From Broke To Brexit: Britain’s Lost Decade 3030818888, 9783030818883

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From Broke To Brexit Britain’s Lost Decade Michael Burton

From Broke To Brexit

Michael Burton

From Broke To Brexit Britain’s Lost Decade

Michael Burton London, UK

ISBN 978-3-030-81888-3 ISBN 978-3-030-81889-0 (eBook) https://doi.org/10.1007/978-3-030-81889-0 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. Cover credit: Peter Dazeley/Getty Images This Palgrave Macmillan imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland

Preface

This is an account of one of the most extraordinary decades in modern British political history, the first of the 21stC, a period bookended at the start by the aftermath of the worst recession since the 1930s and concluding with the departure of the United Kingdom from the European Union after almost half a century of membership. The permanent loss of economic growth from the recession and the accompanying decline in living standards led the years being dubbed by some economists as ‘the lost decade.’ It is no coincidence that the two events, recession and Brexit, are linked for the one in essence led to the other. The 2008/9 fiscal crisis or Great Recession as it became termed, resulted in big cuts in public spending, stagnant wages for the lower paid, permanently lost economic growth and anger at the political and business establishment. The introduction of ‘quantitative easing’ to flush money through the financial system along with record low interest rates benefited those wealthier owners of capital and assets, exacerbating inequalities. Resentment among those whose standard of living flatlined found expression in xenophobia, fuelled by global events such as Islamic terrorism, the eurozone crisis, the Syrian civil war, mass immigration from eastern Europe into the UK, and the refugee crisis, much of it fanned by a mushrooming social media, which in turn provided oxygen for a resurgent Eurosceptic and populist far right. Into this toxic mix was injected the longstanding feud over Europe within the ruling Conservative Party which led its leader, Prime Minister David v

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Cameron, to attempt to head off the mounting threat from the right and his own Eurosceptic wing by agreeing to hold an in-out referendum on EU membership. Offered the opportunity to register its discontent against the established political classes, and following years of either indifferent or negative media coverage of the EU, the British electorate duly delivered its verdict by voting to leave, ignoring warnings of the economic damage such a choice might inflict. The result, with 52% voting to leave and 48% to remain in the EU, bitterly divided the UK, families and friends and upended the political system. For the next four years politics was dominated by one question: are you a Leaver or a Remainer? It split both the Labour and Conservative parties with members and MPs voting on both sides. An ugly seam of xenophobia emerged in the aftermath of the referendum vote whose result gave succour to displays of racism and intolerance that consensus politics had previously made unacceptable. The result also threatened the unity of the UK itself, with Scotland and Northern Ireland voting to remain in the EU, and even had global implications, influencing American voters later in the year who backed the pro-Brexit populist Donald Trump. To liberal commentators in the outside world and indeed to many in the UK the referendum decision appeared incomprehensible, almost suicidal. Why would an advanced industrial nation choose to quit the protection of the world’s biggest trading bloc at a time of such global turmoil? This book is not a polemic arguing for one side or the other. It sets out to answer the above question while also examining the wider socioeconomic and political forces, some with their roots years back in the past, which influenced the referendum vote and changed the course of British political history. When these are considered, the conclusion has to be not so much why the UK voted to leave the EU but why the majority was not bigger. The referendum coincided with one of those rare historical episodes, a confluence of disruptive socio-economic and political forces, some global and some local, that mostly had little to do with the EU but whose victims found their expression of rage in Brexit. Most of the causes of resentment which manifested themselves in a Leave majority were unrelated to the EU and indeed in most cases the solutions lay in the hands of the UK government, not Brussels. The idea for this book, which is aimed at both general readers and in particular students of British politics, economics and history, came about after many years of my commenting on British politics which included writing a study on the 2010–2015 UK Coalition government’s fiscal

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policy, The Politics of Austerity: A Recent History (Palgrave Macmillan, 2016). It was clear the UK was experiencing a decade like no other in its recent history and that the dramatic political events were inextricably linked with their origins in seismic socio-economic forces underneath the body politic as yet not fully understood. The Great Recession and the Brexit referendum result were a cause and effect, by coincidence straddling the same decade roughly 2010–2020, for the latter is impossible to understand without also examining the undercurrents in British society that led to it. But while the Great Recession led to Brexit, the latter was also a protest against years of globalism by voters in deprived, former manufacturing areas or rundown seaside resorts who felt themselves victims of forces over which they had no control; it is no coincidence that the leave campaign’s referendum slogan ‘Take Back Control’ struck such a chord. Buffeted by the cold winds of globalism, these disillusioned voters were then doubly, even triply adversely affected by the Great Recession through stagnant wages and cuts in welfare caused by austerity imposed to restore the public finances. It was this Leave-backing group of largely white, working class voters in former industrial areas and poorer pockets of the otherwise prosperous South East that later also gave Boris Johnson his majority during the December 2019 general election in which he campaigned on the slogan ‘Get Brexit Done.’ Post-referendum analysis bracketed Leave voters as mainly white, less educated, older and poorer, living in former industrial cities with struggling local economies like Stoke on Trent (69% backed Leave) or ailing seaside towns like Great Yarmouth on the Norfolk coast (71.5% backed Leave) while conversely Remain supporters were ethnically more mixed, younger, better educated, more cosmopolitan and living in successful cities like Bristol (61.7% who voted Remain) or university cities like Oxford (70.3% for Remain) and better off. However this disillusioned section of the electorate did not alone create Brexit in 2016 and the Leave vote cannot be explained just as a protest by deprived areas or against immigration. Every one of the nine English regions apart from London registered a Leave majority and there were plenty of areas which were neither deprived or contained immigrants, EU or non-EU. It is the combination of often unrelated issues that flowed together into the Leave vote that I intend exploring in this book. Firstly I set the scene in 2009/10, regarded in the UK as the depth of the Great Recession, when the deficit in the public finances breached

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an unprecedented 10%. I look at the wider socio-economic forces that would later emerge as major influences on Brexit and also at British attitudes to the EU and vice-versa. I then outline the 2010–2015 Coalition government’s austerity policies which especially hit poorer householders most dependent on welfare and who in 2016—not without coincidence— would be most prominent among Leave voters. I examine the inequalities in British society, not just between the very rich and the poor but between London and the more deprived regions of the UK and indeed within London itself. As immigration was a key issue in the 2016 referendum I examine the facts and fiction about the influx of EU workers into the UK since the early 2000s which provided a major boost to the Leave vote. I also comment on some of the decade’s dramatic global events which increasingly persuaded many UK voters that the world outside their borders was a dangerous and unstable place and they were better off having as little as possible to do with it. It is not possible to cover the politics of the decade without examining the huge impact of social media which disrupted traditional political engagement as well as giving voice to views, often extreme, otherwise excluded from the mainstream media. I cover the longstanding split in the Conservative Party over Europe and the rise of UKIP, which sucked in right-wing Conservative voters, putting pressure on Prime Minister David Cameron to make his fateful decision to call a referendum. Surprisingly in 2015 Cameron gave the Conservatives their first outright general election victory since 1992 and I then analyse the politics of the period up to 2016 including the extraordinary resurgence of Labour’s far left under its populist leader Jeremy Corbyn. My final chapters are devoted to May’s term in office including her disastrous election campaign in 2017, her failure to strike a Brexit deal, and the splits over Brexit that threatened to tear apart both Labour and the Conservatives. In the end she failed and resigned and it was Boris Johnson, the former Mayor of London and the most charismatic and controversial politician among an otherwise lacklustre generation, who replaced her in a leadership contest and to no great surprise won. The unlikely denouement of this decade was the emergence of Boris Johnson, an Old Etonian, upper middle class, American-born Prime Minister with Turkish ancestry who was dedicated to delivering Brexit and in the last days of 2019 won a general election in a landslide thanks to the support of white former Labour-voting, anti-immigration working class

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areas in England. They had helped deliver Brexit in the referendum: now, after Theresa May’s troubled interregnum, they expected her successor to deliver the goods and end their lost decade. London, UK

Michael Burton

Acknowledgements

I am grateful for the many stimulating discussions with work colleagues, think-tanks and those directly involved with the events of the lost decade whether local or national politicians, Whitehall and local government special advisers or private and voluntary sector providers who helped guide my thoughts in writing this book. In particular I would like to thank my old friend John Tizard, a longstanding public policy expert and commentator who scrutinised my draft and made many detailed and valid comments. I am deeply grateful to Sir Bob Neill, chair of the House of Commons justice select committee, former local government minister and an MP at the centre of the Brexit parliamentary debates whom I have known for many years and who gave me his deep insight regarding my chapters on Europe and the May and Johnson premierships. Thanks also go to John O’Brien, former chief executive of London Councils, exWhitehall advisers Jackie Sadek and David Godfrey and Heather Jameson, editor of The MJ, for their helpful comments. It goes without saying that any errors in this book are entirely mine.

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Contents

Part I

The Undercurrents 3

1

From Boom to Bust

2

‘What Has the EU Ever Done for Us?’

15

3

The Immigration Debate

31

4

Globalism and ‘the Left Behind’

43

5

The Great Faultline: Europe and the Conservatives

57

Part II

The Catalysts

6

Austerity

79

7

Cameron Opts for a Referendum

93

8

Pulling Up the Drawbridge

107

9

The Disrupters

115

10

The Recovery That Wasn’t

125

11

Labour Turns to Populism

135

12

Dress Rehearsal for the Referendum

145

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CONTENTS

Part III

The Brave New World

13

Road Map to the Referendum

153

14

The Referendum

165

15

The Merry Months of May

187

16

The Gamble That Failed

201

17

Brexit Unravels

209

18

Boris and the Brexiteers

227

19

Aftermath

241

Index

251

PART I

The Undercurrents

CHAPTER 1

From Boom to Bust

On the eve of what became known as the Great Recession in 2007 the UK was one of the developed world’s strongest economies with 15 years of successive increases in GDP, substantial investment in public services, stable politics and a booming financial services sector. The government’s March 2007 Budget referred to ‘the longest period of economic stability and sustained growth in our country’s history’ while the economy was growing faster than all the other developed G7 countries (the US, Canada, France, Italy, Japan and Germany).1 In June 2007 a prominent British broadcasting journalist, Andrew Marr, ended his 2007 five-part TV series The History of Modern Britain with a ringing endorsement of the country’s economic and social progress since 1945 and in particular its booming financial services industry. Marr referred to the ‘constant gush of global money’ and a ‘time of plenty,’ even ‘a golden age,’ though he also concluded with a prescient warning that while the UK was more open to the world it was also ‘perhaps more vulnerable than ever before.’2 He was right though to be optimistic about the economy and the ‘constant gush’ of tax revenues flowing from London’s booming financial services sector. The last recession had ended 15 years previously in 1992, meaning an entire generation was growing up having never experienced an economic downturn, in stark contrast to every decade since the 1950s which had experienced crashes and high unemployment, notably in the 1960, 1970s and 1980s. The new Prime Minister Gordon Brown, who © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_1

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entered Number 10 Downing Street in June 2007, had, in his previous role in charge of the nation’s finances as Chancellor of the Exchequer (1997–2007), pledged ‘an end to boom and bust’ and it seemed he had achieved his goal.

The Boom The strong economy in the first eight years of the century had enabled the Labour government, in power since 1997 under firstly Prime Minister Tony Blair (1997–2007) and then Gordon Brown (2007–2010), to pour money into public services. For Labour’s inheritance in 1997 had indeed been enviable. With a tired and unpopular Conservative government under John Major (1992– 1997) and a charismatic, reinvigorated Labour leadership under Blair and Brown there was little question that Labour would win the 1997 general election. In fact it achieved a landslide with a majority of 179 so large this virtually guaranteed a second and even a third term. Furthermore Labour also benefited from an improving economy, recovering from a recession that had ended in 1992, and the previous Conservative government’s tough approach to managing the public finances through tax rises and spending cuts. Most governments run annual deficits, the amount they need to borrow to cover their outgoings for the year. Aware of the need to show it could be trusted with the public finances Labour initially stuck to the Conservatives’ stringent targets with the result that for three successive years from 1998/9 the government not only cut the deficit but actually ran a surplus. Such an achievement would not be repeated and by 2002/2 the deficit was back. From then on the brakes were taken off public spending which as a proportion of the nation’s wealth—or gross domestic product (GDP)— rose from 36% in 1999/2000 to 40% by 2005/6. The UK entered the longest period of sustained above-inflation spending since 1945 as money poured into health, schools, welfare and local government. The National Health Service had experienced average annualised real increases of 3.2% under the Conservative governments from 1979–1997 but under Labour from 1997 to 2008 it shot up to 6.3%. Unsurprisingly a combination of a strong economy and investment in public services was also good news for the government and Labour was re-elected twice, in 2001 and 2005. Even the Conservatives in opposition felt obliged to match Labour’s spending plans confident that growing

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GDP would cover the costs. The argument was not about whether public spending should increase but at what rate. Politics in 2007 was still dominated by the two main parties, Labour (on 355 seats, its majority down to 66 in the 2005 election) and Conservatives (198 seats) plus the Liberal Democrats third with 62 seats, the most seats of any third party since 1923. The tiny right-wing, anti EU UK Independence Party (UKIP), whose later rise in the UK polls helped lead to the EU referendum, polled no seats and just 2.2% of the vote although by number of votes it was the fourth largest party. However UKIP was already a presence in the European Parliament where in the 2004 euro elections it gained 11 seats. Coverage of British politics was still dominated by the mainstream media, the press, radio and TV, social media being then in its infancy. Twitter, launched in 2006, was then barely known in the UK though by 2008 it was posting 100 m tweets per quarter worldwide. Facebook, launched in 2004, had 100 m users by 2008. There were however serious weaknesses in the economy and wider society that were masked by the strong growth in GDP which reached a high of 3.7% in 2007. Firstly, public spending was dependent on buoyant tax revenues, in particular tax from the booming global financial services sector in the City of London which represented some 12% of all tax receipts and 25% of corporate tax. Labour had, in the words of one of its ministers, been ‘intensely relaxed about the filthy rich’ because their tax paid for its public spending priorities. When the new Chancellor of the Exchequer, Alistair Darling, arrived at the Treasury in June 2007 he found no evidence that any top officials were unduly concerned about this imbalance in tax revenues or what might occur should there be a downturn in the global financial services sector. After all, the last recession which ended in 1992 was a distant memory, GDP had increased every year since then and the City of London following the deregulation of the Stock Market in 1986 had established the UK as the world’s second largest centre for financial services after New York. As one financial journalist later wrote: ‘It is almost impossible to overstate the breadth of relaxed consent, if not evangelical support, for the City and its doings at the zenith of the boom. The ruling left had few complaints about a sector that sent tax revenues cascading into the Treasury.’3 Secondly, strong economic growth obscured serious regional variations. For years London and the South East of England had been the

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powerhouses of the economy, driven by the buoyant services sectors, especially financial, and by their proximity to Europe, the UK’s largest export market. They were the only two out of the nine English regions above the European Union prosperity average while neither Wales, Scotland or Northern Ireland met the grade either. The weakest English regions were in the former industrial areas of the North West, North East, Yorkshire & Humberside and the Midlands which had been devastated by closures of mines, steelworks, shipbuilding and factories and the decline in manufacturing since the recession of the early 1980s. It was these areas which later voted to leave the EU in 2016. While unemployment rates fluctuated nationally between 4.8% and 5.7% from 2000 to 2008 the rates were invariably higher in the former industrial areas. Furthermore the official rate based on those who claimed unemployment benefit did not include the ‘hidden unemployed’ such as those on incapacity benefits which were particularly high—as much as 10% of 16–59/64-year-olds—in South Wales, Merseyside, the North East and Clydeside in Scotland.4 This is not to say that the government— and indeed its predecessors—was unaware of these regional imbalances. Ministers made strenuous efforts to encourage investment out of London and the South East such as setting up Regional Development Agencies in 1999 in each of England’s nine regions with an economic development brief. There was a blizzard of initiatives to revitalise rundown areas to boost jobs, skills and infrastructure such as the Single Regeneration Budget, Education Action Zones, Enterprise Zones, Housing Action Trusts and Learning and Skills Councils. There were also notable successes in the reinvigorated car industry with overseas investment especially prevalent in the Midlands and North East. The so-called core cities, the biggest cities in the regions such as Manchester, Liverpool, Newcastle, Nottingham, Birmingham, Bristol, Leeds and Sheffield, also experienced a renaissance but smaller towns continued to struggle with declining local economies. Poorer areas were also more dependent on welfare, whether through benefits paid direct to claimants or from grants paid to local government to tackle specific deprivation challenges. Many of these would be slashed during spending cuts after 2010, taking millions of pounds out of already anaemic local economies. Inequality was not confined to regional disparities. The consequence of the booming financial services sector which bankrolled public spending was a widening gulf between the very rich, especially bankers, and those on low or even middle incomes. Although the number of extremely

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wealthy people was small they contributed an increasing share of tax revenues while the size of their salaries, so out of kilter with what most of the population was earning, bred a resentment among voters, especially in deprived areas, that they were the victims, not the beneficiaries, of the economic boom of the previous decade. The wealth pouring into London created another inequality gap, this time between young and old as a growing population in the capital, up by 1 m over the previous 20 years and increased by immigration, led to soaring house prices. Older homeowners benefited while the young found it increasingly impossible to afford to buy their first home. The proportion of people aged 20 to 34 living with their parents rose from 19.48% in 1997 (2.4m) to 26% in 2017 (3.4m).5 In contrast older people, especially the so-called baby boomers born between 1946 and 1964 who were coming up to retirement were increasing beneficiaries of—or a burden on—the state through more generous pensions and their reliance on the free NHS. As the population aged so the costs of health, pensions and care swallowed a growing share of public spending. The generation gap would be later put sharply in focus by the referendum vote in which the over-65 s overwhelmingly backed Leave and the young Remain. Ironically the retired had a far greater stake in society through state pensions, a free NHS and their own homes than did the young. A major issue bubbling to the surface by 2007 was immigration. The first immigrants mainly from the Caribbean had come to the UK in the 1950s followed later by others from the Indian sub-continent, many settling in England’s northern cities where there was work in manufacturing. Most of these had long assimilated though there were tensions in some cities. Since 1998 however immigration exceeded emigration by 100,000 every year. The most recent influx of overseas workers was from the eight former East European countries that had joined the European Union in 2004, especially from Poland. Britain was one of only three countries that opened its borders straight away to citizens of the new member states who under EU freedom of movement rules were entitled to live and work anywhere in the EU. The British government assumed the numbers wishing to work in the UK would be in the few thousands since before 2004 net migration of EU nationals was below 35,000 a year. By 2007 it was running at 127,000 annually. By 2011 there were 2.68 m EU citizens living in the UK according to the Census that year. The Office for National Statistics had to revise its population estimates after the 2011 Census because England and Wales turned out to have

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464,000 more inhabitants than expected. The largest single cause was the underestimation of recent long-term immigration from Central and Eastern Europe.6 European nationals were generally well educated, younger and in work and net contributors to the public finances as they paid taxes but tended to use health or education services less than UK or other nationals. Prevalent in hospitality and in social care, sectors that UK nationals shunned because the wages were low and the hours erratic, many East European arrivals also settled in specific geographic areas like Lincolnshire with its food packaging jobs. However there was also suspicion among many UK workers that Europeans were being hired to keep wages down as they were cheap, though this was never proved by official statistics, were taking jobs from less educated UK nationals or allowed employers to avoid training local staff, even though the immigrants often filled vacancies that local workers avoided. The UK’s population was also increasing, up from 56 m to 66 m by 2018 of which 9.4 m were born abroad. Resentment over higher than anticipated levels of EU workers became a lightning rod for hostility to immigration generally, often in areas, rich or poor, that had little or no foreign-born populations. Yet in multiethnic London where 36% of the population were born outside the UK, compared with 14% for the UK as a whole, immigration was much less of an issue and the capital later voted overwhelmingly to Remain. Ironically, the demand by Leave campaigners in 2016 to gain control of immigration from the EU and end freedom of movement ignored the fact that non-EU immigration, over which the UK had control, was higher. Nonetheless governments were under increasing public pressure to be seen to reduce immigration and the EU’s freedom of movement policy, a key part of its single market to which the UK was an early signatory, soon became a scapegoat for concern about immigration generally. Despite these underlying issues Labour continued to ride high in the polls, winning a record second and third term in 2001 and 2005, a triple victory never previously achieved by the party. The Conservatives, who had been in government for 18 years from 1979 to 1997 under first Margaret Thatcher and then John Major, were now in the wilderness and by 2007 onto their fourth leader since their election defeat in 1997. The new leader was a young and articulate ‘one nation’ Tory called David Cameron. With no sign of a downturn it was electoral suicide for any political party to suggest public spending should be cut so even the Conservatives were compelled to back Labour’s March 2007 Budget

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raising spending to £674bn by 2010. When Tony Blair retired as Prime Minister in June 2007 handing over the keys to Number 10 Downing Street to his Chancellor of the Exchequer, Gordon Brown, there seemed no reason why Labour could not win a fourth term in 2009 or 2010. And then the US sub-prime mortgage market collapsed.

