truss as outside bets as an alternative. The Age of Austerity will be leaving Whitehall as ‘Spreadsheet Phil’ takes his leave of it.

For the first time in more than a decade, and for a Conservative Chancellor the first time in about 30 years, there will be a Budget in which tax cuts both as a matter of political principle and as a fiscal stimulus will be a more important factor than deficit reduction. If the process of delivering Brexit proves to be messy, the incentives to secure the support of Conservative MPs and the wider Conservative Party via big tax reductions will become even more urgent. The overall package is likely to be in a range of £20-£30 billion (perhaps higher) and the central question for Mr Javid (if he lands the portfolio) is how to divide the spoils between those on average or less-than-average earnings, the lower end of those caught in the 40% tax band, and any other measures which can be presented as indicating the determination of the new administration to be internationally competitive on corporate taxation. The politics of ‘who gets what’ in the run up to Budget Day will be the only show in town bar Brexit.

The next seven days, not the next 20 days, will probably decide the leadership outcome

As noted earlier, the result of this race will not be known for almost three weeks, but in truth it is likely to be settled in a much shorter period. Ballot papers are on their way out and past experience is that most members will return them in 72 hours. If by this time next week the election looks and feels as it does today then the chances of a shift in fortunes is very limited. Time is running out for Mr Hunt.

Tim Hames
Director General, BVCA


×

Update your login details

We updated our website and supporting systems on 12th December. 

If you previously had an account, please reset your password. If it's your first-time logging in, please register to create an account. For assistance, please contact the BVCA Membership Team

Login