Shortly after I started as a bus driver at Go Wellington as a Bus Driver I recall overhearing drivers talking about the company changing shifts to reduce drivers’ overtime pay. One driver, a former bank teller believed the problem was the union leadership. In his view what the Tramways Union needed was “a smartly dressed lawyer in a suit and with a good haircut to come and sort everything out.” Instead of this, the drivers ended up with me as their union president, no suits but I did eventually get a haircut. More importantly, what drivers got was a democratic union where drivers stood together and improved their pay and conditions.
The Great man of history theory is nothing new and has been quite seriously rebuffed by historians for many years. In Leo Tolstoy‘s War and Peace he firmly rejected the “great man” (and when he wrote this in the 1860s, it was men who were being written about), a theory claiming that in fact, they are only “history’s slaves.”
Yet, much of history is still written about and from the perspective of our leaders. In politics, it is a truism that leadership is of paramount importance, yet few can really define what ‘leadership’ really is. The common features tend to be personal strength, decision-making powers, bringing together and managing a team, the ability to communicate, and in effect being the human embodiment of a political ideal or movement. More cynically, money, good looks, fame, and various superficial qualities also help.
It is certainly true that the performance of a party leader can decide an election result, and this is understandable as they are in a position of responsibility where they must exercise judgment. The risk though is that the personal qualities or weaknesses are given greater emphasis and boring detail like tax policy is reduced to who came up with the best slogan or soundbite.
This issue is not a new one. Whilst it is currently vogue to blame all the world’s ills on social media, the reduction of politics down to a popularity contest of leaders predates Twitter. It has probably always been a feature of politics and certainly something that has constantly been a feature of democracies. Leaders with deep voices for example have tended to perform better, as physiologically we find them more authoritative.
The problem is, once we understand that to be a successful leader it helps to have certain qualities and mannerisms, those with ambition quickly start to act the part. Building a personal brand based on characteristics common among successful leaders has become the tried and trued playbook of many ambitious upcoming politicians, business leaders, and others aiming for positions of power. Maybe this is just smart and anyone who is ambitious needs to learn these unwritten rules? But when many believe politics and civil society is in decline, should we not think more critically about leadership?
There can be very little doubt about the importance leadership has played in recent politics. My recent post about Rishi Sunak and the state of the British Conservative Party outlines, the challenges facing the UK Government today make it very difficult for the Tories to win the next election. Whilst Rishi Sunak certainly has some of the qualities of a successful leader, he is simply too constrained by the situation he faces to really lift support for the Conservative Party now, though this may change. Likewise in New Zealand, Jacinda Ardern’s meteoric rise to power in 2017 and global popularity shortly after, dissipated throughout 2022 as the current economic crisis hit.
To paraphrase Harold MacMillan, what shapes the course of political history is “events dear boy, events”. Having certain qualities can get one into leadership positions, but ultimately one’s time in power is judged by how one responds to events. And more often than not, leaders only have limited control of these or their own legacy.
On October 25 2022 Rishi Sunak became the fifth leader of the Conservative Party since they came to power in 2010. Having lost the membership ballot in the summer, Tory MPs having seen the polls after the Mini Budget and facing the prospect of electoral annihilation, coalesced around Rishi Sunak and ensured he was the only person on the ballot. In short, MPs no longer trusted their party membership after the Liz Truss fiasco.
When a new Prime Minister comes in and appoints a new Cabinet it is referred to as a “new government.” This wears somewhat thin when many of the “new” Cabinet Ministers have served in previous governments, many only a few weeks earlier. The likes of Michael Gove, Dominic Raab or Penny Mordant have served under previous Prime Ministers pursuing the same Conservative Party policies in Government. The Conservative Party were elected in 2019 on a Manifesto that the public expect them to implement. The accumulative issues of the last 12 years or the last 12 months have not disappeared with a change at Number 10.
The Truss libertarian experiment, described by Paul Goodman editor at Conservative Home as the economic experiment, which blew the roof off the chemistry lab. The Conservatives, having learnt in 2017 that policies of austerity are electoral Kryptonite, now face the reality that small government libertarian policies much craved by many tory members, simply will not work. Sunak inherits a party bereft of ideas and vision and is now forced to increase taxes to pay down public debt and fund public services such as the NHS. Promises made in 2019 to cut taxes would have been difficult to implement before the pandemic, now they simply are not possible.