The Bust and The Great Recession The first inkling that a growing mortgage crisis in the US had implications for the UK was when a prominent North East of England bank, Northern Rock, asked the Bank of England to help it through a liquidity crisis triggered by the US mortgage market collapse. When the news became public in September 2007 queues of panic-stricken customers formed outside Northern Rock’s branches to withdraw their money, the first run on a British bank in 150 years. Like its US counterparts Northern Rock had over-reached itself and become dependent on securitisation, or cheap credit borrowed against future income streams which dried up due to the downturn in the property market. Unable to maintain liquidity the bank was nationalised in 2008 but its demise was soon followed by other even bigger bank failures culminating in the spectacular collapse of Lehman Brothers in the US in September 2008. During this fiscal crash, the initial phase of the Great Recession, Gordon Brown and other world leaders showed immense foresight in shoring up public confidence and preventing the entire banking sector collapsing through an injection of public funds, as much as a trillion dollars in the US, thus avoiding a repeat of the 1930s depression, the worst downturn in the history of the industrialised world. However what began in Wall Street inevitably spread into Main Street or in the case of the UK, from the City of London to cities. In the UK the result of the fiscal crash was a downturn not just in the financial services sector but across the high street and in the housing market as consumer confidence wilted, bank lending dried up and unemployment rose. GDP growth, running at an average 2.2% a year throughout the entire time of the Labour government, now headed into minus as the economy contracted for five consecutive quarters. While tax revenues immediately fell public spending continued its upward trajectory previously set on the expectations the tap would forever flow with the inevitable result that the annual budget deficit, the amount the government had to borrow during the year, at 2.7% of GDP before the crash, ballooned to 8% in 2008. By

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the end of that year Britain was officially in recession for the first time since 1991 following two consecutive quarters of falling GDP. A later Budget report in March 2010 later admitted that the downturn was ‘the most severe and synchronised contraction in 60 years.’7 The government’s reliance on the financial sector to fund its spending plans was now starkly exposed. In October 2008 the IMF’s World Economic Forum warned the UK could face the worst downturn of any of the leading industrial countries because of its dependency on City tax revenues. The question was, how would the government react? On the one hand the deficit, which reached a record 10% in 2009/10, had to be reduced; on the other, Labour and especially Prime Minister, Gordon Brown, were not inclined to slash public spending when the economy was already so weak, citing the example of the 1929 depression which was exacerbated by government spending cuts to balance budgets. The famous economist John Maynard Keynes had argued that to offset the fall in private sector activity during a recession governments should spend public money and conversely cut deficits only when the economy was on the mend. Chancellor Alistair Darling would later maintain that Labour’s postponement of immediate deficit reduction—his 2009 Budget planned to halve it to 5% over the next four years—helped support the economy for another three years and prevent a recession from becoming a depression. Nonetheless it was increasingly clear that a 10% deficit was unsustainable and the government needed to show it had a strategy to reduce it to a more manageable level, especially as the UK was heading towards bearing the highest ratio of debt to GDP among the major economies after debt-laden Japan. Public opinion was also shifting, voters becoming increasingly restive about the deficit and less enthused at maintaining previous levels of public spending. Sensing the mood change the Conservatives in November 2008 abandoned their policy of sticking to Labour’s spending plans and announced that their strategy was to bring down the deficit; new battle lines were therefore drawn up between them and Labour over who was best able to manage the public finances. After a decade of presiding over-generous spending funded by tax revenues that had now disappeared this was not comfortable territory for Labour. Chancellor Alistair Darling recognised that ‘the old battle lines were now hopelessly out of date,’ that deficit reduction ‘gained considerable traction’ among the public and that Labour had to show it could keep spending on essential public services while also reducing the deficit.8

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In September 2009 a poll for The Times newspaper showed 60% of the public now preferred spending cuts to higher taxes. In autumn 2009 at the Conservative Party conference Shadow Chancellor George Osborne spelled out his remedy for the economy, effectively describing what would later become termed ‘austerity’ by its critics. The foundations for a vote for Brexit were being laid even if at that time there was no inkling of any referendum. In the first quarter of 2009 the economy contracted by 1.9%, the worst performance for 30 years. In that year, the depth of the recession, the deficit hit 10% but by the first quarter of 2010 growth returned, albeit at an anaemic rate of 0.1%. Darling’s last Budget in March 2010 before the May general election had the optimistic heading Securing the recovery and astonishingly, considering the state of the public finances, declared itself ‘fiscally neutral’ with a target of halving the deficit within the next four years. Spending, as per Keynesianism, was forecast to actually increase the next year though at a slower rate, as growth returned to 3–3.5% in 2011 and 3.25–3.75% in 2012, predictions that soon proved to be wildly optimistic. It is impossible to overstate the long-term damage to the economy caused by the recession. In his 2007 Budget Gordon Brown had forecast an increase in GDP of 2.5%–3% in 2008 and 2009. In fact after 63 successive quarters of expansion GDP in that period from the first quarter of 2008 to the second quarter of 2009 shrank by 6%, a difference of some 9% on Brown’s forecast. This was money lost to the economy forever, national income which could have continued to fund public service investment in housing, health, social care and infrastructure for Britain’s deprived areas. It took five years for the economy to return to the size it was before the recession. In 2018 the Institute for Fiscal Studies (IFS) estimated that the economy would have been £300bn a year bigger had the rate of GDP growth continued on its pre-2008 trajectory while GDP per person would have been £5,900 higher. Assuming that public spending as a percentage of GDP was 40% then the UK could have had an extra £120bn to invest in public services, the equivalent of the entire annual NHS budget. Furthermore, unlike in previous recessions, the economy did not rapidly return to normality. As the IFS noted: ‘Neither the early 1980s recession nor the early 1990s recession led to falls in median earnings among workers. In 1983, four years after the pre-recession peak in GDP, median earnings were around 8% higher than in 1979, while in 1993

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median earnings were 4% higher than in 1989. By contrast, in 2011– 2012, four years after the pre-recession peak in GDP, median earnings were 8% lower than before the recession.’9 In hindsight Labour argued that, even though GDP was up in 2010, the private sector was still weak and it was too early to impose stringent spending cuts. The Conservatives maintained that without getting the public finances back in balance the country would be laden with unsustainable debt. Either way, the recession ended with a long tail of stagnant wages, low productivity and low growth that would continue throughout most of the next decade. As a right of centre think-tank noted in 2020: ‘While nominal hourly wages have been increasing throughout the last two decades, real wages have been either declining or stagnant for most of the last 10 years.’10 The fiscal crisis also provoked anger among the public who blamed reckless bankers for plunging the country into recession, especially when the banks then had to be bailed out by public money. They saw greedy bankers, the most prominent of whom were named and shamed in the media, being paid huge salaries with the tacit approval of the government, only to discover the same bankers had been so careless in their pursuit of profits and bonuses that they bankrupted their businesses, then walked away leaving the taxpayer to pick up the bill. As the fiscal crash turned into recession, the victims were not the bankers who caused it but the low- to middle income-earners who saw their standard of living stagnate for years. Public disgust at the financial establishment was then followed by revulsion at politicians when full details of MPs’ inflated, occasionally taxavoiding and often ludicrous expenses claims were leaked to a national newspaper, the Daily Telegraph in May 2009 during the depth of the recession and despite efforts by MPs to block publication. The BBC later said the scandal ‘shook the British political system to its foundations’ and there were questions by commentators at the time as to whether parliamentary democracy could survive the revelations which were daily drip-fed by the newspaper and disgusted the public. Some MPs went to prison, many were vilified for their taxpayer-funded second homes and their tax avoidance or for laughable claims on items like duck houses, toilets seats and wisteria but all were tarred with the same brush, innocent or guilty. The victim was public confidence in politics and even democracy itself. Coming soon after outrage at the misbehaviour of the bankers, the expenses scandal only added to the public’s perception that they were

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being taken for a ride by the establishment and that somehow, sometime, there needed to be a reckoning. Far from ending ‘boom and bust’ Britain had begun the 2000s with a booming economy only to end in recession. As the new decade began the economy was bust and public confidence in the nation’s institutions severely tested. The stage was set for a confluence of social, economic and political undercurrents that would lead to Brexit.

Notes 1. HM Treasury. (March 2004). The Budget. 2. Andrew Marr’s. (2007). History of Modern Britain. BBC. 2007 and Macmillan. 3. Janan Ganesh. (2014). George Osborne. The Austerity Chancellor (Biteback Publishing, p. 167). 4. See Christina Beatty, Steve Fothergill, Tony Gore and Ryan Powell in The Real Level of Unemployment (Centre for Regional Economic and Social Research, Sheffield Hallam University, May 2007). 5. Office for National Statistics. 6. Briefing Paper. Migration Statistics. (December 2 2020). House of Commons Library. 7. HM Treasury. (March 2010). The Budget. 8. Alistair Darling. (2011). Back from the Brink (London, Atlantic Books, p. 282). 9. Institute for Fiscal Studies. (November 2017). Recessions, income Equality and the Role of the Tax and Benefit System. 10. Centre for Policy Studies. (October 2020). A Framework for the Future: Reforming the UK Tax System.

CHAPTER 2

‘What Has the EU Ever Done for Us?’

From the day the UK joined the European Union in 1973 the British public’s attitude to the EU ranged from indifference to occasional hostility, fuelled by what would become a virulently Eurosceptic press. Turnout in elections for the European Parliament was always low, being 38% in 2004, reflecting the public’s general disinterest in European issues. A 2010 study from the European University Institute in Florence concluded that ‘the UK is one of the most Eurosceptic countries in the Union and the negative image of the EU in the UK is alive and well.’1 According to a Eurobarometer survey conducted in July 2009, only 30% of people in the UK thought EU membership was a good thing. The EU average was 53%. The UK’s citizens had the second least knowledge about the EU among all 27 member states in 2009 and the lowest number (13%) who said they had read anything about the then presidency of the EU council. Two-thirds of UK respondents were against a single European currency.2

A European Legacy To understand why the British public were so lukewarm about being inside the security of the world’s largest trading block and despite the fact that almost half the UK’s exports went to the EU it is necessary to delve into the historic tensions that bedevilled relations between the UK © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_2

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and Europe for what might be argued has been two millennia. Britain, or more precisely England, has always had an ambivalent relationship with Europe. For most of history Europe to England meant conquest, first by the Romans in AD 54, then Angles and Saxons, then Vikings, then Normans and but for the English Channel there would have been invasions from the Spanish in 1588, the French in 1805 and the Germans in 1940. Equally, for centuries England’s destiny was bound up with Europe and it has been an ally at various times of most of the major European powers. For much of the mediaeval period from the twelfthto the fifteenth-century England and parts of France under the Plantagenet kings were effectively the same country while the Stuart king William the Third was Dutch and from 1714 Britain’s royal family was German from Hanover, a connection that lasts today. Queen Victoria, the embodiment of Britishness, was half-German and had so many relations and descendants in Europe’s ruling royal families she was known as ‘the grandmother of Europe.’ Margaret Thatcher, the British Prime Minister so identified with Euroscepticism, said in her famous Bruges speech in 1988: ‘We British are as much heirs to the legacy of European culture as any other nation. Our links to the rest of Europe, the continent of Europe, have been the dominant factor in our history.’3 This relationship only serves to emphasise how important Europe was to England, or the UK as it became in 1707 once Scotland joined to form the union. Its foreign policy has always been to ensure no one European power dominates western Europe. In 1839 the UK was a signatory to a treaty guaranteeing neutrality for the new state of Belgium, a decision that led Britain entering the First World War when Germany invaded Belgium on its way to France. The exception to this close, if volatile, bond with its European neighbours was when Britain, with its huge naval power and endless thirst for trade, expanded globally, especially from the eighteenth century onwards, to form the largest empire the world has ever seen. Much of its attention was focused on protecting its immense overseas possessions, especially India. Throughout most of the nineteenth century it kept out of European disputes. Its involvement in the Crimean War against Russia in 1853–1856 was largely because Russia threatened British commercial and military interests in the Middle East and India. British foreign policy in the late nineteenth century, with its strategy of avoiding permanent alliances, was dubbed ‘splendid isolation.’ Britain ended it not in a treaty

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with a European power but with Japan in 1902, to protect its Far East possessions, especially Singapore. The more ardent empire loyalists proposed creating tariff walls around the empire to protect trade against competitors, especially the US, though opponents pointed out that the increasingly independent Dominions like Canada and Australia were not inclined to suffer trade restrictions just to serve British interests and such a policy was never enacted. In reality Europe was still Britain’s most important trading partner: in 1913 41% of its imports were from Europe, while half its coal exports were to European countries.4 After 1945 as Britain handed independence to its former colonies, attention again turned back to Europe, though nostalgia for the empire still remained, and indeed remains to this day, especially on the right wing of the Conservative Party and among Conservative voters who feel Britain’s destiny and trade ought to lie with the Commonwealth, its former empire, not Europe. After the devastation of the Second World War its former enemies concluded that integration was the best antidote to the belligerent nationalism that had led to war. In 1952 six countries, France, West Germany, Italy, Belgium, the Netherlands and Luxembourg, formed the European Coal and Steel Community, the first step on the road to what later became the EU, and in 1957 signed the Treaty of Rome which created the European Economic Community (EEC) and set up a customs union. Britain too now decided it wanted to join the club. Ironically, considering the future bitter rift within the party over Europe, it was a Conservative Prime Minister, Harold Macmillan (PM, 1957–1963), who first came knocking on the EEC’s door requesting entry in 1961. When the one-nation Tory told the Commons of his plans there were cries of ‘shame’ from both Labour and Conservatives mixed with cheers. Macmillan said the EEC was about protecting freedom and democracy and it was the UK’s duty to help Europe. He insisted he would not take the final step until Britain’s Commonwealth obligations were reconciled otherwise ‘the loss would be greater than the gain.’ The Tory MP for Yarmouth, Anthony Fell, said Macmillan’s ‘decision to gamble with British sovereignty and with 650 million people in the British Commonwealth, is the most disastrous thing any Prime Minister has done for many generations past.’5 Another MP asked why Britain could not simply be part of a looser association but Macmillan—unknowingly predicting future Brexit discussions—said it would mean having all the economic difficulties without giving any influence in Europe.

