We are living through the most intense political drama in modern British history. The vote to leave the European Union is the greatest act of defiance against the establishment since the coming of universal suffrage. It has triggered leadership challenges crises in the three most popular political parties: Labour, the Conservatives and Ukip. As Tony Blair might have put it, the kaleidoscope has been shaken and the pieces are in flux. We’re midway through a very British revolution.
As in other revolutions, a seismic event has caused a vacuum. It turns out that Boris Johnson and Michael Gove were telling the truth about not using the referendum campaign to further their leadership ambitions. Had either been thinking seriously about Downing Street, they might have had something resembling a plan on the weekend after the referendum. Neither man did, and they have both paid the price. Their spectacular falling out has left Tory MPs thinking only about who must come next. The more important question is what must come next.
Brexit has raised the stakes: the risks are higher, but so are the rewards if the government can plot the right course. With the Labour party in no fit state to even challenge for power, that responsibility — and the opportunity — falls to the Tories.
For years, Tony Blair’s pro-market, pro-reform Labour party denied the Tories political oxygen. But that party has collapsed — or, rather, is collapsing. The EU referendum debate saw a third of Labour voters go against their party over Brexit. Rather than thinking of ways of reconnecting with their voters, Labour MPs are seriously considering the creation of a pro-EU, metropolitan party unsullied by the unfashionable opinions of the working class. An attempt to remove Jeremy Corbyn through mass resignations from the front bench has succeeded only in exposing the desperate plight of the party. Never has Labour seemed so close to destruction.
All this gives the Conservatives an unrivalled opportunity. During the referendum campaign, Michael Gove and Boris Johnson seemed to have grasped that point. They used a new vocabulary. They spoke about defending the NHS, about the dividing lines between those who had done well out of the European Union and those who had not. This was not the 1980s Conservatism both men grew up with, but the message demonstrably resonated with people who are normally allergic to Tory politicians. Its success suggested that the idea of a great, modern one-nation Conservative coalition was not just fantasy.
As Scotland has shown, referendums can bring about a political realignment. Voters are cut loose from their old party and are receptive to well-presented offers from a new party. The EU referendum was one of the most important verdicts ever passed by a British electorate. Many were voting for the first time because they felt that, for the first time, they might be able to change something. Many had been short-changed by the education system: two thirds of those who did not proceed beyond GCSE voted for Brexit. Many of them were middle-aged and had been watching their job security vanish as those at the top raised their glasses to globalisation and mass immigration.
The Remain camp lost because it viewed too many people with disdain. It is a great error to view older, lower-wage workers as history’s leftovers. By definition, the losers of globalisation are as modern as globalisation itself. Their numbers are growing, as is their discomfort — which is why they are roiling politics on both sides of the Atlantic. They look to the nation state for help, or at least for understanding. A party that has no message for these people is a party that is living on borrowed time.
So what will the Conservatives say? The response of the patrician — to express sympathy, denounce inequality and promise a brighter tomorrow — is not enough. Iain Duncan Smith did well pushing people into work, but the Tories’ next mission is to focus on low pay. One side effect of globalisation is rising wages in internationally tradeable industries (mainly services) but stagnation in other sectors. Compounding this is a UK tax system that leaves too many caught in a complex web of wage subsidies and partial benefits where they (still) sometimes keep just 23p out of every £1 they earn. They need a party willing to do the sums and look at the issue of low pay from the perspective of those trapped within it.
Labour, fixated by its caricature of wicked employers offering only zero-hours contracts, is unable to offer practical solutions. By contrast Stephen Crabb, the new Work and Pensions Secretary, pitched his leadership bid on making work pay. Duncan Smith had hoped to do this with a new in-work benefits system, Universal Credit. It was shredded by the Treasury, and is now no real improvement on the old system. Money was directed to pensioners instead, and wrongly. If the Tories are to dedicate themselves to the strivers, to making capitalism work better, they need to address the low-pay trap. And if this is expensive, so be it. Nothing matters more.
