Cameron’s Hesitancy Makes Brexit A Fringe Issue

Since the Conservative party conference in Manchester, much ink has been spent and airtime filled poring over the speeches of Messrs Cameron, Osborne and Johnson. Among the Westminster cognoscenti, some relatively clear conclusions have emerged.

The Prime Minister is “at the height of his powers”, we read, his speech “shifting his party to the centre-ground, like Blair but from the opposite direction”. The Chancellor is “a safe pair of hands” and “assured”, the political sketch-writers tell us, clearly “the leader-in-waiting”. As for the London Mayor, he remains “good at telling jokes” but “will have to show more than humour if he’s to launch a genuine bid for Number 10”.

Then there’s the Theresa May, whose “tough, uncompromising” speech was “slapped-down by cabinet colleagues” in anonymous briefings. The Home Secretary’s warning that high immigration “made a cohesive society impossible” did indeed jar with the “Cameroons’ shift to the centre”. But was she “making a pitch for the vote of Tory activists”? Many party members, after all, are also alarmed that net immigration hit a record 330,000 during the year to March. And such activists hold the casting vote on who’ll be the next Tory leader.

I spent little of my three days in last week’s Tory bubble focused on the big conference-hall speeches, and what they might mean for a leadership contest the best part of four years hence. By then, either the referendum on European Union membership, an economic meltdown, or both, could anyway have entirely upended British politics.

Most of my time in the conference secure-zone, I was knocking about on the fringe, speaking and listening at some of the dozens of smaller interviews and panel discussions. Fringe events are far less staged-managed than what goes on in the air-brushed, auto-cued conference hall.

On the fringe, there’s the time and space to get beyond mere slogans, consider technical details and drill-down into some proper policy discussion – particularly important, of course, when it comes to economics and finance.

One of the most striking statements I heard came from the Michael Gove, at a fringe dinner organized by the Legatum Institute and TheGood Right.Com. Introducing a variation on Victorian views of the poor, the Lord Chancellor argued that a “dividing line should be drawn between the deserving and undeserving rich”.

Gove talked compellingly about entrepreneurs who “work hard, are creative and employ people” – and those who “just play the markets, sit on each others’ remuneration committees and rig free market rules in their own favour”. If the latter aren’t checked, said Gove, “they undermine capitalism itself”.

Far from being a throwaway remark, the reformist former Education Secretary went on to evoke Teddy Roosevelt, the trust-busting US President who took on the corrupt and seemingly unassailable oil companies in the early 20th century.

Iain Duncan Smith, on the same panel, linked Gove’s remarks directly to our still too-big-to-fail banks. “If the rich can’t get poorer because the system protects them, the system loses legitimacy,” said the Work and Pensions Secretary. These interventions, from two big Tory beasts, were significant – yet not of word of them was heard in the hall.

Another fringe I spoke at, held by the Social Market Foundation, where I’m on the Advisory Board, focused on the UK’s woeful export performance. Last year’s deficit of exports over imports, at 5.5pc of GDP, was the highest on record. We’ve posted an overall external deficit, in fact, for 29 years in a row – with trade acting as a drag on British growth for a generation.

While this discussion was in part about air-freight, it ended up centering on small and medium-sized enterprises. Many of our dynamic SMEs find it famously hard to win market share in fast-growing overseas markets, lacking the reach and staying power of, in particular, their German counterparts.

With numerous business-owners in the audience, the discussion was detailed and well-informed. Again, the unimaginative lending policies of the UK’s banks, and a lack of alternative finance, came in for much criticism. I also heard complaints from SME owners about the lack of interest shown in them by UKTI, the government body that works to help UK companies access foreign markets.

A fringe on pension provision turned into a discussion on the overwhelming need for more housing-building. Why? Because pension providers and other informed speakers reported that a huge share of working adults aren’t saving because they’re spending so much on rents and mortgages – even at today’s artificially depressed interest rates.

The same meeting concluded that recent moves to end the legal requirement to annuitize were also stoking the housing market – and worsening social immobility. With the 400,000 workers who retire each year now able to drawdown the bulk of whatever pension pot they have, often amounting to hundreds of thousands of pounds, much of that is being channeled into housing – either via buy-to-let, or in the form of deposits that wealthy new retirees give their children. This makes the dream of home ownership even more remote for many.

The most obvious point to make about the Tory conference fringe programme, though, is that it was dominated by Europe. Many of the numerous events on the prospects for Brexit, and the possible impact on UK trade and investment, were packed, standing-room only.

I repeatedly heard Tory backbenchers – not least Steve Baker, the formidable High Wycombe MP fast-emerging as Parliament’s most compelling Brexit advocate – say they would campaign for Britain to leave in the referendum Cameron has promised before the end of 2017.

The Prime Minister is, of course, “re-negotiating” our EU relationship with the likes of Germany and France. Until that happens, and the results are clear, many people – including me – are holding judgment on which way to vote. Almost no-one I met in Manchester, though, even instinctive loyalists, fancy Cameron’s chances of reclaiming the sovereignty, including on border controls, now required to convince the British electorate that EU membership, on balance, is in our national interests. The mood on the fringe – and across the country if the latest polls are accurate – is that, as things stand, a majority of voters want to leave.

Even though it dominated the fringe, and will be near or at the top of the news agenda for months to come, Europe barely featured in the conference hall speeches. All Cameron said is that “Britain is not interested in ever-closer union” – a reference to the symbolic and highly-charged clause in the 1957 Treaty of Rome, the foundation stone of the EU’s existence.

Far from a bold position, prior to a tough negotiation, this is something the Prime Minister has said countless times before. And, when you think about it, all an end to “ever closer union” amounts to, even if the rest of the EU agrees, is the retention of the status quo – a status quo that almost all of his party, and now the majority of the country, look set to reject.

I’ve often said that, by initially committing to vote to stay in, before any negotiation had happened, Cameron made a serious strategic blunder. In his Manchester speech, for fear of causing offence, and perhaps haunted by past splits, that error was compounded.

The Prime Minister just squandered a major opportunity to lay out – to his party, his country and, not least, to the rest of Europe – the changes required to secure the British government’s continued support for our EU membership. The only words of lasting significance in the conference hall, in my view, were those that weren’t actually said.

http://www.telegraph.co.uk/finance/economics/11924097/Prime-Minister-squandered-chance-to-tackle-Brexit.html

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