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In the end Britain’s application was vetoed by the Anglophobic French President Charles de Gaulle who claimed the UK’s economy was incompatible with Europe and that Britain would never be a committed member. Britain tried again in 1967 and was rejected by de Gaulle for the second time. After the French president’s departure in 1969 Britain made a third application. By now its exports to Europe were outstripping those to the Commonwealth countries and British businesses were calling for membership. Just as it was a Conservative Prime Minister, Macmillan, who had first applied to join the EEC, it was again a Conservative Prime Minister, the Europhile Edward Heath (PM, 1970–1974), who led the successful third bid which was agreed in 1972 through the European Communities Act. On January 1 1973 Britain became a member of the EEC. After Heath lost the 1974 general election to Labour the new Prime Minister Harold Wilson (PM, 1974–1976), to placate the Eurosceptics in his own government and party, said he would renegotiate Britain’s terms and hold a referendum on whether voters wanted to stay in the EEC/EC or quit. One reason for his decision was that membership was, if anything, even more controversial within the Labour party as it was within the Conservatives. While right wingers in the Conservatives were anti-EEC membership because of the perceived loss of British independence and their attachment to the Commonwealth, left-wingers regarded the Common Market as a capitalist club whose rules hindered them from building a socialist Britain. Seven of Wilson’s 23 Cabinet members were anti while a one-day conference of Labour members to discuss membership produced a vote of almost two to one in favour of leaving. At the Paris Summit of heads of state or government in December 1974 and the Dublin European Council in spring 1975, the UK government successfully negotiated with the other eight member states the introduction of the community’s regional policy, a budgetary correction mechanism and market access for New Zealand dairy products. Wilson was then ready to present the new deal to the electorate. The referendum campaign produced some curious bedfellows. Left wingers like Tony Benn shared platforms with right wing Tories to back leave while centrist Tories (as well as new Conservative leader Margaret Thatcher) joined moderate Labour ministers urging voters to back remain. Most of the political, media, business and even showbiz establishment campaigned to stay in the EEC and the major newspapers,

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including the popular tabloids, were pro-remain as were the main political parties, though Wilson suspended Cabinet collective responsibility to allow his anti-EEC ministers to campaign against their own government. The turnout on June 5 1975 was 65% (compared to 72% in 2016) but the result was a landslide, an overwhelming 67.23% backing remain and 32.77% leave, with every administrative county and region in the UK apart from the Shetland Islands and the Outer Hebrides in Scotland returning a majority vote to remain in the EEC. Harold Wilson optimistically—and incorrectly—said the result ‘ended fourteen years of national debate.’ There is little connection between the 1975 and 2016 referendums, only their stark differences. In 1975 it was England which was most proEEC while Scotland, Wales and Northern Ireland were more sceptical in contrast to 2016 when it was the reverse. Immigration, certainly from Europe, was barely an issue in 1975: at that time because of its decrepit economy, high inflation, crippling strikes and low productivity the UK was seen as the sick man of Europe and of little interest for French or German workers. Emigration was more likely than immigration as skilled British workers looked for work abroad. Memories of the Second World War that had ended 30 years previously were still strong in 1975 and the ideals of a united Europe of former enemies were attractive to British voters. The 1970s was also the height of the Cold War with the Soviet Union and with the USA withdrawing that year from its disastrous war in Vietnam Wilson told his Cabinet that Western Europe, including the UK, must now take a greater role in defending itself against the Soviet Union. Wilson himself pulled off a result which eluded Cameron in 2016, helped by the support of the Opposition and the media. As in 2016, the pro-remain campaigners of 1975 warned of dire consequences if Britain withdrew from the EEC but in the latter case voters believed ‘project fear.’ The country was almost bankrupt and in 1976 the government had to ask the International Monetary Fund for a loan, inflation was running at 24%, oil prices had quadrupled in 1973 and it was only a year since striking miners had forced the government to bring in a three-day week for three months to conserve power. The prospect of risking an economic catastrophe by leaving the security of a prosperous trading bloc like the EEC was deemed a step too far by voters. In 1975 Britain was only 30 months into membership of the EEC, too early for voters to appreciate that Brussels, its capital, was on a trajectory towards greater integration, culminating ideally in the minds of its

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most ardent supporters in a federal Europe. The EEC was also expanding and changing its economic make-up, new members being Denmark and Ireland (1973), Greece (1981), Portugal and Spain in 1986, the latter three ruled until the 1970s by dictatorships. Relations over the next four decades were dominated by disputes between British governments and Brussels over the speed and nature of integration with the former frequently allowed to opt out of agreements it opposed. In 1979 Britain opted out of the newly formed European Monetary System which was designed to be the precursor of the single currency. It also declined to join the Schengen Agreement in 1985 which removed internal border controls between five of the ten member states that signed up to it. In the 1983 general election Labour, now dominated by its left wing, even campaigned on a manifesto that included leaving the EC though Margaret Thatcher (PM 1979–1990) won a landslide victory. A leading campaigner to stay in the EC in the 1975 referendum and still a Europhile Margaret Thatcher nonetheless engaged in titanic battles with Brussels which also spilled over into internal Conservative Party politics. An increasingly vociferous anti-EC faction took root within the Tory parliamentary party, especially in the backbenches, as well as among party members, just as Labour was heading the other direction by becoming a pro-EC party, once its left wing lost control of the leadership in the mid-1980s. One of Thatcher’s first victories was over the size of Britain’s contribution to the EU which ended with the latter agreeing a rebate. Nonetheless in 1985 the government signed up to the Single European Act, the first major revision of the 1957 Treaty of Rome, which set a goal of a single market by 1992. Indeed Thatcher was an enthusiastic advocate of the single market as a way of removing barriers to trade, though it also enabled the free movement of labour, an issue which was to become a potent source of Euroscepticism in the following decades. However Thatcher was becoming increasingly suspicious about the direction of the EU. In a 1988 speech to the College of Europe in Bruges outlining her view of the EC’s future Thatcher emphasised that Britain’s destiny was ‘in Europe, as part of the Community’ but not as part of a federal union. She added: ‘We have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed at a European level with a European super-state exercising a new dominance from Brussels.’6 She also opposed the Delors Plan—named after EC president Jacques Delors—which outlined the stages towards economic and monetary union.

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Thatcher’s battles with the EC damaged relations with her pro-Europe Cabinet members as well as hardening divisions between supporters and opponents of the EC within the Conservative Party. Reluctantly pushed by her Foreign Secretary Sir Geoffrey Howe and her Chancellor Nigel Lawson to join the European Exchange Rate Mechanism (ERM) with the pound pegged to the deutschmark she later sacked Howe while Lawson resigned. Both departures weakened her already diminishing authority in the party and in November 1990 she resigned, being replaced by John Major (PM, 1990–1997). The decision to join the ERM in October 1990 proved a political disaster for the Tories, if less so economically for the country. Soon afterwards in July 1990 the UK entered a recession, following a boom in the late 1980s, and the pound, instead of floating downwards, was trapped at an artificially high exchange rate linked to the stronger deutschmark. The resulting Black Wednesday, on September 16 1992 when speculators hammered the pound until the government was forced to suspend membership of the ERM, was a humiliation for John Major and destroyed the Conservatives’ reputation for economic competence. Ironically, freed from the shackles of the ERM, the pound found its natural level and the economy began to improve, a development not lost on Tory Eurosceptics whose influence within the party as well as government was on the rise. John Major, whom to the surprise of many commentators won the 1992 general election albeit with a majority of only 21, spent much of his term in office battling with his own increasingly Eurosceptic party. The EC’s drive for greater integration acted as oxygen for Euroscepticism while his slender parliamentary majority exposed him constantly to Commons revolts. One of his biggest battles was over the 1992 Maastricht Treaty creating the newly named European Union and its ‘new stage in the process of creating an ever closer union among the peoples of Europe.’ It paved the way for a single currency, created the European Central Bank and opened membership for the new independent states of Central and East Europe. Tory rebels helped defeat the treaty when it came before the Commons and Major only won by using a vote of confidence. Assailed by an increasingly Eurosceptic media, the pragmatic Major continued to battle with both Brussels and his backbenchers. In 1994 he tried and failed to block the appointment of an arch-federalist as European Commission president after Delors and also failed to make changes to majority voting rules that would have enabled the UK to obstruct federalist measures. There was also disagreement among ministers over

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whether or not the UK should join the single currency despite the backing of influential Cabinet ministers like Ken Clarke, the Europhile Chancellor. The single currency was created in 12 member states in 2002 but the UK never joined. Meanwhile to create added complexity to EU politics, Austria, Finland and Sweden became members in 1995, East Germany having been absorbed into the EU in 1990 as part of a united Germany following the collapse of the Berlin Wall. The EU was fast becoming a very different entity to the one the UK joined two decades previously. Referendums had been rarely applied by British politicians for fear of bypassing Parliament, the previous plebiscite being to stay in or leave the EC in 1975, but soon they became a means of solving difficult decisions about both further European integration and devolution within the UK. There were referenda for Scottish and Welsh devolution in 1979 and then in 1997, for a Greater London Authority in 1998, and to endorse the Northern Ireland Good Friday Agreement in 1998. In 2004 Prime Minister Tony Blair (PM 1997–2007) promised to hold another referendum on a new constitution being drawn up by the EU which brought more powers for Brussels but before he could do so the constitution was rejected in plebiscites in France and the Netherlands. Brussels duly went back to the drawing board and came up with a new version wrapped up in what became the Lisbon Treaty. Conservative Opposition leader David Cameron in turn promised to hold a referendum should he win an election before the Treaty could be signed by all the member states. In the event the UK signed in 2008, two years before the UK election took place and it became law in December. Cameron duly pledged that he would put any new future treaty to a referendum, referring to the ‘steady and unaccountable intrusion of the EU into almost every aspect of our lives.’ In his memoirs published in 2019 he said he could feel the pressure on Europe ‘quietly building’ and that a referendum might be ‘on the cards at some point in the future’ while insisting that ‘of course’ the UK would remain a member of the EU.7 By 2010 the UK had been a member of the EU for 37 years. When it joined in 1973 its economy was enfeebled and for years its poorer regions were the recipients of EU regional funding. The ensuing years saw the UK economically transformed. Its booming financial services sector, which far outweighed its rivals in Europe, represented 7% of the UK’s GDP and 13% of its exports and generated a huge trade surplus. Many multinational firms, whether in the finance sector, or in manufacturing, based themselves in the UK precisely because it was a member of the EU single

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market and therefore an entry point into Europe’s 500 m population. The EU became the UK’s largest trading partner representing around half its imports and exports while the UK’s exports to EU member states were worth £218bn in 2010, around 45% of its total, generating 3 m jobs. The period of membership coincided with the growth of international tourism but Britons enjoyed visa-free and easy access to Europe’s cities and coasts for one of the key features of the EU’s single market, to which the UK was a signatory, was freedom of movement. This meant citizens of member states could work and live anywhere within the EU. In practice the number of UK citizens working abroad was low in comparison with those from other states flocking to booming Britain although many older Britons moved to Spain for its sunshine and the middle classes bought second homes in France and Italy. Many of the issues concerning lack of sovereignty, poor living standards or over-regulation that were blamed on the EU were often within the remit of national governments to address. Tony Blair later said in a newspaper interview: ‘I was Prime Minister for 10 years and I can’t think of a single law that I wanted to pass that Europe told me I couldn’t, or any law they made me pass that I didn’t want to.’8 To millions of Britons born since 1973 and especially since the early 1990s, the period of the last recession, economic prosperity and freedom of movement coincided with EU membership. They saw themselves as citizens of Europe as well as the UK. It was no coincidence that these generations would later vote to remain.

Freedom of Movement In 2004—by which time Labour had been in power for seven years— the EU saw its greatest enlargement to date, when Cyprus, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Malta, Poland, Slovakia and Slovenia (the so-called EU 10 accession countries) joined. The combined population of the eight East European countries (the so-called A8) was 72 m and to prevent an influx of immigrant workers into existing member states the Accession Treaty stipulated a transition period of seven years during which the existing member states could restrict access of workers from the EU 10 to their labour markets. Britain’s Home Office commissioned a report that said if the UK labour market were opened up the number of immigrant workers from the ten new member states would only be between 5000 and 13,000 annually. As a result the UK

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government decided not to impose controls on workers from these countries. It was also influenced by an earlier report in 2000 Migration: An Economic and Social Analysis which maintained that ‘market-driven immigration’ was good for the economy and that to try and reverse it would be damaging. At the time the decision not to impose restrictions on EU migrants was barely noticed but with a strong economy, plenty of jobs and a language that was familiar to many East Europeans who had learned it at school, the UK was an attractive prospect. At the end of 2004 the Annual Population Survey estimated that there were 167,000 people born in the A8 countries living in the UK. Within one year that number had increased by over 100,000 and by 2006 it had increased by another 156,000. Between 1983 and 2017 the ratio of working-age EU immigrants to the working-age UK-born population increased from 1.3% to 7.9%, a growth of 6.6%.9 Almost all the East European immigrants came for work, filling jobs in hospitality, care and agriculture that Britons themselves shunned mainly because of the low pay. As they were young the immigrants were infrequent users of state services like the NHS even though they still paid taxes. Skilled immigrants especially in the construction trade were often hard-working and competitively priced to the delight of consumers but to the irritation of indigenous builders who found their own estimates undercut. Jokes about ‘Polish plumbers’ abounded among middle-class users of their services. But the flood of overseas workers generated resentment in poorer areas where large numbers settled, such as in rural towns in the East Midlands or smaller cities in the North, or where it was felt employers were using their cheap labour to keep down wages. Opposition to immigration, outside multicultural London, was highest in poorer, Labour voting areas. Since the government had no way of restricting immigration from within the EU because of the latter’s freedom of movement policy, a sacrosanct part of the single market to which the UK was a signatory, resentment in poorer areas, already the most Eurosceptic, began to turn against membership of the EU itself. To many critics of migration blaming the EU for the increase in immigration was also a means of expressing opposition to wider immigration, both EU and nonEU, for immigration from outside the EU, which the UK could control, was almost as high as immigration from the EU, which it could not control. Between 2004 and 2019 the share of the UK population from the EU rose from 2.5% to 5.5% while the non-EU share rose from 6.4%

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to 8.9%.10 Immigration also became a lightning rod for other grievances like poor housing, overcrowded schools and hospitals or lack of jobs which had little to do with migrants but were the consequence of UK government policy.

The public’s View of the EU Membership of the EU was rarely trumpeted by politicians or the media. The arcane institutions, treaties and bureaucracies of the EU were of little interest to the British public. Turnout for the first European parliamentary elections in 1979 was a paltry 32% compared to an average 62% across the then eight other member states. Thereafter it was never above 50%. In 1984 UK turnout was again the lowest in Europe at 32.6%, in 1989 it was 36%, and in 2004 still only 38%. The British public received its information about the EU from the media whose tabloids and right of centre newspapers were increasingly Eurosceptic and its coverage in consequence mostly critical. Media coverage tended to focus on the rows and tortuous negotiations between British Prime Ministers and Brussels in which the former could not afford to be seen as losers and every debate had to end in victory or defeat with no compromises. It was difficult for Conservative Prime Ministers in particular to extol the positives of the EU when so many of their backbenchers were hostile to Brussels and suspicious of any sign of conciliation. The EU was seen as an opponent to be bested in combat on the battlefield, namely the airless confines of the commission’s Brussels offices. Yet despite the mostly negative media coverage of the EU public attitudes to membership did not always follow suit as pollsters MORI found in a series of regular opinion polls. There was a wobbly start after the 1975 referendum in which by March 1979 60% now said they would vote to leave in another referendum and only 32% said they would vote to remain. The next year the gap was even wider, at 65% to 26% but thereafter declined until in 1987 47% backed remain and 39% to leave. Throughout the 1990s and despite John Major’s bruising battles with his Eurosceptic party public opinion was broadly in favour of staying in the EU. In the ten years that Tony Blair was Prime Minister, British attitudes to EU ‘fluctuated between reasonably comfortable majorities for staying in and narrow leads for the leave camp.’ MORI’s only poll on EU membership under the government of Gordon Brown taken in September

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2007 showed a big majority for membership, and this was three years after an influx of East European workers from the 2004 new accession states.11 A separate Gallup survey for the EC in 2010 showed an even balance between supporters and detractors of the EU but a clear generational and educational divide. It found that 42% of respondents had a positive view of the EU while 39% had the opposite. A third of respondents felt the economic benefits of the UK being a member of the EU outweighed the costs while 40% took the opposite viewpoint. A positive perception of the EU was well above average among the youngest respondents (aged 15–24: 63%), full-time students (67%) and those with the highest level of education (59%), On the other hand, manual workers (53%), British citizens older than 54 (48%), rural residents (45%), those with the lowest level of education (48%) and men (45%) were particularly likely to have a negative image of the EU, a pattern that later featured clearly in the 2016 referendum. The British public’s lack of knowledge about, or interest in, the EU was starkly confirmed in the Gallup survey which found that just 18% of respondents felt informed about the EU while 82% said they knew ‘little or nothing.’ Only 5% thought that information about the EU was ‘simple and clear’ but 48% also recognised a negative bias in media coverage, especially among the written press. Furthermore respondents showed little interest in finding out more about the EU with 38% saying they were ‘not interested at all’ and 22% answering ‘quite uninterested.’ Because of their lack of knowledge in the EU, the public often had misconceptions about its cost. The UK actually paid 0.5% of its national income into the EU. The average figure cited by survey respondents was 19% and those most negative about the EU over-estimated its contribution by even higher amounts. Three-quarters of respondents thought the EU budget was bigger than the UK’s although the UK’s was six times larger while 42% wrongly believed there was an EU tax.12 Despite repeated calls from the far right for another referendum on staying in or leaving, there was little sign on the eve of the new decade that the political establishment had any intention of ending Britain’s almost four decades of EU membership or that the public expected any imminent change. There were however indications that as a political issue the EU was moving up the public’s agenda. Significant immigration from the new East European EU member countries since 2004 was stoking hostility, particularly among white working-class voters, to the EU’s freedom of movement rules. The far right anti-EU, anti-immigrant

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UK Independence Party (UKIP), a negligible force in British domestic politics ever since its formation in 1993, was the principal beneficiary of this resentment, gaining seats in European elections helped by the proportional representation voting system which benefited smaller parties. Because voters regarded the European Parliament elections as unimportant they tended to use them as an opportunity to register discontent with domestic politics. In the 2004 euro elections UKIP increased its number of European parliamentary members (MEPs) from three to 12, becoming the fourth largest UK party in the European Parliament with 15.6% of the vote, albeit on a low 38% turnout. Indifference and scepticism about the EU among the public tipped into hostility whenever Brussels appeared to be pushing for more integration. MORI noted that although in favour of membership the public were hostile to political and monetary union and in all its polls between 1991 and 2007 asking whether the UK should join the single currency MORI never found any majority in favour. But there was no clear evidence that the British actively wanted to leave the EU. Their attitude was one of indifference and as a result ignorance about the EU but there was no clamour for a referendum, no obvious spark that might turn apathy into hostility. However public fury about domestic issues in the UK such as resentment against the financial and political establishment over the banking crisis and the MPs’ expenses scandal plus the recession, which reached its peak in 2009, required an outlet. That year one conveniently came along in the shape of European elections.

European Elections 2009 With unfortunate timing for the Labour government and the political establishment, weeks after the MPs expenses scandal, with the recession at its peak and households feeling the squeeze on their living standards, elections for the European Parliament were held in June 2009. This was the first major opportunity for voters to register their disgust with the political establishment since the recession and ‘in essence the election ended up being a referendum on the established parties and the Labour government in particular’ as a 2010 European academic study of the election later noted, adding: ‘The political atmosphere in the UK in the spring of 2009 was characterized by mounting public disaffection in politicians, a

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lack of confidence in the political system as a whole and furious activity by the leaders of all parties to respond to this unprecedented situation.’13 The turnout was even lower than the previous euro elections at 34.3% but those who did bother to vote sent a clear message to the main parties. For Labour it was a disaster. The party recorded its worst result in a national election for nearly a century with just 15.7% of the vote while UKIP shot into second place with 16.5%. In an ominous portent of what would occur on a larger scale ten years later, Labour was losing its core working-class vote not to the left-wing splinter parties but to the populist right. UKIP gained an extra seat, winning 13, the same as Labour, while the extreme right wing party, the anti-immigrant British National Party, gained two seats in the industrial regions of the North West and Yorkshire & Humberside. Labour’s longstanding dominance in Wales was also broken and in Scotland it was overtaken by the rising Scottish National Party which took 29% of the vote. The European academic study the following year commented on Labour’s performance: ‘In the face of an economy that shows no signs of recovery, of likely future public spending cuts, and of big questions over how government is run, support for the party is evaporating.’ Shrewdly the researchers concluded that ‘the gains of both UKIP and the BNP have put further pressure on the traditional shape of the British party system; the arrangements for power-sharing in Northern Ireland appear increasingly under strain; and there is growing debate over all sorts of political and institutional reform, right across the UK. In short, this second-order election looks to have produced first order consequences.’14 The election confirmed that the political kaleidoscope was breaking and that previously minor parties were moving centre stage at the expense of the main parties as voters registered their anger over the recession and the expenses scandal. Membership of the EU had barely featured even in the European election campaigns which focused on domestic concerns but one controversial issue was about to put Europe right in the electorate’s firing line: immigration.