The economic disruption from Brexit is disturbing. But it could be the spur for changes that might not otherwise have been made, due to lack of political will. The housing shortage underlines the urgent need for a radically simpler planning system. Our national infrastructure needs updating, but not with white elephants such as HS2. That project should be scrapped, and the money instead spent on massive investment in east-west links. There could be other, better-targeted and more realistic projects, such as a South Yorkshire/Lancashire powerhouse. Sajid Javid, the Business Secretary, is suggesting a new infrastructure fund, borrowed at negative interest rates to accelerate private sector involvement. It’s a compelling idea.
In fact, beneath the bitterness and the emotional turmoil, a strong Tory consensus exists. The low-wage trap is a real problem and, in large part, a function of dismal economic productivity, which is itself a hangover from poor education. Even after Michael Gove’s schools reforms, only 53 per cent of primary-school pupils are meeting the new expected standards in reading, writing and maths. The poorest are most likely to fail, sending inequality cascading down the generations.
The Conservatives must now see inequality in all of its dimensions, and ask questions that do not occur to Labour. For example: why has the drop in crime helped the rich more than the poor? Why does family breakup affect the poorest the most? When a rising tide does not lift all boats, government should step in.
In the 1980s, the Conservative government encouraged the emergence of a new affluent class who went on to build a world-class financial services industry. The Spectator cheered this on. Today, the winners from globalisation need no help from government. It is the unprotected who understandably look to the government to help. It is to such people that the Conservative party must now dedicate itself. In the last century, a laissez-faire Conservatism was called for and enacted. But today’s problems call for leaner, smarter, braver and more active government.
Crucially, the vote for Brexit must not be defined as a cry for a Little England. Brexit was not a protest that Europe was too big. On the contrary, Vote Leave repeatedly argued that a globally minded country such as Britain ought not to be constrained by the parochialism of Brussels. The Conservatives now need to make this point: that the vote for Brexit was a defence of democracy, not a fit of nativist pique. That the world’s fifth-largest economy is rethinking its global alliances, and is keen to make new friends. Trade deals, even preliminary ones, are needed urgently. The terms of the first few deals are frankly less important than the fact that they happen.
The last few weeks have shown how many European leaders — fearing their own Eurosceptic movements — are keen to portray Brexit Britain as broken, isolated and caving into the worst instincts of its populists. Every day, the Foreign Secretary needs to find new ways to counter this message. Spectacular offers could be made to end discrimination against non-EU migrants. The current contemptible restriction — that any non-EU immigrant can be thrown out if they earn less than £35,000 a year — could be abolished. High-skilled industries should be told they can hire who they like from wherever they like. What worries Brexiteers is the sense of a lack of control over immigration, not the number and background of research scientists at Cambridge or tech-entrepreneurs in Manchester.
The new Prime Minister should not deny the challenges of Brexit, nor overlook the still-open wounds from the campaign. Millions of Brits fear that their country has turned in on itself, paving the way for a darker, more selfish politics. Such fears need to be forcefully dispelled by everything that the new Conservative government says and does. Theresa May’s suggestion that the two million Europeans living here will be used as collateral in negotiations with Brussels is a prime example of what not to do. As Michael Gove says, their status must be assured: our country needs them. The Tories must stress that Britain needs immigrants: the country has simply voted to exert control over the immigration process.
The inevitability of economic turbulence after a Brexit vote does not make that turbulence any easier to deal with. The question is how to mitigate it, and here powerful ideas are needed too. Lower corporation tax is a symbol, but more potent financial inducements must follow. The fall in sterling has made Britain a cheaper destination for foreign investment, and the Conservatives need to think of ways to make a good deal even better.
The Tories cannot look abroad for ideas. No one on the right is doing this sort of thinking. No one on the right is attempting to recalibrate the uneven effects of globalisation — certainly not Donald Trump, Nicolas Sarkozy or Angela Merkel. The Republican nomination race saw establishment candidates dusting down lame versions of earlier tax-cutting policies. All over the world, the established right is either clinging to a failed, outdated consensus or being overwhelmed by the nativist right. This is no time to stick to the old conservative script. This is the time to write a new one.