The longstanding problem with British politics, as other commentators have pointed out, there is an expectation of European levels of spending on public services, but a naive view that the country can also have American levels of taxation. This is a problem not just for the Conservative Government, but for the opposition who once in government will have the choice of increasing taxes or slashing public spending. My next blog post will address this issue further.
Brexit is adding to Britain’s economic woes. In 2021 the UK faced a 14% fall in trade with the EU. The new trade agreements have not offset this, with deals like the one signed with Singapore largely mirroring Singapore’s deal with the EU meaning no gain from leaving the single market. In the case of the Australian deal, the desire to quickly conclude negotiations resulted in terms less favourable to Britain. There is no appetite from any of the main political party’s to revisit the decision to leave the European Union and to date little evidence that another referendum would see a different outcome. However, this becomes an issue of economic management with many leading Conservative politicians having boasted that having left the EU, Britain could negotiate favourable trade deals with the rest of the world. There is little prospect of a Free Trade deal with the US and the geo-political situation means deals with China are also unlikely, and in both cases, it is unlikely any deal would be favourable to Britain. The Conservatives since 2016 have talked of the opportunities of Brexit, yet have delivered few. This may not be top of voters’ priorities right now, but certainly, for many businesses, including those who have supported and donated to the Tories in the past, this is a serious problem. This is not a problem Sunak or any Conservative leader is likely to fix without going back on earlier commitments and renegotiating terms with the EU.
The Conservative Party are the natural party of Government in Britain and is the most electorally successful party in Europe. One of their great strengths is internal unity and discipline, much more so than Labour who more often than not air their dirty laundry in public. In the last 18 months, internal infighting has dominated the Conservative Party and ground the government to a halt over the summer while they elected a new leader, only for the winner to resign and be replaced by the runner-up weeks later.
Sunak’s ascent to the top job has not reduced these internal divisions at all. The below tweet from former Minister and Conservative MP Nadine Dorries recently gives some idea of the simmering tensions within parliament:
The ‘Get Brexit Done’ coalition has fallen away with many former voters and supporters feeling disillusioned with the Tories’ performance in Government. Whereas in 2019, enough voters could get behind The Conservatives over Brexit, now there are fewer policies areas where the government have an advantage over the opposition. Attempts to attack Labour regarding recent union industrial actions have not landed so far. Many feel sympathy for striking nurses and feel health workers are not paid enough. Traditionally Rail workers get a bad rap for taking strike action without explaining their position to the public very well. RMT General Secretary Mick Lynch has been much stronger than his predecessors at making a case for his members. At the same time, with inflation above 10% many have sympathy with striking workers, and many more see the problem as poor economic management by the government even if they do not like unions going on strike. The current situation feels much more like the Ted Heath Conservative Government in 1973 than the Thatcher Government taking on the Miners Union a decade later.
It will be very difficult for the Conservative Party to win the next election. Certainly were an election held today the government will lose. But this is why there will be no election in 2023. In the best-case scenario, the economic situation is unlikely to improve until early 2024. Further to this, Sunak will want as much distance as possible from the Kwarteng Mini Budget, and this will take time. As well as an improved economy, the Tories will need to restore party unity both within their MPs and the broader party membership – who didn’t vote for Sunak.
A wedge issue, like Brexit, was in 2019, could help the Conservatives, but it is unclear what this would be. After 12 years in power, it is difficult to talk about ‘fixing the asylum system’ without it begging the question why haven’t you done so already? Slogans like a coalition of chaos about Labour and the SNP may have worked in 2015, but given the last year the Tories are in no position where they can accuse others of creating chaos. Certainly the 2017 slogan of strong and stable will not work again.
Despite everything that has happened, it would be a serious mistake to underestimate the British Conservative Party which has proven time and again to be an electoral force to be reckoned with. In England, where over 80% of British voters live, Tory is the default option in many parts of the country. The polarisation within Britain is high with tensions from the Brexit debate and ongoing calls for Scottish Independence still simmering. The Tories can certainly play these divisions to their advantage in the hope of winning support.