Notes 1. European University Institute, Florence, Italy. (2010). The 2009 Elections to the European Parliament Country Reports. 2. European Commission. (September 2009). Eurobarometer 71: Public Opinion in the European Union.

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3. Margaret Thatcher. (September 20 1988). Speech, College of Europe, Bruges. Margaret Thatcher Foundation. 4. Prof. David Edgerton. (April 2019).Tortoise. 5. Norman Shrapnel. (August 1961, quoted August 1, 2016). The Guardian. 6. Margaret Thatcher. (September 20, 1988). Speech, College of Europe, Bruges. Margaret Thatcher Foundation. 7. David Cameron. (2019). For The Record. (London, William Collins, p. 120). 8. Tony Blair, interview, London. (19 September, 2019). Evening Standard. 9. Home Office Migration Advisory Committee. (2018). EEA Migration in the UK: Final Report. 10. Home Office Migration Advisory Committee. (December 2020). Annual Report. 11. Roger Mortimore. Ipsos MORI. (June 22, 2016). The Conversation. Polling history: 40 years of British Views on ‘‘In or Out’ of Europe. 12. Analytical report. European Commission. (March 2011). Attitudes towards the EU in the United Kingdom. 13. European University Institute, Florence, Italy. (2010). The 2009 Elections to the European Parliament Country Reports. 14. ibid.

CHAPTER 3

The Immigration Debate

In the first decade of the twenty-first century Britain, or more accurately England, experienced the largest increase in immigration the country had ever seen, driven by citizens from East European states, an influx described as ‘unprecedented in our history’ by a House of Lords report and yet for which there had been no plans, no preparation, no public consultation and no prior research about its potential impact.1 The flow of immigration simply happened and the result was eventually to upturn British politics. Public concern about the scale and speed of immigration, driven in particular by the open borders created by the EU single market of which the UK was a signatory, crystallised opposition to the EU itself. A later study concluded that ‘surging public concern about immigration was a central factor in both the rise of [the UK Independence Party] as a new political force and in the majority vote for “Brexit” in the 2016 EU membership referendum.’2 Numerically the numbers were small. In fact most of the UK had little experience of immigration and even those that did assimilate migrants locally. While 76% of the population saw immigration as a national problem, only 18% saw it as a problem locally. By 2010 the UK population included 2.24 m who were born in an EU member state, only 3.6% of the total, and still considerably less than those born in a non-EU country at 4.8 m or 7.7%.3 But the number of foreign-born residents in the UK in 2011 at 8 m was up 63% from 2001 of which those from Poland were © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_3

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the second highest national group.4 The growth in EU migrants boosted the UK economy as the newcomers were young, mostly educated, easily found work, paid taxes and were low users of public services. But for Britons the experience of immigration depended on their economic status and where they lived. In cosmopolitan London, already used to decades of immigration, the newcomers from East Europe were more easily assimilated, filling jobs from financial services and hospitals to coffee bars, restaurants, specialist grocers and minicab drivers and adding to the capital’s diversity while the middle classes benefited from the hardworking, and cheaper skilled trades people, the much-quoted ‘Polish plumbers.’ Public services like the NHS and especially low-paid social care which faced constant staff shortages came to rely on EU migrant labour to fill vacancies. For a small number of less wealthy areas in England unused to immigration it exacerbated social tensions, especially where newcomers filled low-paid jobs or were exploited by employers using them as cheap labour in favour of the local workforce. In former industrial areas where the numbers of migrants were low immigration became a lightning rod for wider discontent among the existing population about working conditions and stagnant pay and was swiftly exploited by far right groups. Although the total number of immigrants was around 7.7 m in 2010 it was still low as a proportion of the population, at 12%, and most areas had virtually no immigrants at all. While some migrant workers and their families had a social impact in specific localities outside London much of the antipathy towards immigration was based on resentment of social change caused in part by globalism which migrants were seen as representing but also by government policy. One study commented: ‘Migration can be seen as a touchstone issue signifying a broad range of concerns pertaining to overburdened public services, pace of change, job insecurity and the perceived laxity of border controls.’5 Because EU immigration was out of the UK’s control, being a central strand of the 1993 European single market which allowed people, goods, services and money to move around as if in one country, opposition to it provided a powerful impetus for opposition to the EU itself.

Freedom of Movement Immigration into the UK in itself was not new; the difference from 2004 was its scale and the speed. Immigration had become a feature, albeit

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limited, of British life since the nineteenth century when East European Jews escaping persecution settled in London’s East End. After the Second World War the Labour government in 1948 allowed any subject of the British Empire to work and live in the UK and in the 1950s Jamaicans arrived to take up jobs in the then booming economy, settling in poorer urban areas in London and the Midlands. They were later joined by immigrants from India and Pakistan, many of whom gravitated to the northern English mill towns for work, then from the new state (since 1971) of Bangladesh who settled in London’s East End, often in the areas where nineteenth-century Jewish immigrants once inhabited, and Asians from East Africa as well as Turkish Cypriots and other nationalities. But as immigration levels rose, albeit from a low base, public hostility compelled the government to curtail its open door policy and introduce restrictions. The 1971 Immigration Act repealed all previous legislation on immigration creating strong control procedures, including new legal distinctions between the rights of the UK-born/UK passport-holders and people from former British colonies such as India, Pakistan and the Caribbean who became subject to immigration controls. The origins of public awareness in the mid-2000s onwards over EU migration stemmed from the UK Labour government’s decision to allow workers from the eight new mainly East European countries, Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia, that joined the EU in 2004 (known as the A8 or later the EU8) to immediately take jobs in the UK rather than impose a transition period of seven years which the EU had proposed. (The EU28 are all the countries in the EU. The EU15 are the countries that joined before 2004, the EU8, formerly the A8, are the Central and East European states that joined on May 1 2004 and the EU2, formerly the A2, are Bulgaria and Romania that joined on January 1 2007.) The single market, launched in January 1993 and one of the EU’s great success stories, allowed free movement of people, goods, services and money to flow across member states, removing obstacles to trade and creating competition. One of its early supporters was Margaret Thatcher. Under the terms of the single market citizens from EU member states were allowed to work and settle in any other member state. The decision by the UK government to allow immediate entry for the A8 countries followed a report from the UK’s Home Office which hugely underestimated the number of immigrant workers from these new East European member states, predicting flows of between 5000 and 13,000 a year. At

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the end of 2004 the Annual Population Survey estimated that in fact there were 167,000 people in the UK born in the eight East European states that had joined that year. Within one year that number had increased by over 100,000 and by 2006 it had increased by another 156,000. Between 1983 and 2017 the ratio of working-age EU immigrants to the working-age UK-born population increased from 1.3% to 7.9%, a growth of 6.6%.6 This was in addition to non-EU immigration over which the UK government, as opposed to EU immigration, at least had control. A House of Lords report in 2008 commented that ‘net immigration— defined as immigration minus emigration from the UK—of non-British persons trebled from less than 100,000 per year in the early 1990s to over 300,000 in 2006, reaching a scale unprecedented in our history.’ It added: ‘Between 2001 and 2006, the UK population grew by 2.5% (about one and a half million people in total), which is the fastest rate of growth since the first half of the 1960s when the birth rate was much higher than today. Most of the recent population growth has been driven by rising net immigration of foreign nationals. Foreign-born persons currently account for about 10% of the population (and about 12% of the working-age population aged 16–64), up from just over 6% in 1981 and just over 8% in 2001.’7 A study by opinion pollster Ipsos MORI wrote: ‘On census night 2011, the population of England and Wales was 56.1 m, which had grown by 3.7 m in the 10 years since the last census, an increase of 7.1%. This was the largest growth in the population of England and Wales in any 10-year period since census-taking began in 1801 … In England and Wales, 56% of the population increase between 2001 and 2011 was due to migration.’8 A study from the official Home Office Migration Advisory Committee (MAC), set up to provide evidence-based analysis on the impact of immigration, stated: ‘Before 1990 the inflow of migrants was always below 300,000. Since then it has doubled. The outflow has also risen, but much more modestly … The major change over the last decade is the growth in the relative fraction of EU net migrants.’9 What made post-2004 EU immigration different from previous years was that, unlike non-EU immigration, the UK government had no control over its levels because free movement of labour was a sacrosanct part of the EU single market. The MAC commented: ‘Prior to the 2004 expansion of the European Union (EU), there was little concern

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expressed in the UK about free movement, perhaps because the flows were small and relatively balanced. After the expansion of the EU in 2004, the flows became much larger and mostly towards the UK and public concern about immigration also rose… Free movement was not a political issue prior to 2004 when EU migration was relatively low.’10 Yet as a proportion of the population the numbers were still low, the new visitors assimilated well, worked hard, made few demands on public services and if anything reflected the buoyancy of the UK’s economy. The UK was an especially attractive destination for young East Europeans, whose countries had won independence from the collapsing Soviet Union over a decade previously and whose economies were still emerging from years of stagnancy. To young East Europeans the UK was a magnet because of its wage levels, its availability of jobs and its language. Furthermore this was not one-way traffic. Freedom of movement also applied to UK citizens who were also able to live and work anywhere in the EU and over a million did indeed take up the option. The warmer climates of southern France, Spain and Italy were especially attractive to older Britons who could buy inexpensive homes on the coast, live off their British pensions and have the same tax and social security benefits as the citizens of the countries they adopted such as access to the health system. In 2014 there were 237,000 Britons living in Spain, double the number in 2001. In the UK criticism of the new immigrants was not so much against them as migrants but that their arrival was largely unplanned by the government and their impact unqualified. Mindful of growing public concern and with little empirical evidence on the impact of immigration on jobs and public services the government set up in 2007 the Migrant Advisory Committee (MAC) based within the Home Office to provide independence, evidence-based advice on migration issues and to provide recommendations. As the MAC noted: ‘The problem with free movement is that it leaves migration to the UK solely up to migrants and UK residents have no control over the level and mix of migration. With free movement there can be no guarantee that migration is in the interests of UK residents.’11 The Labour government, which had severely underestimated the amount of immigration from the A8 countries, introduced a points-based system to manage non-EU migrants, those which it could at least control as opposed to those from the EU who were allowed to settle in the UK under the terms of the single market.

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Empirical evidence at least countered unfounded criticism of immigration who argued that it forced down workers’ pay, created social tensions and placed pressures on public services because of increased population in an already overcrowded island. There were media-fuelled allegations of immigrants coming to the UK to live on benefits, some of whom were in fact asylum seekers who had no choice as they were not allowed to work. A large proportion of overseas visitors were also students, bringing income to the UK. Studies by the MAC concluded that ‘migrants have no or little impact on the overall employment and unemployment outcomes of the UK born workforce,’ and that there was minimal negative impact on wage rates. A study by Oxford Economics found that EU migrants paid more in taxes than they received in public services, largely because they had high employment rates, were better educated than the UK-born population and being younger required fewer public services. The MAC did accept that the population increase of an average 250,000 a year ‘sounds dramatic’ but that ‘another way of imagining that same statistic is to picture a street with 100 people living in it. In five years’ time, the current levels of net migration mean that street will have 102 people living in it, this sounds less dramatic.’12 A separate MAC report found that low-skilled work accounted for around 13 m jobs, 16% of which were held by migrants, that the main benefits went to labour-intensive employers who could not find a sufficient supply of UK-born labour and that migrants also gained as wages were higher than their home countries. Costs included rapidly changing populations ‘with implications for cohesion and integration’ and extra pressure on health, education and transport services. There was ‘a small negative impact on the wages of low paid workers’ but overall ‘skilled migrants are much more likely to be complementary to British labour and capital. They contribute, net, to productivity, the public finances and the employment prospects of local labour.’13 A House of Lords report reckoned immigration ‘has had a small negative impact on the lowest-paid workers in the UK, and a small positive impact on the earnings of higher-paid workers. Resident workers whose wages have been adversely affected by immigration are likely to include a significant proportion of previous immigrants and workers from ethnic minority groups.’14 The Migration Advisory Committee (MAC) that advised the government noted that between 1983 and 2017 the ratio of working-age EU immigrants to the working-age UK-born population increased from 1.3%

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to 7.9%, a growth of 6.6%. The MAC suggested that the EU immigration over this 34 year period reduced the employment rate of the UK-born working aged population by around 2%, increased the unemployment rate by around 0.6% and also decreased the participation rate by 1.8% compared to a scenario with no EU immigration. Over this same period the employment rate for the working-age UK-born population increased from 63.9% to 74.8% while the unemployment rate fell from 11% to 4.3%. The committee added: ‘Taking all the relevant new evidence into account it remains the case that the majority of studies find no or little impact of immigration on the employment and unemployment outcomes of the UK-born workforce.’15 Repeated economic studies maintained that immigration from the EU accession states added to the UK’s GDP and indeed the Office for Budget Responsibility later factored in a negative cost for lower immigration after the UK left the EU. However this yardstick was criticised by independent research for taking too a narrow focus. The MAC complained it gave little, if any, attention to the social impact, saying: ‘When a new motorway is being evaluated, the impact assessment is relatively straightforward because the UK population is assumed constant. By contrast, changes in migration policy alter the size of the population. Before 2012 government impact assessments did not consider this issue. They simply calculated gross domestic product (GDP) lost or gained because of less or more immigration. Such an approach was not sustainable as it led to the conclusion that more immigration is automatically good because it raises GDP.’16 A report by the House of Lords in 2008 said the real determinant should be the impact on the income per head of population, concluding: ‘Overall GDP, which the Government has persistently emphasised, is an irrelevant and misleading criterion for assessing the economic impacts of immigration on the UK. The total size of an economy is not an index of prosperity. The focus of analysis should rather be on the effects of immigration on income per head of the resident population.’17 Labour’s later leader Ed Miliband admitted that by ‘focusing exclusively on immigration’s impact on growth, we lost sight of who was benefiting from that growth - whose living standards were being squeezed. We became disconnected from the concerns of working people.’18 The 2008 House of Lords report concluded that: ‘In the short term, immigration creates winners and losers in economic terms. The biggest winners include immigrants and their employers in the UK. Consumers

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may also benefit from immigration through lower prices. Taxpayers are likely to benefit from lower costs of public services. The losers are likely to include those employed in low-paid jobs and directly competing with new immigrant workers. This group includes some ethnic minorities and a significant share of immigrants already working in the UK.’19

Public Attitudes to Immigration Only a minority of the public were likely to wade through erudite studies from think-tanks and bodies like the Migration Advisory Group on the economic benefits of immigration so what mattered were perceptions, based either on the public’s own experiences of where they lived or if they had no direct connection with migrants, what they believed. Polling body Ipsos MORI said that ‘British concern about immigration is not directly linked to economic competition over jobs but rather more to other factors such as being “swamped” by foreigners, perceived unfair access to public housing and other state services and concern about weakening of community.’20 The public’s view was influenced by press coverage of immigration which in the tabloid newspaper media focused on asylum seekers, benefit frauds, crime and stories of public services struggling with migrant demand. Although health staff were regularly praised there was little reference to how much the NHS depended on immigrant nurses, doctors and ancillary staff or that EU migrants gave more in taxes than they received in services. Ipsos MORI explained: ‘In the twenty-first century immigration regularly topped all other issues as the biggest problem facing the country. This change came about for two reasons|: a real rise in the volume of people entering Britain but also the media debate about immigration.’ The public were more understanding about what they knew in their local area rather than across the nation. While 76% of the population saw immigration as a national problem, only 18% saw it as a problem locally. In 2004 concern was strongest in the South West and the North East where immigration was lowest and yet white Londoners in a city with a 40% non-white population were the least concerned, perhaps because the capital has long been a diverse area.21 Ipsos MORI, which ran regular surveys of public attitudes, distilled its views in a 132-page study Perceptions and reality: public attitudes to immigration which concluded that the public ‘hugely overestimate the scale of the immigrant population.’ It found, for example, that ‘the public’s

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average guess at what proportion the foreign-born population make-up of the UK is 31%, compared with the official estimate of around 13%.’ It also found that the most mentioned are refugees or asylum seekers, ‘despite these being the least common immigrant type. The least mentioned group were people who come here to study, when in fact students were the largest category of migrant to the UK in 2011.’ The study also found ill-founded concerns about the impact of immigration on public services irrespective of the fact that EU migrants in particular were net contributors to the public finances due to their younger age profile. This was perhaps understandable because the public had only a limited picture: migrants’ tax contributions were invisible but their use of local services was not. Hostility to immigration tended to be strongest among the older age groups, the generation born before 1945 being nearly twice as likely as generation Y (born 1980–2000) to consider immigration a problem in 2013. Hostility was also more prevalent in former industrial areas. Ipsos MORI found that white Britons living in the ‘superdiverse’ and ‘cosmopolitan London/periphery clusters’ were least likely to want to reduce immigration, while ‘Northern manufacturing and industrial towns’ and areas of ‘low migration were amongst the keenest to see immigration reduced.’ Hostility was especially marked in areas where asylum seekers were dispersed, often where there was already pressure on housing and jobs, naming Bolton, Portsmouth, Swansea and Rotherham, all of which later voted to leave the EU. In the 10% least ethnically diverse wards, the proportion of the white British population who thought that immigration should be ‘reduced a lot’ was 64%, falling steadily as ethnic diversity increased, so that in the 10% of the most diverse wards this figure reduced to 44%. Opposition to immigration was strongest among the skilled white working class and older residents, both groups which would later be prominent Brexiteers. The report added that ‘the oldest generation (those born per-1945) are much more concerned than the youngest, as are those in skilled manual work compared with higher social classes. Between areas, there remain the patterns we have seen for a number of years, with less diverse regions and districts tending to be most concerned about immigration.’22 Immigration was also a broad term that covered all levels of workers, from doctors and scientists to fruit pickers, and attitudes varied accordingly. For example, a 2011 Migration Observatory/IpsosMORI study found that attitudes towards low-skilled labour migrants, extended family

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members and asylum seekers were much more negative than attitudes to high-skilled migrants, students and close family members. This general pattern was found again in a Migration Observatory/YouGov study conducted in both Scotland and England and Wales. Prior to that study, a 2010 survey found that 72% supported admitting more doctors and nurses from other countries to cope with increasing healthcare demands, while 51% supported admitting more care workers to help the burdens of an ageing population.23 Evidence, such as existed, on the impact of large-scale immigration in the mid-2000s onwards found it to be far less negative than portrayed by critics but equally less positive than painted by its supporters. The Migration Advisory Committee concluded as late as 2018 that ‘EEA migration as a whole has had neither the large negative effects claimed by some nor the clear benefits claimed by others.’ The MAC added: ‘We found a hint of a positive effect for those with more positive views of migrants and a negative effect for those with negative views.’24 But facts were almost irrelevant to the debate since it was perception that counted among voters and many believed immigration was too high, that the EU was partly to blame because freedom of movement meant any one of 512 m residents in the EU could work in the UK and the government was powerless to prevent them. This resentment was highest in lower income areas and among the ‘white working class’ but lower among the middle class. As the Ipsos MORI report concluded: ‘The public’s concern about the increase in immigration in the early 2000s was not taken seriously as quickly as they would have liked, as has been covered in a number of studies and commentary pieces… the top social classes were slower to see immigration as a concern.’25 Immigration therefore became a political issue in the 2010 general election, Conservative leader David Cameron pledging to reduce net immigration to 100,000, a hopelessly ambitious figure that was never met, not least because it also included foreign students who in addition were also contributors to the economy as they paid tuition fees. The public was sceptical that with a third of migrants coming from the EU, it would be possible for the government to control numbers anyway because of freedom of movement. The immigration issue there became conflated with future membership of the EU: it would prove to be a major factor in the referendum.

