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Brexit, the City, and the Crisis of Conservatism.Indd VALDAI DISCUSSION CLUB REPORT www.valdaiclub.com BREXIT, THE CITY, AND THE CRISIS OF CONSERVATISM Radhika Desai and Alan Freeman MOSCOW, DECEMBER 2016 Author Radhika Desai Professor at the Department of Political Studies and Director, Geopolitical Economy Research Group, University of Manitoba, Winnipeg, Canada Alan Freeman Co-Director of the Geopolitical Economy Research Group, University of Manitoba, Winnipeg, Canada The views and opinions expressed in this Report are those of the authors and do not represent the views of the Valdai Discussion Club, unless explicitly stated otherwise. Contents Cameron’s High Stakes Poker: Staking the Country for Party Gain ..................................................................3 The Campaign: Racism versus Fear.......................................................................................................................5 The Verdict: Protest Against Neoliberal Britain....................................................................................................7 The City’s Brexit Fears .............................................................................................................................................9 What have they done?! The Known Unknowns and the Unknown Unknowns ............................................ 12 British Society’s Neoliberal Faultlines ............................................................................................................... 15 A Broken Political System .................................................................................................................................... 16 Conclusion .............................................................................................................................................................. 17 References .............................................................................................................................................................. 18 BREXIT, THE CITY, AND THE CRISIS OF CONSERVATISM Thanks to the role of money and and European leaders were demanding an end entrenched class power in electoral processes, to the uncertainty. In September, as the eventful the history of liberal democracy is not exactly summer of Brexit drew to a close, and normal life littered with instances of the people springing resumed in London and Westminster, Mrs May nasty surprises on the powers in the land. That, announced on the opening day of the Conservative however, was precisely what the British electorate Party conference that Britain would trigger did on June 23, 2016 when it voted to leave Article 50 before March 2017, and that Parliament the European Union in the face of impressive would soon repeal the 1973 act of British ruling class and political establishment accession to become effective upon completion opposition. So far, notwithstanding these of the negotiations. powerful forces and currents seeking a reversal However, opening negotiations under or dilution of the referendum verdict – including Article 50 will only start the clock ticking on a two- practically all party leaderships, most year window. So it could be 2019 before Britain of the educated middle class, and the powerful exits from the EU and the intervening two and fi nancial sector that has historically dominated a half years will give those who would obstruct, British capitalism – it appears to be sticking. stall, divert or reverse the implementation True, in his resignation speech the day of the referendum verdict plenty of opportunities. after the referendum, Prime Minister Cameron So Mrs May’s announcement represents less a plan postponed Brexit implementation until after and timetable than a positioning in the potentially the Conservatives elected a new leader at gruelling struggles to come. It is not possible the autumn party conference. True also that to predict their outcome; there are simply too when Theresa May emerged as leader and Prime many forces at play, within Britain and the other Minister much sooner than expected, she further 27 EU countries and too many uncertainties, postponed the date when negotiations for Britain’s particularly economic ones. What we can do, exit from the EU would be triggered under Article however, is try to understand the forces at play, 50 of the Lisbon treaty until the following year. their strength and motivations. To do this, we must However, such stalling could only go on so long: begin by understanding why the referendum was the popular verdict had to be implemented called in the fi rst place. Cameron’s High Stakes Poker: Staking the Country for Party Gain The naïve might be forgiven for Two things came together to cause this imagining that an important referendum with problem. The fi rst is that, since it peaked in 1955, such a potentially damaging verdict would not the Conservative vote (Figu re 1) has shown a secular be called lightly, that such a move would be downward trend, in the share of the vote, and justified only if divisions over EU membership in absolute numbers despite a growing electorate. had become so acute as to overwhelm political Secondly, while EU membership and its terms life leaving no other way to resolve them. have regularly caused inner party conflict So it may come as something of a surprise in both major parties, the Conservatives have to many that the referendum was called been particularly prone to them. Unlike some in response to an entirely inner-party problem other European countries, where small and large of the Conservatives. property is politically represented by different VALDAI DISCUSSION CLUB REPORT, DECEMBER 2016 3 BREXIT, THE CITY, AND THE CRISIS OF CONSERVATISM parties, in Britain the Conservatives are the party over the EU brought down Mrs Thatcher, of property in general, small and large (Gamble contributed to the inner party wrangling that 1974). They are, therefore, particularly susceptible kept the Conservatives out of power for 13 years, to the chasm that separates the interests and ended Cameron’s political career, and could also perceptions of big and small capital, which the EU determine the longevity of Mrs May’s tenure at has widened further (Baker et al 1993). Differences Downing Street. Figure 1. THE CONSERVATIVE VOTE: ABSOLUTE NUMBERS AND SHARE OF THE VOTE Vote (Million) Share % 15 55 14 50 13 45 12 11 40 10 35 9 30 8 7 25 6 20 1955 1964 1970 1974 1983 1992 2001 2010 To make matters worse, the anti-European Cameron’s promise of a new referendum was an United Kingdom Independence Party (UKIP) began internal Tory affair and entirely based on electoral drawing votes away from the Conservatives’ right calculations. flank from the early 2000s onward, making it It worked. Having been rewarded with diffi cult for them to win parliamentary majorities a majority in 2015, he proceeded to re-negotiate despite the fi rst-past-the-post electoral system the terms of British membership, particularly which had hitherto bestowed parliamentary playing up his efforts to control immigration majorities on parties with little more than 40% to prepare the ground for winning the referendum of the popular vote. The result was that, despite all to come. Actually, he achieved very little in these Labour’s troubles, the Conservatives could only get negotiations. He secured some temporary limitations to Downing Street in 2010 by forming a coalition on immigrants’ access to social benefi ts. He extracted with the Liberal Democratic Party. an acknowledgement that the euro is not the only In 2015 David Cameron was campaigning currency in the EU, but little else to protect the City to win a majority. His party was aware that the key from unwelcome EU regulation. He was given to winning the 2015 election was to win back those a vague commitment to lower the administrative Conservative voters for whom the EU and immigration burden of regulation on business, some assurances were major issues (Cowley and Kavanagh 2016). that Britain was not obliged to participate in ‘ever To this end, he promised a renegotiation of the terms closer union’ and a few concessions on sovereignty of EU membership followed by referendum on EU issues (Sparrow 2016). Nothing about the process membership on new terms as a way to entice voters or its outcome revealed that Cameron was doing back from UKIP. Though the need to placate anti-EU anything more than going through the motions sentiment in the Labour Party was undoubtedly part of renegotiation to propitiate anti-EU sentiment, of what motivated Wilson to call the 1975 referendum that he was worried about losing, or that his efforts on the EU, the link was not so direct and the EU issue made any difference to how the two sides lined up cut across party lines more cleanly. In contrast, against one another in the referendum that followed. 4 VALDAI DISCUSSION CLUB REPORT, DECEMBER 2016 BREXIT, THE CITY, AND THE CRISIS OF CONSERVATISM The Campaign: Racism versus Fear The Remain side expected the referendum back from the EU was read largely as control over to be a walkover, with all major parties campaigning immigration. Finally, the Brexiteers had no qualms for it, nearly the whole of the quality press about making fantastical claims about the amount in favour, the support of most of the corporate of money which was being drained out to Brussels. sector and with the fi nancial sector, the sector Their claims that Brexit would save this money and with the most skin in the game, fervently backing that it would be used to improve social services, them. Instead it became a bruising
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