As the next post will discuss, Labour should be able to win the next election, but it is not a certainty yet. They have their own internal issues to resolve.
The premiership of Liz Truss will be remembered for many years to come. She will be remembered as being the shortest-serving former UK prime minister (for now), resigning after seven weeks. It will be remembered that only two days after going to Balmoral to meet the monarch, Queen Elizabeth II passed away having served 70 years on the throne, making Truss her 15th and final PM. People will also remember the Truss premiership for plunging already bad Conservative Party polling numbers down to record lows, giving the opposition Labour Party an unprecedented 30% lead. But the main thing her seven weeks as Prime Minister will be remembered for – destroying the longstanding myth that the Conservative Party are good at managing the economy.
As outlined in a post earlier this year in a global economic crisis, governments, in the short term at least, are limited in what they can do to remedy the situation. However, the one thing governments can certainly do is not make the situation worse. In this Liz Truss and former Chancellor Kwasi Kwarteng failed spectacularly.
The now infamous ‘mini budget’ or “Growth Plan” of 23 September 2022 caused the pound to hit an all-time low against the US dollar, and force the Bank of England to intervene to prevent chaotic drops in gilts prices from stinging pension funds and threatening financial stability. How on did the UK’s natural party of government, the party of sound money and fiscal responsibility manage to get it all so badly wrong? And so quickly?
Since 2008, as pointed out in my last blog post, right-of-centre governments have stepped back from full Thatcherite free market policies due to the fact that these policies directly resulted in the crisis of the last decade. Whilst free market and trickle-down economics may no longer be electorally viable, there remain many true believers in the small government crusade.
The decline and fall of Boris Johnson as PM was entirely of his own making and had been on the cards for some time. During the period, the disquiet within the Conservative Party was not so much over “Party-Gate” but the increase in taxes, namely National Insurance, to keep their manifesto commitment to fund social care, a policy area where previous governments have failed to grasp the nettle. Tory Party members were furious that a Conservative Government had raised taxes, and former Chancellor Rishi Sunak was in their eyes to blame. Enter Liz Truss.
Truss, on becoming Foreign Secretary in early 2022, began doing these strange photos where she was imitating former Tory Prime Minister Margaret Thatcher. This Thatcher cosplay was matched by sound-bite rhetoric about free markets and individualism. This really played to the home crowd with supporters in the Tory Party claiming “in Liz we Truss.”
Warnings from former Chancellor Sunak that the programme announced by Liz Truss when running for leader would make the economic situation worse were ignored by the party membership. In Liz they Trussed, in early September she became Conservative Party leader and Prime Minister.
A decade before coming to power, a group of right-leaning Tory MPs authored a book titled Britannia Unchained, a treatise, arguing that Britain should adopt a different and radical approach to business and economics or risk “an inevitable slide into mediocrity.” These MPs belonged to the Conservative Party ‘Free Enterprise’ group and included Liz Truss and the person a decade later she was to appoint as Chancellor, Kwasi Kwarteng.
In a later attempt to shift the blame to former Prime Minister Liz Truss for what happened, claiming he warned her the government were moving too fast. Kwarteng has not yet apologised for his mini budget on 23 September or the catastrophic fallout. In fact, his frustration seems more with the fact that Truss ended up sacking him, not long before being forced to resign herself. The truth is, the throwing caution to the wind approach of slashing taxes, removing restrictions on banker bonuses, and slashing other regulations such as IR35 were all consistent with what he and Truss had argued in Britannia Unchained a decade earlier. And these ideas found favour with the Conservative Party membership – with the idealised view of Thatcher’s vision of small government, deregulation and low taxation. For the general public, this was not so much ‘Britannia Unchained’ as ‘Libertarians Unhinged.’
Where this mini-budget really hit the rocks, especially with the financial markets, was the unfunded tax cuts and spending increases. The Tories, having implemented austerity policies during their first term in office with the Lib Dems, found out the hard way that underfunding the Police or the NHS was simply not an option. The 2017 election where they lost their overall majority, and Corbyn’s Labour had an unexpected surge in support largely due to increased turnout by young voters, was largely due to an anti-austerity backlash. In Kwarteng’s mini-budget, the solution was that the government borrow to pay for tax cuts and spending increases. The former Chancellor argued that cutting taxes and red tape this would stimulate economic growth meaning the government would soon be able to repay the debt.