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Notes 1. House of Lords Economic Affairs Select Committee. (March 2008). The Economic impact of immigration. 2. NatCen Social Research/British Social Attitudes 34. (2017). How attitudes in the UK compare with Europe. 3. Eurostat. (2011). Population and social conditions (Luxembourg, No 34). 4. Migration Observatory, University of Oxford. (September 2014). Migration in Great Britain. Census Factsheet. 5. Ayesha Saran. Transatlantic Council on Migration. (2009). Public Attitudes on Immigration. The United Kingdom in an International Context (Washington and Brussels). 6. Migration Advisory Committee, Home Office. (2018). EEA Migration in the UK: Final Report. 7. House of Lords Economic Affairs Select Committee. (March 2008). The Economic Impact of Immigration. 8. Bobby Duffy and Tom Vere-Smith. Ipsos MORI Social Research Institute. (January 2014). Perceptions and Reality|: Public Attitudes to Immigration. 9. David Metcalf, Chair, Migration Advisory Committee and London School of Economics. (June 2016). Work Immigration and the Labour Market. 10. Migration Advisory Committee, Home Office. (2018). EEA Migration in the UK: Final Report. 11. Ibid. 12. Ibid. 13. David Metcalf, Chair, Migration Advisory Committee and London School of Economics. (June 2016). Work Immigration and the Labour Market. 14. House of Lords Economic Affairs Select Committee. (March 2008). The Economic Impact of Immigration. 15. Migration Advisory Committee, Home Office. (2018). EEA Migration in the UK: Final Report. 16. David Metcalf, Chair, Migration Advisory Committee and London School of Economics. (June 2016). Work Immigration and the Labour Market. 17. House of Lords Economic Affairs Select Committee. (March 2008). The Economic impact of immigration. 18. Ed Miliband. (June 2012). Speech to the IPPR. 19. House of Lords Economic Affairs Select Committee. (March 2008). The Economic Impact of Immigration. 20. Ben Page. Transatlantic Council on Migration. (2009). British Attitudes to Immigration in the 21st Century. 21. Ibid. 22. Bobby Duffy and Tom Vere-Smith, Ipsos MORI Social Research Institute. (January 2014). Perceptions and Reality|: Public Attitudes to Immigration. 23. Migration Observatory, Oxford University. (November 2016). UK Public Opinion Toward Immigration: Overall Attitudes and Level of Concern.

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24. Migration Advisory Committee, Home Office. (2018). EEA Migration in the UK: Final Report. 25. Bobby Duffy and Tom Vere-Smith, Ipsos MORI Social Research Institute. (January 2014). Perceptions and Reality: Public Attitudes to Immigration.

CHAPTER 4

Globalism and ‘the Left Behind’

Fifteen years of prosperity, no recessions, full employment and generous public spending obscured the underlying reality that the UK in 2010 was still one of the most unequal societies in the developed world. Both geographically, with the prosperous south and the less wealthy north, and in terms of income between the very rich and the poor, the gulf between the extremes barely shifted in the four decades to the end of the 2000s despite concerted efforts by successive governments through the tax and benefits system. A think-tank report described the first decade of the 2000s as ‘a period in which housing costs rose along with fuel and food prices, benefit increases slowed, the labour market started to disappoint for certain groups, and the richest hoovered up a very large share of income growth. As a result, low- to middle-income households experienced only weak growth in disposable incomes between around 2003–04 and the financial crisis.’1 A 2004 European analysis of the UK’s divide compared to that of other EU states described it as having ‘the most extreme economic disparities of any current or new member state’ and adding: ‘the UK has the most prosperous … region in the EU, with a GDP per capita approaching three times the level of the EU-26 average. At the other end of the scale, the UK has one of the poorest EU regions.’2 The inequality was not just expressed as a North–South divide with poorer English regions concentrated in older industrial towns and cities whose manufacturing base had disappeared versus the richer areas in © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_4

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London and the South East: there were areas of high deprivation in the latter, especially in ailing seaside resorts and smaller towns in rural areas with low-wage agriculture economies. Nor was inequality just a case of a small number of very poor unemployed benefit-dependent households at the bottom of the income ladder. One study estimated there were some 6 m what it called ‘squeezed low to middle earners’ (LMEs) in the UK in 2008/9 and around 11 m adults, a third of the working population. A substantial number of struggling households were working, even homeowners, but their finances were borderline and the prospects of improving their lot through better-paid jobs were minimal partly because their educational attainment was low—almost half of LMEs (44%) had no qualifications beyond GCEs, taken at age 16. Average (mean) gross income among LME households was £25,700 in 2008/9 compared to a national average of £43,500 across all working-age households. They were, to use a phrase that would be adopted by a post-referendum Prime Minister, ‘just about managing.’3 Struggling areas tended to suffer from an ageing population, lack of skills and training and fewer economic opportunities as well as being geographically spread. A report chaired by a former Whitehall chief noted that ‘Between 1998 and 2016, London’s economy grew by 71% compared with about 30% in Yorkshire and the Humber, the North East and the West Midlands regions… High performing major towns and cities have been mainly throughout the Wider South East, for example Milton Keynes, Reading, Cambridge and Southampton… These contrast with the poor performance of other older industrial cities and towns such as Stoke, Scunthorpe and Middlesbrough… In addition, there are many communities in marginalised smaller industrial or coastal towns, and in rural areas, that have often been referred to as “left-behind” or “excluded’ … such as for example Blackpool, Merthyr Tydfil, Oldham and Redcar.’ These struggling areas would vote Leave in 2016.4 A 2018 report from the Organisation for Economic Cooperation and Development (OECD) noted that the UK ‘has the 6th highest regional economic disparities among 30 OECD countries with comparable data and recorded the 4th largest increase in disparities between 2000 and 2016. With a productivity growth of 1.3% per year over the period 2000– 16, Greater London has not only the highest productivity level among UK regions but also experienced the largest productivity growth. In terms of GDP per capita, London is among the richest 20% of the 327 OECD

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metropolitan areas. Kingston upon Hull and Sheffield are among the bottom 20% of OECD metropolitan areas.’5 Productivity is the key to improved living standards and in the poorer areas it tended to be below average, not because workers were indolent but because their employment was in low turnover, low profit, low technology and low investment industries and sectors. A later Treasury Budget report said: ‘In the long term, higher productivity remains the only path to sustainable economic growth and rising living standards. Investing in skills and infrastructure to improve productivity across the UK permits growth by enabling firms to pay higher wages, offer goods and services at lower prices, and increase their profits.’ England has historically had the highest GDP growth in the UK, averaging 2.2% between 1998 and 2018. Growth was uneven at a regional level with London having the fastest growth of all regions, averaging 3.1% between 1998 and 2018, while the North East of England had an average growth rate of 1.5%, the slowest of all regions. UK productivity growth averaged 0.3% after 2008, slowing from 2.3% in the previous decade By comparison, growth across the G7 countries averaged 0.8% after 2008, compared to 1.9% in the previous decade.6 In March 2009 a think-tank, the Resolution Foundation, produced its first ever audit of what it called ‘low to middle earners.’ The report presented ‘a statistical review of the experiences of people on low-tomiddle incomes in 2007/8,’ and concluded they were ‘too poor to benefit from the full range of opportunities provided by private markets but too rich to qualify for substantial state support.’ They were also ‘living at the edge of their means and therefore vulnerable to changes in circumstances.’7 It meant that when the Great Recession overwhelmed the economy in 2008 a substantial number of households, mainly concentrated in the North, Midlands and Wales but also in pockets of deprivation across even wealthy regions, were ill-placed to cope with the downturn because they were already in a financially perilous condition. They were not dependent entirely on benefits but they worked in low-wage jobs, their employment was unstable and their economic prospects were uncertain. They would later be dubbed ‘the left behind’ and ‘the just about managing’ and they would overwhelmingly vote for Brexit. A later study referred to the ‘geography of discontent.’8 In the December 2019 general election Conservative leader Boris Johnson capitalised on the frustration felt by working-class and lower

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middle-class Brexiteers in the so-called red wall Labour areas of the Midlands, Wales and the North by promising not only ‘to get Brexit done’ but funnel infrastructure support in their direction, garnering their votes and 50 seats as a result and winning the election. Of the 50 constituencies, 12 were in the North West, nine in Yorkshire and the Humber, nine in the West Midlands, seven in each of the North East and East Midlands and six in Wales. The constituencies were most concentrated in the stretch of the country from the outskirts of Liverpool in the North West of England to Grimsby in Yorkshire and the Humber. Later analysis of these 50 former ‘red wall’ now ‘blue wall’ Conservative seats whose population was 4.7 m found a consistent socio-economic profile. They were large towns or small cities with low population growth and below average levels of immigration, their inhabitants’ standard of living had fallen faster than other areas since the recession with a slow uptake in employment though they were not as poor as Labour seats, they had average to low skills and low aspiration and were particularly exposed to welfare cuts. Main employers were health, manufacturing and retail with higher average unemployment compared to both Labour and Conservative areas. Mortality rates were similar to Labour areas. The new ‘blue wall’ seats were therefore neither very rich nor very poor but richer than Labour seats and poorer than Conservative.9

A Post-Industrial Age The roots of the UK’s inequality were threefold. Firstly, they were down to structural changes in the economy as manufacturing, historically based in the Midlands and the North, declined. Secondly, the huge expansion of financial services from the 1980s was focussed on the city of London and thirdly, the growth of hi-tech companies tended to take place in university cities like Cambridge, Oxford and Bristol with highly skilled workforces. High performing major towns and cities were mainly throughout the wider South East, like Milton Keynes, Reading, Cambridge and Southampton while older industrial cities and towns like Stoke, Rotherham and Middlesbrough were in the Midlands and the North. Between 1998 and 2016, London’s economy grew by 71% compared with about 30% in Yorkshire and the Humber, the North East and the West Midlands regions. The industrial revolution of the late eighteenth and nineteenth centuries began in the Midlands and North West of England. It was

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based initially on textiles and then other sectors such as coal-mining, iron and steel, heavy engineering and shipbuilding. By the nineteenth century Britain was not only the largest empire the world had ever seen but also a global workshop, the China of its day, the first nation to fully industrialise, producing cotton from Lancashire, steel from Sheffield, coal from South Wales, ships from Glasgow, Belfast and the North East. After the First World War however competition from other fast-industrialising countries, notably the US, led to a long decline in the 1920s and 1930s in Britain’s manufacturing base, especially the traditional industrial heartlands of the North West, North East and South Wales. The decline was temporarily slowed by economic expansion and full employment after 1950, a period sometimes dubbed ‘the long boom’ when the then Prime Minister Harold Macmillan told voters ‘you’ve never had it so good’ and manufacturing increased by 400,000 jobs between 1959 to 1966. By the mid-1960s employment in industry was at a record level of 11.5 m people, of which manufacturing accounted for 8.97 m employees.10 From the 1960s however the decline in Britain’s traditional manufacturing base accelerated, employment declined by 580,000 jobs between 1966 and 1971 and by a further 3 m up to 1984, most lost between 1979 and 1984. The manufacturing recession of the early 1980s decimated employment, the closure of the Shotton steelworks in North Wales leading to the loss of 6,500 jobs in one day in March 1980. At the same time there was a rise in service employment, many of whose new jobs were filled by women, in leisure and recreation, education, banking, finance and business services as well as in the public sector. As one study described the changes: ‘These processes of deindustrialisation, tertiarisation and technological innovation together contributed to major changes in the economic, social and spatial organisation of the United Kingdom. Industrial decline affected not just individual industries but virtually the whole manufacturing sector in the older industrialised regions, especially in the North West and West Midlands. More than one-quarter of manufacturing jobs were lost nation-wide, a figure rising towards one-third in the North West, North Yorkshire, Humberside, Scotland and Wales. Job loss in the manufacturing sectors was far lower in some of the southern regions.’11 The decline of traditional metal-bashing jobs in the old manufacturing areas coupled with the rise of new, well-paid employment mainly in London and the South East made economic inequality notably geographic. The opening up of London’s financial services from 1986

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through the ‘Big Bang’ deregulation of the stock market jump-started a period of unprecedented expansion making the capital a global banking centre by the late 1990s but its prosperity further widened the gap between north and south. Out of the UK’s 12 regions and countries, London, the South East and Eastern all performed above the UK average while the South West, East and West Midlands, Scotland, the North West, Yorkshire and the Humber, Wales, Northern Ireland and the North West were all below average. As a later KPMG report noted: ‘Regional inequality is not a wholly new phenomenon in the UK, but the gap has certainly been widening since the 1980s.’12 One study in 1994 commented: ‘ A striking feature of UK regional problems is their persistence.’ The problem regions in the 1960s were the same as in the 1930s and ‘more than two decades later, it could be argued that the United Kingdom was almost the only developed country where historical regional unemployment rates would serve as good predictors of contemporary regional disparities.’13 This persistent regional divide was in spite of concerted efforts by both Conservative and Labour governments to drive industry and jobs to blighted industrial areas. Conservative Cabinet Minister Michael (later Lord) Heseltine, famously after a visit to Liverpool in 1981, was one politician notable in his determination to deliver prosperity to the oncebooming seaport and other cities, and created Urban Development Corporations with planning powers to drive through regeneration. Eventually 11 UDCs covered former industrial areas including London’s Docklands, the Midlands, Merseyside, Teesside and Manchester though they were criticised for being top-down and private sector-led. In the 1990s the Conservative government developed the more partnershipbased City Challenge in which cities bid for funding and later the Single Regeneration Budget which aimed to bring local authorities and communities more into the decision-making process. With a greater focus on decentralisation the Labour government from 1997 devolved powers to a Welsh Assembly and Scottish Parliament and created nine regional development agencies in England to cover the regions of London, the South East, South West, Eastern, West Midlands, East Midlands, North East, North West and Yorkshire and Humberside. The government also developed the concept of ‘The Northern Way’ in 2004, to promote the North of England abroad and created 39 community-based New Deal for Communities partnerships.

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Nonetheless one critic of government support commented that ‘the longstanding nature of problems in the UK are such that, over last fifty years, the position of all governments has been that the level of inequality is undesirable, unacceptable and should be remedied. Overall, however, aside from some notable exceptions, too little has been done, too late (often only when there is a crisis). Indeed, sometimes the policies which have been pursued have been part of the problem.’14 Nonetheless by the late 2000s thanks to a strong economy, 15 years without a recession and private sector investment Britain’s largest—or socalled core—cities notably Manchester, Liverpool, Glasgow, Birmingham, Newcastle, Leeds and Cardiff were economic success stories fuelled by ambitious regeneration projects revitalising former docks, coalyards and steelworks. Regeneration brought young people back into city centres and a virtuous circle of jobs, housing and night life brought in more young residents with disposable income making urban living fashionable again after years of neglect. There were also industrial successes, notably the renaissance of what had once been Britain’s ailing car industry, albeit now foreign-owned, such as Nissan in Sunderland, Honda in Swindon and Jaguar Land Rover in the Midlands. The big socio-economic problem areas however remained the inner suburbs and smaller towns outside the core cities which lacked investment. These poorer ‘left behind’ areas tended to have ageing populations, lack of skills and training, fewer economic opportunities and poor transport and digital connectivity. They were also bypassed by major government initiatives and inward investors. The emergence of vibrant regional capitals also highlighted the gaps within regions and the pockets of deprivation and prosperity that existed in both the north and south. Ailing seaside resorts and rural towns were especially affected, with lowwage jobs, poor housing and health inequalities from Blackpool in the North West to Great Yarmouth in the Eastern region and Hastings in the South East. Cornwall, famous for its beauty spots, was nonetheless for many years a recipient of EU regional aid through its Objective 1 fund targeted at Europe’s poorest regions. A think-tank report noted: ‘The challenge facing Britain in narrowing the gap between and within cities is substantial. The evidence suggests that differences have remained relatively entrenched since 2004. Nevertheless this static picture hides the fact that some city regions have narrowed the gap between themselves and others and in some regions intra-regional disparities have fallen.’15

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Deprivation, although more prevalent in the former industrial areas of the Midlands, North and Wales, existed right across the UK, albeit in pockets and smaller towns and rural areas. As the UK2070 study of regional inequalities noted: ‘Whilst the London region is recognised as the richest region of Europe, six of the ten poorest regions also lie within the UK. The nature and causes of inequality are problems that need to be tackled at all levels: local, regional and national.’ The report summed up these run-down areas whether former industrial towns or ailing seaside resorts as experiencing ‘the decline of traditional industries, erosion of public services, and chronic underinvestment in regeneration, whilst also needing improved transport, better broadband connectivity and skills. Their local economies are often characterised by a high number of low-pay, poor-quality jobs and low levels of start-ups.’16 The think-tank the Institute for Public Policy Research blamed a lack of skills, and employers’ reluctance to invest in skills training for those overtaken by global change when it said: ‘The adult skills system has failed to address the significant social and regional inequalities that scar our society’ adding: ‘The adult skills system has failed to address deeply entrenched regional inequalities that hold back our economy. Its record on supporting adults and communities to adapt to economic change is exceedingly poor. Many regions which were affected by deindustrialisation at the end of the last century still suffer from low pay, low productivity and high levels of inactivity. Low skills equilibria have developed in some areas, with low levels of qualification among the working-age population and low demand for skills from employers.’ It pointed out that a worker with a degree earns on average 61% more than a worker with A-levels as their highest qualifications, 85% higher than a worker with GCSEs, and 132% higher than a worker without any qualifications. It added: ‘The referendum vote to leave the EU demonstrated the extent to which many people felt that they were not sharing in the growth of the economy, and that they had been left behind by economic change. Qualification level was a strong predictor of voting behaviour; those with low levels of qualification were far more likely to vote to leave the EU’.17

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Income inequality Inequality however was not defined just by geography. There were structural changes in the economy which shifted power and wealth to the skilled and the owners of capital and away from unskilled and industrial workers. Much of the change was down to the steady internationalism of Britain’s economy from the 1980s onwards which brought with it winners and losers. Cheap goods from China and the Asia Pacific pushed retail prices down and were good news for consumers but destroyed Britain’s homegrown industries unable to compete. Cheap air travel brought holidaymakers to exotic locations their parents and grandparents could only have dreamed of visiting but left Britain’s seaside resorts denuded of tourists. As the well-paid, pensioned jobs in sectors like mining, steel, heavy engineering and shipbuilding disappeared with the demise of heavy industry they were replaced by low paid, part-time, unstable employment in call centres and retail. As a report noted: ‘In relation to employment, the decline in manufacturing is particularly striking. In just ten years from 1999 to 2008, the sector fell from being the largest employer in the UK, providing 19% of all jobs, to being the fifth largest, providing just 12% of all employment.’18 In contrast the booming financial services and high technology sector, based mainly in London, made a small number of top executives immensely wealthy sharply increasing the gap between the very rich and the middle to lower earners. Soaring house prices until the recession benefited homeowners while low interest rates after it increased asset values. According to the Institute for Fiscal Studies the share of income going to the top 1% almost tripled in the decades to 2010 from around 3% in the 1970s to 8.5% in the late 2000s. The period was marked by large increases in top pay with much smaller rises for the lower paid partially offset in the late 1990s onwards by government tax credits.19 In a 2009 study following the financial crash the IFS concluded: ‘Income inequality has risen (on most measures) in each of the last three years and is now at its highest level since our comparable time series began in 1961. Real income growth was near-zero at almost every point of the income distribution last year, so that it would only be a slight exaggeration to say that we had the same income distribution in 2007–2008 as we did in 2006–2007.’ The IFS’s 2009 report correctly predicted the forthcoming lost decade of growth saying: ‘ Given that the recent period of weak income growth

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is largely due to slow earnings growth, and that it came during a period of historically low unemployment, we may worry that things will be even worse going forward. Unemployment has risen sharply in recent months, the average earnings index has fallen for the first time in decades and the economy has entered recession. The outlook for household income growth in the near future is almost certainly bleak.’20 In an analysis of changing job patterns the Resolution Foundation found ‘evidence that there has been a growth in lower paid jobs within a category of jobs generally considered to be well-paid… For example, in the retail and wholesale sector, where managerial jobs increased between 2000 and 2008, the proportion of these jobs earning below £400 per week—adjusting for inflation—increased from 37 to 58% in this time period.’ But at the bottom end there was an increase in low-wage work, the study adding: ‘there has been an increase in the incidence of low wage work and that good jobs became increasingly polarised between the highest earners—whose wages have grown far faster than all other workers—and the rest, who have been left behind and now more closely resemble mid-range occupations rather than top jobs.’21 Quite simply the wealth was failing to percolate much down the income ladder. A think-tank report written soon after the recession commented: ‘It is a central assumption of modern, democratic economies that economic growth leads to rising living standards for the great majority of people. Now, evidence is emerging that questions that assumption. Median wages in the UK were stagnant from 2003 to 2008 despite GDP growth of 11% in the period. For some time, the pay of those in the bottom half of the earnings distribution has failed to track the path of headline economic growth. In 1977, of every £100 of value generated by the UK economy, £16 went to the bottom half of workers in wages; by 2010 that figure had fallen to £12, a 26% decline. Indeed, the trend may be even starker: inclusion of bonus payments reduces the bottom half’s share to just £10 in 2010.’ The shift was not unique to the UK, the report adding: ‘While in the post-war period, advanced economies became used to economic growth producing comparable increases in the wages of workers across the earnings distribution, in recent years this relationship appears to have broken down across a number of countries.’22 A separate study concluded that ‘another striking pattern that emerges from the trends in income poverty under Labour is the continuing increases in poverty for working-age adults without dependent children.

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Relative poverty among the group continued to creep up, as it has done for most of the past three decades; and even absolute poverty among the group did not move much, which is quite remarkable over a period in which the economy grew by 27%.’ It attributed this to Labour’s tax and benefit reforms.23 Despite full employment many households, even with those working, were also dependent on welfare support and this dependency was highest in low-wage areas, in smaller towns and cities and especially in former manufacturing areas. Post-recession spending cuts would disproportionately affect these claimants. One think-tank concluded that ‘wage inequality was by far the main contributor to the declining share of value generated in the UK economy going to the bottom half of earners in the form of wages over the period 1977–2010.’24

The Nature of Deprivation Low incomes and poverty were not confined just to the unemployed or those dependent on benefits in areas of high joblessness. In March 2009 a UK think-tank, the Resolution Foundation, set up to examine the status of households on incomes that were low but nonetheless too high to qualify for benefit support, produced its first ever audit of what it called ‘low to middle earners’ (LMEs) based on 2007/8 when the recession was in its infancy. In 2010 it produced a follow-up report estimating there were 6 m low- to middle-income households in the UK in 2008/9 (those earning £12,000–£30,000) and around 11.1 m LME adults, representing a third of the working-age population. Two years after the recession its evidence suggested that the group had been harder hit by unemployment than higher earners in the last two years. Average (mean) gross income among LME households was £25,700 in 2008/9 compared to a national average of £43,500 across all working-age households. Around 930,000 (16% of the total) had net incomes before housing costs in 2008/9 of less than 60% of the national median, meaning that they were considered to be living in relative poverty. Although they were not benefit dependent they relied on state support. In 2008/9, 30% of LME families received tax credit—a subsidy for low incomes introduced by the Labour government—compared to 25% of benefit-reliant families and 10% of higher earners. Compared to 2007/8, LME net incomes increased in nominal

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terms by 2.5% while benefit-reliant incomes, driven by above-inflation increases in several benefit payments, rose by 4.7% and higher earner incomes by 3.5%. The report described LM as ‘are rarely in crisis; they can more accurately be described as being squeezed, exposed and overlooked. Squeezed because they face limited options: too poor, for example, to easily access home ownership, but not considered priorities for social housing. Exposed because they live towards the edge of their means: unable to build up sufficient savings to maintain their lifestyles in the face of a drop in income. Overlooked because their needs are not adequately understood.’ Compared to 2007/8, LME net incomes increased in nominal terms by 2.5% while benefit-reliant incomes, driven by aboveinflation increases in several benefit payments, rose by 4.7% and higher earner incomes by 3.5%. Its analysis concluded ‘that, as the country entered recession in 2008–2009, the living standards of LMEs remained squeezed. The exposure evident prior to the economic downturn was brought even more sharply into focus by the weakening of the labour market, the restriction of access to credit, food and fuel price increases and uncertainties in the housing market.’ It warned that ‘compared to their position at the time of the last audit, it is apparent that LMEs are even more squeezed in 2008–2009. They are more exposed due to deterioration of the economy… an ongoing failure to understand the particular pressures experienced by members of the group risks further undermining their economic independence in the coming years.’ The 2010 study accurately predicted that ‘the pace of recovery is expected to be slow’ and that ‘contraction in some regions and sectors should be at least partially compensated by growth in others, but those living in the wrong areas or possessing the wrong skills-sets will face significant difficulties.’25 Deprivation was accompanied by stark health inequalities. The official Office for National Statistics found that while those living in the least deprived areas of England saw a ‘significant increase’ in life expectancy between 2014 to 2016 and 2017 to 2019 those in contrast living in the most deprived areas saw no significant changes. Males living in the most deprived areas could expect to live 74.1 years, compared with 83.5 years in the least deprived areas, nearly a decade difference in life years.26 Despite 15 years of prosperity, mostly under a Labour government, the low to middle earners—the ‘just about managing’—never seemed to enjoy the fruits of a buoyant economy. The recession in 2007/8 put paid to any prospect their lot might improve in the short-term even though

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substantial spending by Labour to prevent a depression delayed its full impact on households. Then in 2010 a different government was elected with a mandate to rebalance the public finances that had been blown off course by the downturn, and a new word entered the lexicon of recession politics: austerity.

Notes 1. Resolution Foundation, UK. (July 2018). The Living Standards Audit 2017/18. 2. John Bachtler. (2004). Regional disparities in the United Kingdom In: Karl, Helmut Rollet, Philippe (Ed.): Employment and regional development policy: Market efficiency versus policy intervention, Akademie für Raumforschung und Landesplanung, Hannover, pp. 36–49. 3. Resolution Foundation UK. (November 2010). Squeezed Britain: The 2010 Audit of Low-to-Middle Earners. 4. UK2070 Commission. (February 2020). Final Report of the UK2070 Commission Into Regional Inequalities chaired by Lord Kerslake. 5. Organisation for Economic Co-operation and Development. Paris. (2018). Cities and Regions at a Glance 2018. 6. HM Treasury, UK. (March 2020). The Budget. 7. Resolution Foundation, UK. (November 2010). Squeezed Britain: The 2010 Audit of Low-to-Middle Earners. 8. IPPR North, (2019). Divided and Connected: State of the North. 9. Charlie McCurdy, Laura Gardiner, Maja Gustafsson & Karl Handscomb. Resolution Foundation, UK. (February 2020). Painting the Towns Blue: Demography, Economy and Living Standards in the Political Geographies Emerging From the 2019 General Election. 10. John Bachtler. (2004). Regional Disparities in the United Kingdom In: Karl, Helmut Rollet, Philippe (Ed.): Employment and Regional Development Policy: Market Efficiency versus Policy Intervention, Akademie für Raumforschung und Landesplanung, Hannover, pp. 36–49. 11. ibid. 12. KPMG. (January 2020). UK Regions: A Framework for Growth: A Perspective From Our Chief Economist. 13. John Bachtler, Organisation for Economic Co-operation and Development. Paris. (1994). Regional Problems and Policies in the United Kingdom. 14. UK2070 Commission. (February 2020). Final Report of the UK2070 Commission Into Regional Inequalities chaired by Lord Kerslake. 15. Stephen Clarke, Resolution Foundation, UK. (October 2016). City Living: Devolution and the Living Standards Challenge.

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16. UK2070 Commission. (February 2020). Final Report of the UK2070 Commission Into Regional Inequalities chaired by Lord Kerslake. 17. Joe Dromey, Clare McNeil and Carys Roberts. IPPR. (July 2017). Another Lost Decade? Building a Skills System for the Economy of the 2030s. 18. Matthew Whittaker, Lee Savage, Resolution Foundation, UK. (July 2011). Missing Out: Why Ordinary Workers are Experiencing Growth Without Gain. 19. Institute for Fiscal Studies. (May 2019). Inequalities in the 21stC: Introducing the IFS Dayton Review. 20. Institute for Fiscal Studies. (2009). Poverty and Inequality in the UK. 21. Resolution Foundation, UK. (March 2012). The Changing Shape of the UK Jobs Market and Its Implication for the Bottom Half of Earners. 22. Matthew Whittaker, Lee Savage, Resolution Foundation, UK. (July 2011). Missing Out: Why Ordinary Workers are Experiencing Growth wWthout Gain. 23. Robert Joyce, Luke Sibieta, Oxford Review of Economic Policy (2013). An Assessment of Labour’s Record on Income Inequality and Poverty. Vol 29 (1), p. 178–202. 24. Matthew Whittaker, Lee Savage. Resolution Foundation, UK. (July 2011). Missing Out: Why Ordinary Workers are Experiencing Growth Without Gain. 25. Resolution Foundation, UK. (November 2010). Squeezed Britain: The 2010 Audit of Low-to-Middle Earners. 26. Office for National Statistics. (March 2021). Health State Life Expectancies by National Deprivation Deciles, England 2017–19.

CHAPTER 5

The Great Faultline: Europe and the Conservatives

The fateful decision by David Cameron to hold a referendum into whether the UK should remain in the EU was inspired primarily by two festering issues: the historic divide within the Conservative Party over Europe stretching back to the 1980s and the creation of the single European currency which accelerated, in the eyes of its critics, the drive by Brussels towards ‘ever closer union’ and even federalism. Opponents of Cameron’s decision said it was more due to the former. He in turn denied that he held the referendum because he hoped it would finally settle the splits within his party as well as see off the threat from the far right and anti-EU UK Independence Party, arguing that it was constitutional change by Brussels taking more powers from Britain that required a sanction by the British people. Ironically just as it was a Conservative Prime Minister who instigated the UK’s exit from Europe so it was a Conservative Prime Minister, Edward Heath (1970–1974) who first led the UK’s entry into Europe in January 1973. For him it was the culmination of a 21-year mission to see a Europe united in peace, after two devastating world wars, which had begun with Britain’s abortive attempt to join the European Economic Community (EEC) in 1961–1963, also by a Conservative government. Heath maintained, as he wrote in his memoirs, that even as early as the 1960s ‘on the continent of Europe support for the idea of integration came from all sections of mainstream opinion and it was always widely © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_5

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acknowledged, accepted and understood that these first glimmerings of economic union were the beginning of a process which would unite the free nations of Europe politically.’1 The 1957 Treaty of Rome which created the EEC included the goal of laying the foundations of ‘ever-closer union among the peoples of Europe.’ This fine-sounding phrase was to become controversial decades later as Europhiles and Eurosceptics argued over its meaning. Did it imply that member states themselves would eventually merge into one federal union, as the Eurosceptics feared and claimed, or was it no more than an aspiration for closer friendship among the citizens of Europe, as the Europhiles argued? The phrase has remained in EU treaties ever since 1957, including the Maastricht Treaty in 1992, surviving several amendments and one attempt to remove it and another to replace it with the phrase ‘federal union.’ But, as a legal briefing paper lodged in the House of Commons library later maintained: ‘The Treaty text refers to a union of peoples, not of Member States.’2 The EEC that the UK joined in January 1973 along with Ireland and Denmark was a very different entity to what it would become by 2016. There were just nine members, the original six, West Germany, France, Italy, Belgium, the Netherlands and Luxembourg plus the three newcomers (a referendum in Norway rejected joining otherwise it would have been four). The idea that three decades later the EEC (or EU as it became) would incorporate states from central and Eastern Europe which in 1973 were still firmly within the Soviet bloc was unthinkable. Even the southern European states of Portugal, Greece and Spain were ruled by right-wing dictatorships and far removed from any idea of membership. The EEC that Britain joined was strictly a west European bloc of advanced industrial economies in which Britain was one of the weakest. Conservative Party members were mainly in favour of EEC membership. Heath recalled a Tory party conference in 1971 where there was a majority of 2,474 against 324 in favour of joining the EEC. Party conferences consistently backed membership. After all the process of trying to join the EEC had begun under one Conservative Prime Minister (Harold Macmillan) and entry achieved by another (Heath). The right of the parliamentary party tended to be anti-EEC but as Heath recalled ‘there was none of the bitterness that became so depressingly familiar in the 1990s.’3 The same was not the case for Labour whose members were hostile to the EEC regarding it as a capitalist club and whose Shadow Cabinet

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was split, the left opposing Europe for fear it would curtail a Labour government’s socialist policies. In opposition Labour pledged to hold a referendum over continuing membership should it win the next general election only after ‘renegotiations’ with EEC members over such issues as agriculture and fisheries could produce sufficient changes—or at least appear to—so Labour could claim it had created a new deal for the UK. Although Labour leader Harold Wilson himself wanted to stay in the EEC he knew a referendum was the only way to prevent his Eurosceptic party from backing withdrawal. Labour voted against the European Communities Bill during a parliamentary debate that lasted 39 days which was won by the government culminating in the bill becoming law in October 1972. Heath would later argue that it was ‘absurd’ to say MPs did not know what they were doing after such a marathon and that the debate over the Single European Act in 1985–1986 creating the single market under Mrs Thatcher’s government took only 12 days which in his view ‘greatly curtailed the national veto.’4 Heath’s premiership only survived a year beyond EEC accession, brought down by strikes and a stand-off with the powerful miners when he called an election in February 1974 and lost. The Labour leader Harold Wilson then formed a minority government though to settle controversy within his parliamentary party, the left of which were vehemently opposed to EEC membership, he agreed to hold a referendum on continuing EU membership after some ‘renegotiations’ with Brussels. The official Conservative line was to oppose a referendum. In a foretaste of what would follow almost half a century later Heath wrote: ‘I oppose national referenda for reasons of principle. Eurosceptics claim to be the guardians of British democracy but then say that the House of Commons cannot legitimately speak for the people on issues of major importance such as Europe. What sort of argument is this?’ He maintained that if parliament could not be trusted on vital issues ‘then surely it cannot be trusted to take decisions at all?’.5 After losing a second election in October 1974 Heath subsequently resigned as Tory leader and was replaced by the pro-EEC Margaret Thatcher who led the party’s abortive campaign against the referendum Bill which passed in May 1975 while arguing that if referenda were to be held for constitutional reasons then Britain should have a written constitution. Harold Wilson soon declared in March 1975 that the ‘renegotiations’ with Brussels, described by the Europhile Home Secretary Roy Jenkins as ‘a largely cosmetic enterprise’,6 were successful and the referendum went

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ahead with the government backing remain although the Labour Party itself was neutral along with Wilson himself: in April 1975 Labour delegates at the party’s conference voted by almost 2 to 1 against remaining in Europe, partly as most trade unions there were anti-EEC even though most of its Shadow Cabinet supported membership. The question on the ballot paper was: ‘The Government has announced the results of the renegotiation of the United Kingdom’s terms of membership of the European Community. Do you think that the United Kingdom should stay in the European Community (the Common Market)? Yes/No.’ Wilson allowed a free vote within his Cabinet since it was split with the result that prominent Labour Europhiles campaigned on the same platform as Conservative pro-Europeans and vice versa. Seven out of 23 Labour Cabinet ministers, mostly from the left, campaigned to leave the EC. Margaret Thatcher in contrast campaigned to remain in the EEC, even being pictured wearing a sweater with the flags of the member states. Other parties apart from the Conservatives and the Liberals backing leave ranged from the Scottish Nationalists to the right-wing National Front and the Communist Party. Most big business as in 2016 backed remain although unlike 2016 so did the pro-Conservative newspapers. Wilson feared a close result, or one part of the UK like Scotland or Wales, voting differently to England. In fact 67% of the voters backed British membership with almost every region of the UK delivering a majority to remain.