Many were surprised to see financial markets react to a right-wing Tory budget in this way. Threats of capital withdrawal and other measures are not uncommon when centre-left governments try to implement their agenda. Yet here we had a right-wing budget and the market responded badly. One issue was that Truss and Kwarteng completely ignored the Office for Budget Responsibility before preparing the mini-budget. This office was set up by former Conservative Chancellor George Osborne, in response to his claims that Labour had acted financially irresponsibly when in power. This office was designed to be a check and balance for the left, yet it was the right who fell foul of it. One of Britain’s key selling points is that is a rules-based economy. By not consulting the OBR before the mini-budget, Truss and Kwarteng damaged Britain’s brand.
Cutting taxes at a time of high inflation is not a terribly smart move as it will drive up inflation further. Borrowing money to cut taxes and increase spending is what the Government in Greece did prior to the 2008 financial crash, with devastating consequences. Add both of these to a world economy struggling in the wake of the pandemic and the Russian invasion of Ukraine, it is no surprise that the markets reacted as they did.
Within days, Truss was forced to sack Kwarteng and announce a U-turn on the mini-budget, to much tormenting that “the lady is for turning” with reference to Margaret Thatcher’s famous quote. Within 44 days of becoming Prime Minister, Truss announced her resignation, having days earlier replaced her friend Kwazi Kwarteng with Jeremy Hunt as Chancellor and almost all measures in the mini-budget had to be reversed.
It was would easy to blame Truss and Kwarteng for this specular failure. Many have cited her shocking performances in the media as why ultimately she resigned and question how someone got to the highest level of public office when so clearly unable to perform. Leadership qualities play a significant role, and in modern politics media presentation is critical. But this was not a problem of style and presentation alone, as abysmal as this was under the Truss premiership.
The initial reaction to the Mini Budget in September was very positive from many in the Conservative Party and their cheerleaders in the tabloid media.
For Tory Party members and Daily Mail readers, this was the budget they had been waiting for. Far from being a surprise, the mini-budget was implementing not just the promises of Truss’s leadership campaign, but the wishes of many rank-and-file Conservatives. After enduring Sunak’s National Insurance increase the free market wing of the party finally had their way, at last, a true Tory budget. Never mind Britannia Unchained, this was Conservative Party unleashed.
The ‘get Brexit done/anti-Jeremy Corbyn’ coalition that won the Conservatives the 2019 election now finds itself in tatters. Not only were so-called red wall voters from the North East of England put off by the return of trickle-down economics, but polls show that large swaths of traditionally Conservative voting south of England were also in despair. Within the Conservative Party, those who still subscribed to Edmund Burke’s view that no “generation should be arrogant enough as to only think of themselves” and that borrowing for tax cuts would harm future generations, found themselves in the minority. In fact, the enduring influence of one-nation conservatism made popular by Benjamin Disraeli, of pragmatism and paternalism was replaced with an unwavering belief in small government and the market.
That Conservative MPs managed to avoid another membership ballot and Rishi Sunak replacing Liz Trus is the topic of the next blog post. Needless to say Conservative MPs, many from Constituencies once considered save tory, are now terrified by recent polls. Allowing the party membership a say risked a further dose of trickle-down right-wing economics, making the Tories unelectable for a long time. It was the party members who supported Truss, while in the first round, only 50 backed Truss for leader, though other candidates who had MP backing early on also espoused not dissimilar economic views.
Some who supported Truss may now have reflected on what happened and perhaps realise that these policies not only do not work, but electorally they are poison. But many on the right will blame it on Truss, her leadership style and the speed with which she tried to implement the reforms. In many ways, the fact that the mini-budget changes were done quickly and communicated poorly was a good thing, as it meant these policies were reversed quickly. A more media-savvy and gradual implementation would have done more harm in the long term. It is no accident that since 2008, free market trickle-down economics has been out of fashion. The Truss premiership has been a timely reminder that these policies do not work and should not be tried again.