The EU’s Part in Thatcher’s Downfall Conservative leader Margaret Thatcher played a key role in the 1975 referendum campaign to stay in the EEC. Yet soon after becoming Prime Minister in May 1979 she began the first of a series of rows with Brussels which would lead to a fatal split with her most senior Cabinet colleagues, her own downfall and a bitter civil war within her party lasting almost three decades. Her first tussle with Brussels was over her demand that Britain’s contribution to the EC budget be reduced since due to the way it was calculated, based on VAT receipts and customs duties on goods from outside the community, Britain in her view was paying a disproportionate amount. Furthermore over two-thirds of the payments went to subsidise agriculture, a small part of the UK economy. At the Dublin European Council Summit in November 1979 Thatcher argued that the UK put

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in £2bn, received £1bn back and therefore wanted ‘the greater part’ of that £1bn refunded, refusing to accept a compromise of £350 m. It was after all, she added, ‘our money’ anyway. It took four years for the EC and the UK to agree an annual rebate in June 1984 which lasted until Britain left the EU despite multiple attempts by member states to reduce or scrap it. Between 1985 when the rebate began and 2014 Britain is estimated to have received back £85bn. But the four-year row with the EC over the rebate soured her party’s attitudes to Europe encouraging an ‘us and them’ mentality when it came to the UK government’s dealings with Brussels in which a victory for her meant defeat for the EC and vice versa. Thatcher however was still pragmatic when it came to the EC. She was a signatory to the first significant revision to the 1957 Treaty of Rome which had first set up the EEC (Greece joined in 1981, Spain and Portugal, no longer run by dictatorships, in 1986, bringing the total number of member states to 12). The revised treaty, the Single European Act, enacted in 1987, aimed to boost trade within the EC by harmonising regulations, creating a single market by 1992, making integration easier, enhancing the powers of the European Parliament and introducing voting by qualified majority as opposed to unanimity to enhance more effective decision-making. Self-confessed ‘notorious Europhile’ Ken Clarke, a minister under Thatcher, said she ‘drove through’ the Act which Clarke called ‘probably the biggest single boost to economic modernisation, investment, trade and jobs in the UK that the Thatcher government produced.’7 The Single European Act was an ambitious step on the road to economic integration and the breaking down of trade barriers which Thatcher enthusiastically supported and it led to the January 1993 creation of the world’s largest single market, arguably the EU’s greatest success. But the Act also reinvigorated moves towards political integration about which she was much less comfortable and in establishing freedom of movement laid the seeds of future controversies over the level of immigration into the UK. As political integration developed its own momentum and the creation of a single European currency loomed as an aspiration on the distant horizon so Thatcher’s dismay grew in tandem, hardening into opposition. Her concerns were not alleviated by the appointment of a former socialist French politician Jacques Delors as president of the European Commission in 1985 whom she later described as ‘a fully fledged political spokesman for federalism.’8 In particular battle lines were drawn up over whether the UK should enter the Exchange Rate Mechanism (ERM),

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introduced by the EEC in 1979 to reduce exchange rate instability as part of its longstanding goal of economic and monetary union (EMU), a European Central Bank and a single currency. Thatcher wanted none of these and was annoyed at the way, in her view, the single market—an economic entity to encourage free trade in her mind—was being used to further political integration. Re-elected in 1987 for the third time and by now a global stateswoman in charge of a country whose previously anaemic economy was now fast-expanding Thatcher was not inclined to see the UK’s powers curtailed by officials in Brussels. Until 1988 she remained mostly circumspect, still outwardly professing support for the EEC, though becoming increasingly suspicious of what she regarded as ‘the Franco-German federalist project’ and ‘the federalist express.’9 In her memoirs she said ‘the agenda in Europe began to take an increasingly unwelcome shape’ from early 1988, in particular its progress towards economic and monetary union (EMU), a single currency and European Central Bank, all which she opposed.10 Indeed she blamed the original Treaty of Rome for having both a commitment to EMU and ‘ever closer union’ contained in its preamble which gave her opponents ‘a psychological advantage.’11 It was also ‘logical’ in her eyes that a single currency and a single economic market implied a single government to which she was of course also rigorously opposed.12 In July that year in a speech to the European Parliament Commission President Delors predicted that in ten years 80% of Europe’s economic legislation and perhaps even its fiscal and social legislation as well would originate from the EC and suggested that the Commission in Brussels could be an ‘embryo European government.’ This was a red rag for Thatcher. Some days later she told a popular radio programme, the Jimmy Young Show, that the idea of a European Union was ‘airy fairy’ and that a single currency would never come in her lifetime ‘and I hope – never at all.’ Delors, she added, ‘went over the top and I do not think he should have said it.’ Undaunted Delors spoke at Britain’s Trade Union Congress conference in September where he received a standing ovation for saying collective bargaining and social rights should be enacted at EEC level and called for unions to ‘join the architects of Europe.’ The speech helped shift the unions and Labour’s rank and file into becoming pro-EEC after years of regarding it as a capitalist club. But considering Thatcher’s earlier administrations had been devoted to curtailing what she regarded as overmighty unions, the idea of an unelected Brussels official now calling for

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them to be given powers at a European level scarcely helped her mounting Euroscepticism. The point at which for the first time she made her rising concern public came in a speech that month at the College of Europe in Bruges, an opportunity that the pro-EEC Foreign Office hoped would enable the Prime Minister to set out Britain’s attitudes to Europe in a constructive and positive manner. In her speech she did indeed emphasise Britain’s historic role within Europe and said its destiny was ‘in Europe as part of the Community’ but she also lambasted the concept of a centralised Europe without nation states saying ‘to try to suppress nationhood and concentrate power at the centre of a European conglomerate would be highly damaging and would jeopardise the objectives we seek to achieve…working more closely together does not require power to be centralised in Brussels or decisions to be taken by an appointed bureaucracy.’ Saying that it was ironic that while the Soviet Union (under Gorbachev and glasnost ) was moving away from a centralised state there were ‘some in the Community who seem to want to move in the opposite direction’ she added: ‘We have not successfully rolled back the frontiers of the state in Britain, only to see them re-imposed at a European level with a European super-state exercising a new dominance from Brussels.’13 The speech was seen as a sensational attack on Delors, Brussels and the EEC and is regarded as marking the point at which the iron of Euroscepticism entered the Conservative Party’s soul. Yet it was not intended to be just an anti-EEC speech or an attempt to stir up jingoism at home but practical advice about how she envisaged the future direction of Europe which presciently also included foreseeing a day when central and East European states would join the Community. One phrase however encapsulated the question about the European project. Was it primarily a group of nation states in a free trade area in which tariffs and regulatory obstacles to business were removed or was it primarily a political union with the ultimate goal of a single European state? In Thatcher’s view it was the former for as she said in her Bruges speech, ‘the Treaty of Rome itself was intended as a Charter for Economic Liberty.’ Apart from upsetting Brussels the speech caused dismay among some of her own senior ministers, in particular the Europhile Foreign Secretary Sir Geoffrey Howe, as well as goading former enemies on the centre wing of the party whom she had once contemptuously dismissed as ‘wets.’ But it also received support from backbench MPs and party members, while later Prime Minister David Cameron, then working in the Conservative

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Research Department, recalled how he and his colleagues ‘all applauded’ the speech.14 Unabashed Mrs Thatcher then repeated her views at the annual Conservative Party conference when she said, to applause: ‘We haven’t worked all these years to free Britain from the paralysis of Socialism only to see it creep in through the back door of central control and bureaucracy from Brussels. That wasn’t what we joined the European Community for.’15 As one historian of the party’s Euro-troubles later commented: ‘Having soured relations within the higher ranks of the Thatcher administration, the European question infiltrated the veins of the parliamentary party.’16 Events were moving inexorably to the crisis that would lead to Thatcher’s downfall. The row that precipitated it was again over Europe and again over moves towards economic and monetary union (EMU). The committee headed by Jacques Delors to look into progressing EMU duly reported in April 1989 recommending firstly that member states join the Exchange Rate Mechanism (ERM), then a European Central Bank be created leading to a single currency. Thatcher would have none of it. Her powerful Chancellor Nigel Lawson, though opposed to a single currency, favoured Britain joining the ERM as a way of stabilising currency movements and was supported by Foreign Secretary Sir Geoffrey Howe, both of whom put pressure on the PM by threatening resignation. A European Council meeting in Madrid agreed to move towards EMU as outlined by Delors with Thatcher reluctantly compromising by accepting the principle of the first stage, the ERM. She enacted her revenge in a government reshuffle by dropping Howe from the Foreign Office in July 1989 and demoting him to the more symbolic role of Leader of the House. A few months later in October her Chancellor, Lawson, resigned, coincidentally just before the fall of the Berlin Wall that changed history and the future direction of Europe. Ironically his successor, John Major, also a keen supporter of joining the ERM—as were most of the Cabinet— finally persuaded her and entry occurred on October 5 1989, two days after East and West Germany reunited. Even then Thatcher herself saw entry as a means of stalling progress towards monetary union, not facilitating it. A fractious European Council meeting in Rome that month provoked Thatcher in a Commons debate to quote Delors saying the European Parliament should be the democratic body of the Commission, the Commission be the Executive and the Council of Ministers

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the Senate to which she retorted ‘No. No. No.’ Days later Sir Geoffrey Howe as Deputy Prime Minister resigned and then on November 13 1990 in an 18 minute Commons resignation speech which for him, once one of Thatcher’s closest colleagues, was particularly personal, bitterly denounced his former boss, saying that her attitude to Europe had not only undermined Cabinet government but was running ‘serious risks’ for the future of the country. As it happened Thatcher’s own position was precarious. She was increasingly unpopular among voters (just 33% approved of her according to pollsters Gallup and Labour was well ahead in the polls) as well as her own MPs and Cabinet who feared she could lose them the next election set to take place in early 1991. Plans to reform local government funding by introducing a poll tax were proving toxic among the public who thought it unfair and the nation had been shaken by violent riots in March. There had already been a ‘stalking horse’ leadership campaign against her the previous year in a ballot of Tory MPs. Now her old adversary, the Europhile ex-Cabinet Minister Michael Heseltine, announced he would stand against her, promising a review into the poll tax as well as saying only he could unite the Cabinet behind taking a more positive approach to the EEC. David Cameron later maintained that while Europe was the occasion of Thatcher’s fall it was the poll tax that prevented her from getting up again.17 Unable to win the necessary 15% majority in the first ballot of Tory MPs and persuaded by her Cabinet colleagues she could not win a second ballot and that Heseltine would become the next Prime Minister if she did stand again she reluctantly resigned, allowing her favoured candidate John Major to win instead. On November 28 1990, after eleven and a half years in office, a tearful Thatcher left Number 10.

John Major and ‘The Stab in the Back’ Conspiracy theories about the alleged stab in the back by treacherous Europhile ministers soon began circulating among Tory MPs, guilty at the defenestration of their longest-running leader since Lord Salisbury in the 1890s. It was a wound which would never heal. Thatcher’s authorised biographer later wrote in 2019: ‘Thirty years on, as it struggled with Brexit, the Conservative Party had still not recovered from the feelings engendered by the political assassination of its most successful peacetime leader.’18

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The position of John Major, the new Prime Minister, was not helped by his predecessor’s unhelpful comment that she would be ‘a good backseat driver’ and her tendency to make her views known about his policies, such as abandoning her unpopular poll tax and his backing of the ERM. In addition Major had to deal with the collapse of the overheated economy and the arrival of a second recession in a decade, this time affecting mainly white-collar, Conservative-voting service sectors—in comparison with that of the early 1980s which hit blue-collar manufacturing industries. Major described himself as ‘a pragmatist’ and ‘a friendly agnostic’ on Europe, supporting membership and preferring to be on the inside of the club rather than an outsider like his outspoken predecessor.19 Yet he was also opposed to federalism, political union and the UK joining the euro, though he regarded it as inevitable but with the caveat that entry would only happen if a referendum of UK voters agreed it. A referendum on the UK joining the single currency became government policy in 1995. He later wrote that the moment he became Prime Minister he had ‘dreaded the potential impact of Europe on the Conservative Party’ and felt that Europe had the capacity to split the party and ‘hurl it into the wilderness’ and he was correct.20 A looming elephant trap was therefore negotiating the next Brussels milestone on the road to a single currency and incorporating into British law the Treaty on European Union, known otherwise as the Maastricht Treaty after the Dutch town where it was drafted in December 1991 and signed in February 1992. The treaty replaced the EC with the European Union, created a roadmap towards the creation of a single currency, the euro and European citizenship, and in its preamble repeated the controversial aspiration ‘to continue the process of creating an ever closer union among the peoples of Europe.’ After interminable discussions Major managed to secure two important opt-outs for the UK when signing the Treaty at Maastricht with fellow government heads. One was that the UK was not obliged to join the single currency and the other was it did not have to follow the Social Chapter creating new employment regulation which the government regarded as bureaucratic. When negotiations were completed and he returned to Parliament he met enthusiastic praise from fellow Tory MPs, ‘the modern equivalent of a Roman triumph.’ He added drily in his memoirs: ‘Soon, it would be all very different.’21 As the treaty had to be approved by each member state, this was the ideal time for it to be pushed through the UK Parliament. Unfortunately as

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Major had decided against holding a 1991 general election and held out to the legal limit of five years, May 1992, there was not enough time in the parliamentary timetable to steer through the Maastricht Bill. It would have to wait until after the election which was expected to be close-run considering the government was emerging from a recession, the Conservatives had been in power since 1979 and the Labour opposition was now a viable threat after years of internal infighting. Confounding his critics and pundits who forecast a hung Parliament or a small Labour majority Major won the election. However his overall majority was reduced from 100 to 21 which left his government exposed to backbench revolts, particularly from the small but vocal band of Eurosceptic Tory MPs who were to become a thorn in his side for the next five years. In addition there were 54 newly elected Tory MPs who could be described as ‘Thatcher’s Children’ rather than ‘Major’s Friends.’ Major ‘now had to contend with a new generation of MPs who had come into politics inspired by the Euroscepticism of Mrs Thatcher’s Bruges speech’ for whom opposing a federal Europe was more important than party unity.22 The goodwill generated by the election victory soon began to unravel. Firstly the Maastricht Treaty had to be passed through Parliament. With a small majority and a larger Eurosceptic intake of new MPs the government’s position was much more unstable than the previous December. The Europhile Cabinet Minister Ken Clarke recalled that while Maastricht barely featured in the election campaign this was ‘in dramatic contrast with the atmosphere’ when the debate got underway.23 A speech by Thatcher in The Hague—who was opposed to Maastricht—calling for powers to be removed from Brussels was a rallying call for her Eurosceptic supporters who increasingly conflated her abrupt downfall with a conspiracy by pro-European ministers eager on ‘ever closer union.’ Three-member states, Denmark, France and Ireland as part of their constitutions, held referendums on the Treaty. In June 1992 the Irish passed it, the Danes rejected it and in September the French narrowly passed it by a margin of 0.8%. A second Danish referendum in May 1993 after some amendments to the Treaty this time passed it. But the real spark to the European tinder box was the humiliating exit of sterling from the Exchange Rate Mechanism in September 1992. The pound had entered the ERM, pegged to the Deutschmark, at a rate which soon proved to be uncomfortably high especially because of the demands of German unification and the weakness of the UK economy which could

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not sustain increases in interest rates. Speculators soon gambled on the UK being unable to support the pound at such a level. The crisis reached its climax on ‘Black Wednesday’ September 16 1992 when despite the Bank of England raising interest rates to an eye-watering 15% in one day in a vain attempt to bolster sterling, the government accepted the inevitable and suspended membership of the ERM. Eurosceptics as a result later dubbed it White Wednesday. Politically Black Wednesday spelt the end of Major’s brief honeymoon period and any hope of his winning the next election: the Conservatives never led in opinion polls for the rest of his government. It destroyed the Conservatives’ greatest electoral asset, that they could be trusted with the economy. Because he had been an ardent supporter of joining the ERM Black Wednesday fatally damaged Major’s credibility. It also confirmed Eurosceptic Tory MPs in their conviction that participating in any European project heading towards monetary union was a disaster for the UK. Their view was sustained by the UK’s recovery from the recession helped by lower interest rates now the pound was no longer locked into the ERM. Major later commented that Black Wednesday ‘turned a quarter of a century of unease into a flat rejection of any wider involvement in Europe’ and encouraged an insular nationalism that became not just pro-British but anti-foreign.24 Against this backdrop legislation to pass the Maastricht Treaty became increasingly bogged down in acrimonious debate and knife-edge votes as backbench Tory MPs vented their anger. The so-called Maastricht Rebels at times outnumbered Major’s parliamentary majority making his government teeter on the edge of collapse. Ken Clarke referred later to ‘the previously unexceptional Maastricht Treaty’ becoming the key element in ‘a ferocious civil war’ that dominated Major’s government making party management almost impossible and electoral defeat inevitable.25 Major referred to it as ‘a year of gruesome trench warfare in the Commons.’26 The committee stage of the Bill alone took over 200 hours of debate in 23 full sitting days with 600 new amendments and clauses. Eventually after losing a vital vote in the Commons by eight MPs the government had to demand a vote of confidence in July 1993 in order to pass the Bill by forcing rebellious backbenchers—who despite their loathing of Maastricht did not want to risk a general election—to back it which they did. The Bill was passed but Major ever afterwards wondered how members of an otherwise winning team ‘had turned against each other, plotted against each other, betrayed each other.’27

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The Eurosceptics had lost the battle but they did not intend giving up the war. Skirmishes with Eurosceptic MPs, including some of his own Cabinet, did not subside and Major’s slender majority whittled away over the years, not helped at one point in 1994 by his removing the Whip from eight rebellious Tory MPs over a vote on the UK’s budget contribution to Brussels. In 1995 in frustration Major took the gamble of actually resigning as party leader (though not as Prime Minister) and standing for re-election by his MPs to test their loyalty. A Eurosceptic ex-minister, John Redwood, stood against him: 218 voted for Major, 89 for Redwood, mostly on the right, and 20 abstained. But his victory failed to stem the sense of disintegration. Split by rows over Europe including whether or not to join the single currency, beset by scandals over corrupt MPs and facing a reinvigorated Labour Opposition, the Conservatives went into the 1997 general election with little hope of winning. Major later wrote that the electorate concluded the party was so divided it should be ejected at the polls.28 Their chances were not helped by the launch of a maverick party, the Referendum Party, which campaigned for a referendum on staying in the European Union. The result was worse than the Tories ever expected, in fact their worst result of the twentieth century. Labour under its charismatic new leader Tony Blair won an overwhelming majority of 179 and it would be 18 years before the Conservatives won an election outright again.

The Wilderness Years There were many reasons for the Tories’ election debacle, not least that they faced a rejuvenated Labour Party under a young, voter-friendly centrist leader and that after 18 years in power winning a fifth general election was always going to be a challenge. However a key factor in the public’s disenchantment with the Conservatives was their disunity caused by the internal struggle over Europe exacerbated by Eurosceptic Thatcherites blaming Europhiles for her downfall. The Eurosceptics’ anger was fuelled during the 1990s by the Brussels bandwagon rolling inexorably towards its goal of economic and monetary union. As one chronicler of the party put it: ‘There was a genuine ideological rift occurring within the Conservative Party in the early 1990s. Closer European integration created a powerful tension between a belief in the nation and the desire to spread commerce and trade. The struggle to reconcile these

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forces was tearing the party apart.’29 John Major described the direction of European policy as ‘a pathological source of division within the Conservative Party’ while Thatcher’s supporters ‘had convinced themselves that her policy of resisting European integration was the principal cause of her fall.’30 In his memoirs, published in 1999, when the Tories were still in the foothills of their long hike back to power, Major warned that there were ‘those on the Conservative benches in the House of Commons’ who wanted to renegotiate EU membership or walk away from the EU altogether, a path down which ‘lies madness and long-term opposition.’ The party he said ‘must not turn its back on Europe.’31 John Major resigned immediately after losing the election and Conservative MPs now chose his replacement. The split over Europe and the party’s drift rightwards made it unlikely that the natural successor, the ebullient former Chancellor of the Exchequer Ken Clarke, would be elected because he was an ardent Europhile. In his memoirs Clarke said that in defeat the party was more consumed by European passions that when it had been in government because the 1997 intake of Tory MPs was more Eurosceptic than previous cohorts. The election ballots to find a winner out of the six candidates, he said, was more of an elimination contest to see which Eurosceptic was going to succeed him.32 In the end the winner was the former Welsh secretary William Hague—backed by Thatcher—who had the almost impossible task of leading his party into the next election with a Labour government at the peak of its electoral popularity backed by a huge majority. Europe meanwhile was heading rapidly towards its goal of monetary union. Hague committed the Conservatives to oppose joining the single currency for the current Parliament and the next, that is until at least 2005, which had the benefit of uniting his divided party behind him, though he lost several Europhile Shadow ministers en route through resignations. In January 1999 the euro was introduced as an ‘accounting currency’ though it did not enter into circulation among EU member states for another three years, the UK anyway having won its opt-out at Maastricht. In the 1999 European elections on a Eurosceptic manifesto of stopping further EU integration the Conservatives came first, albeit on a low 24% turnout. The result persuaded Hague that his Eurosceptic approach was a vote-winner and his rallying cry for the 2001 general election was ‘save the pound.’ Since Prime Minister Tony Blair had already set five economic tests before the government would recommend joining and then only if passed in a referendum Hague’s pledge to save the pound was

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irrelevant. In the 2001 election it struck little resonance with voters. The Conservatives gained just one seat, its second worst result after 1997 since 1832 though among the new intake was a future leader David Cameron. Hague duly resigned. Conservative MPs and party members lost little opportunity in ignoring the reasons why they performed so disastrously. Five candidates stood for election, including Clarke again, and three of them were from the right. In the second ballot Clarke emerged marginally ahead of the Eurosceptic Thatcherite and former Maastricht rebel Iain Duncan Smith who had emerged as the outsider candidate (and had Thatcher’s support). He was attractive to Tory Eurosceptics for whom EU integration still fired them up even though it was of little interest to the general public. The difference this time from previous leadership elections was that Hague had extended voting to Conservative Party members so that in the third ballot the decision would be taken by them. The increasingly Eurosceptic party members backed Duncan Smith by a margin of three to two. Duncan Smith had strong views about improving social justice and reducing poverty and would later set up a think-tank to address these intractable issues but he found it hard to make any impression on voters or indeed on his fellow MPs who became increasingly disenchanted with his leadership skills. As one historian of the party said: ‘Although Europe was a handy way of rallying the party’s base from time to time Hague had tested to destruction the notion that resisting the march of EU federalism was much of a vote-winner.’33 The new leader’s appeal for party loyalty did not sit easily with Europhiles who cited his record as a Maastricht rebel against Major when he had voted only four times with his own government in 62 divisions in the Maastricht debates. Following a lacklustre two years as leader Duncan Smith was forced out by Tory MPs after losing a vote of confidence in October 2003, barely two years after being elected. His successor, the experienced former Cabinet Minister Michael Howard won the leadership unopposed, Clarke himself deciding not to stand as the party ‘was utterly obsessed with Europe.’34 The European bandwagon nonetheless continued to roll. In 2004 the former Soviet satellite states, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Slovakia and Slovenia joined the EU, their citizens entitled in principle to work anywhere in the EU under the single market rules. The Home Office, hugely under-estimating the number of citizens of the eight new accession countries likely to seek work in the UK,

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allowed them to do so immediately rather than stipulating a seven year transition period, as Brussels had proposed (see Chapter 3). The impact was felt longer-term but the Conservatives under Michael Howard made immigration an issue in the 2005 election. Once again the Conservatives hoped that Europe would deliver them an advantage in the 2005 election, the single currency, the euro, having replaced the currency of the EU member states in February 2002. The EU was now working on a revised constitution, the Reform Treaty, which the Europhile Ken Clarke said was ‘highly desirable’ as it aimed to bring more democracy into the EU but which was increasingly controversial even among other EU states. Both France and Holland rejected the treaty in referendums in early 2005. The Tories, decrying the new constitution as yet another milestone on the road to federalism, also argued the UK should have its own referendum. The Blair government, which had at first ruled out a referendum, then shifted its ground and agreed to hold one after the negotiations were over. Since the treaty was postponed due to its rejection in France and Holland and resurfaced later under another name, the Lisbon Treaty, and since the Labour government had pledged a referendum anyway it was not an issue in the 2005 election. It was however a portent of controversies to come. The Conservatives lost their third election in a row despite halving Labour’s majority though this was more to do with Blair’s foreign policy difficulties and the Iraq war. Following Howard’s resignation, Tory MPs selected as their next leader a young unknown, David Cameron, 39, who had only been an MP for four years but was steeped in politics as a former special adviser, including to Chancellor Norman Lamont during Black Wednesday. Their choice was confirmed by the ballot of party members when Cameron won with a resounding 68% of the vote in December 2005. Cameron was a new broom for the beleaguered party. Despite his Old Etonian school background Cameron was a One Nation socially liberal moderniser unafraid to accept some of Blair’s progressive reforms just as Blair had absorbed some of the industrial relations initiatives of Thatcher’s administration. Cameron wanted his party to neither resist nor grudgingly accept the reality of cosmopolitan, multiracial Britain but welcome it. His metropolitan coterie, soon dubbed Cameroonies, were of the same liberal persuasion. On Europe however Cameron was a traditional Tory although he supported remaining within the EU and indeed described himself as being in ‘the broad church of the Major years.’35 He admired

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Thatcher and sympathised with her battles against Brussels and witnessed as a special adviser to the then Chancellor Norman Lamont the collapse of Britain’s membership of the ERM on Black Wednesday in 1992. Unusually for the otherwise loyal Tory, as a prospective parliamentary candidate in 1997 for Stafford in the Midlands, he had joined a rebellion of 200 other candidates to pledge their opposition to monetary union as Major had not ruled out entry. He maintained that while the Conservative Party had to change and focus on the issues that mattered like health, education and poverty it had become a Eurosceptic party and should remain one even though it should also back remaining in the EU. Cameron also believed that where the EU planned constitutional changes in new treaties then the British people should be allowed to vote for or against them in a referendum, an argument which would become core to his decision to hold one in 2016. However the party also had to accept that ‘banging on about Europe,’ as he later told his party conference, was damaging because while it was in the top ten of the most important issues for the electorate it seemed at times it was the only issue the party actually cared about.36 After all, the UK had an opt-out from the euro as well as the Schengen Agreement which abolished borders within the EU. The Cameroonies showed that it was possible for Conservatives to be both socially liberal and yet sceptical about Europe in contrast to the Eurosceptic rebels of the early 1990s who had tended to be on the right of the party. At this time the right-wing populist United Kingdom Independence Party (UKIP) which was to be Cameron’s nemesis a decade later, was still regarded as an obscure single issue extremist party. Cameron referred to its members as ‘fruitcakes’ in 2006. Although founded in 1993 it had made little impact in polls until the 2004 European parliamentary elections when campaigning on a platform of a referendum to leave the EU it came third and won 12 seats. In a September 2004 by-election in the Labour stronghold of Hartlepool in England’s North East UKIP came third pushing the Conservatives into fourth place. But in the 2005 general election UKIP won only 2.2% of the vote and seemed destined to return to obscurity again until a new leader, Nigel Farage, who took control in 2006, widened its appeal by capitalising on concerns about immigration which struck a chord with white working-class areas. Its time however had yet to come. One of Cameron’s earliest controversial decisions concerning Europe was his pledge—which he had made during the leadership campaign—for

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his 27 Tory Members of the European Parliament to leave the centreright European People’s Party (EPP) in the European Parliament. He argued that the EPP, which included many moderate centre-right parties among member states, was too pro-federalist and out of synch with the UK Conservatives’ view on integration which was to have less, not more, of it. Withdrawing the Tory MEPs immediately, some of whom were Eurosceptic and others pro-integration, however threatened a split and the decision was postponed. A compromise was reached in which his MEPs would remain in the EPP until after the 2009 European parliamentary elections when they would then form a new non-federalist grouping with a Czech centre-right party. Europhile critics argued that it cut the party off from mainstream centre-right opinion in Europe on integration and reduced its influence on centre-right ‘back channels’ which could have proved useful in negotiations in 2015/2016. As much as Cameron may have wanted to park Europe as an issue for the party the Brussels bandwagon rolled onwards. There were follow-up treaties amending Maastricht such as Amsterdam which came into force in May 1999 and transferred more powers to the EU as well as incorporating Schengen into European law (except for the UK and Ireland). The Nice Treaty, which came into force in February 2003, reformed the institutions of the EU to cope with new member states from East and Central Europe and increased the legislative powers of the European Parliament. The Reform Treaty (see above) aimed, as stated in its preamble, to ‘complete the process started by the Treaty of Amsterdam and by the Treaty of Nice with a view to enhancing the efficiency and democratic legitimacy of the Union and to improving the coherence of its action.’ Among other changes it proposed more powers for the European Parliament, a president of the European Council and a foreign affairs head. A new constitution was drawn up but after convoluted debate the French and the Dutch rejected the Treaty in referendums in summer 2005, opponents arguing it gave too much power to Brussels. After further delay the Treaty was then amended and returned in diluted form to be signed by member states in 2007 in Lisbon. Cameron was outraged when the Lisbon Treaty went ahead without any referendum, despite the Blair government’s promise in the 2005 general election but by then Blair himself had resigned and been replaced by Gordon Brown who rejected a plebiscite. Cameron then pledged that if the Conservatives won power they would hold a referendum on Lisbon. At the time, summer 2007, there was a strong possibility that Brown,

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who had succeeded Tony Blair in summer 2007, would call an election to secure his own majority. If this happened before the Treaty could be ratified by member states it would give the Conservatives the chance of holding a referendum on Lisbon should they win the election. In the end Brown backed down from the idea of holding an election at all and the EU states carried on with the process of ratifying Lisbon so the opportunity of a UK referendum never arose and the UK itself signed the Lisbon Treaty in December 2007. The controversial phrase ‘ever closer union’ which Blair had managed to get removed from the original failed 2004 Treaty creating a European constitution nonetheless managed to reappear in the Lisbon Treaty. Cameron later promised he would never allow a transfer of powers from the UK to the EU again without a referendum, promising a ‘referendum lock’ in a speech in November 2009. In his memoirs Cameron said he could feel ‘the pressure on Europe quietly building’ and wrote that the anger at the transfer of powers ceded at Maastricht had been reawakened by the denial of a referendum over Lisbon. As a result he thought a referendum could be on the cards ‘at some point in the future.’ The die was cast.37

Notes 1. Edward Heath. (1998). The Course of My Life (London, Hodder & Stoughton, p. 201). 2. Briefing Paper, Treaties and Court of Justice Case Law. House of Commons Library (November 2015) Ever Closer Union’ in the EU . 3. Edward Heath. (1998). The Course of My Life.(London, Hodder & Stoughton, p. 386). 4. Ibid., p. 387. 5. Ibid., p. 543. 6. Philip Ziegler. (1995). Wilson (London, HarperCollins, p. 428). 7. Ken Clarke. (2016). Kind of Blue (London, Macmillan, pp. 166, 365). 8. Margaret Thatcher. (1993).The Downing Street Years (London, HarperCollins, p. 742). 9. Ibid., pp. 728, 742. 10. Ibid., p. 737. 11. Ibid., p. 742. 12. Ibid., p. 760. 13. Margaret Thatcher (September 20, 1988). Speech to the College of Europe, Bruges. Margaret Thatcher Foundation. 14. David Cameron. (2019). For The Record (London, William Collins, p. 35).

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15. Margaret Thatcher. (October 14, 1988). Speech, Conservative Party Conference. Margaret Thatcher Foundation. 16. Peter Snowdon. (2010). Back from the Brink. The Extraordinary Fall and Rise of the Conservative Party. (London, Harperpress, p. 25). 17. David Cameron. (2019). For The Record (London, William Collins, p. 35). 18. Charles Moore. (2019). Margaret Thatcher.(Allen Lane, Volume 3, p. 733). 19. John Major. (1999). The Autobiography (London, HarperCollins, p. 579). 20. Ibid., p. 583. 21. Ibid., p. 288. 22. Peter Snowdon. (2010). Back from the Brink: The Extraordinary Fall and Rise of the Conservative Party (London, Harperpress, p. 25). 23. Ken Clarke. (2016). Kind of Blue (London, Macmillan, p. 257). 24. John Major. (1999). The Autobiography (London, HarperCollins, p. 352). 25. Ken Clarke. (2016). Kind of Blue (London, Macmillan, p. 262). 26. Ibid., p. 384 27. Ibid., p 384. 28. Ibid., p. 647. 29. Peter Snowdon. (2010). Back from the brink. The extraordinary fall and rise of the Conservative Party. (London, Harperpress, p28). 30. John Major (1999). The Autobiography (London, HarperCollins, p. 265). 31. Ibid., p. 732. 32. Ken Clarke. (2016). Kind of Blue. (London, Macmillan, p398). 33. Frances Elliott and James Hanning. (2009). Cameron: The Rise of the New Conservative (London, Harper Perennial, p. 350). 34. Ken Clarke. (2016). Kind of Blue (London, Macmillan, p. 424). 35. David Cameron. (2019). For the Record (London, William Collins, p. 321). 36. Ibid., pp. 65–66. 37. Ibid., p. 120.

PART II

The Catalysts

CHAPTER 6

Austerity

For two years following the Great Recession of 2007/2008, politicians battled for the hearts and minds of the British public over how they should best deal with the mounting debt crisis, a direct consequence of the downturn. Since 2001 the Labour government, elected by a landslide in 1997, had been on a public spending spree funded by taxes cascading from the booming financial services sector. The investment in public services went down well with the electorate which re-elected Labour in 2001 and 2005 and the Conservative opposition felt no alternative but to back Labour’s spending plans. After the banking crisis in 2007, the taxes dried up but the public spending continued, fuelled by a Keynesian investment in infrastructure and the bailout for the indebted banks. This in turn led to a big rise in the deficit, the amount of borrowing the government needed each year to cover its day to day spending, from 2.6% before the financial crisis to 10.2% in 2009/2010. By then, the electorate had come to accept that the halcyon years of above-average public spending were over and that the economy and the public finances had to be mended. In November 2008, Shadow Chancellor George Osborne finally broke with the parties’ consensus on spending levels and declared that Labour’s plans were profligate and only the Conservatives could get the public finances back in order. In fact, the Labour government, after some initial hesitation by Prime Minister Gordon Brown over the use of the dreaded word—at least © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_6

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in traditional Labour eyes—‘cuts,’ was also bringing in its own panaceas of tax rises and spending cuts. While all the main political parties now agreed that public spending, which in 2008/2009 hit a record high of 43.5% of GDP, would have to be reined back; the question was by how much. Examining the parties’ plans in spring 2010, the respected think-tank the Institute for Fiscal Studies estimated those from the Liberal Democrats and Labour would bring spending as a proportion of GDP back to 2004/2005 levels, 40%, while the Conservatives would reduce it down further, to 38%.1 Labour’s last Budget in March 2010 attempted to balance the need to reduce spending from 2011 without further weakening the economy before it had recovered. It even envisaged spending rises of 0.8% annually to 2014/2015; while these were in effect cuts after taking into account inflation they were nothing on the scale of what was to actually occur.

The Coalition A combination of the recession, Brown’s stumbling performance as Prime Minister and a rejuvenated Conservative opposition under a young David Cameron put the latter consistently ahead in the polls throughout 2009. A landslide loomed. Then in early 2010, the political temperature changed as if the electorate, close to a May general election, began to reconsider the enormity of Conservative spending cuts just as the fragile economy was beginning to improve with a 0.1% increase in GDP in the last quarter of 2009. In the election, although they won the largest number of parliamentary seats, 307 out of 650, as well as votes, the Conservatives were still short of an overall parliamentary majority. A deal was confirmed with the Liberal Democrats who had won 57 seats and for the first time since 1945, Britain was ruled by a Coalition government. Although the Liberal Democrats were ostensibly to the left of their new allies, they signed up to now Chancellor George Osborne’s tough debtreduction programme which became the centrepiece of their new joint manifesto. The parties’ Programme for Government called debt-reduction ‘the most urgent issue facing Britain.’ Their aim was to ‘accelerate the reduction of the structural deficit over the course of a Parliament’ to be achieved by spending cuts rather than tax rises. Ministers never called the programme ‘austerity’ which was used as a term of abuse by critics. In fact, the name stuck to such an extent that it would become a euphemism for the Coalition’s fiscal policy until 2015 and an albatross round the neck

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of its Conservative successor governments when they tried to distance themselves from it (though this book will use it as a shorthand). Coalition ministers preferred to call it ‘fiscal consolidation’ and the only question was the degree of its vigour. Labour had worked on the Keynesian premise that the economy needed another year of growth before cuts were brought in, so that renewed private sector activity could offset the impact of spending cuts. The Coalition, however, had inherited a deficit that hit 10.2% in 2009/2011 (compared to 2.7% in 2007/2008, the year before the recession), debt interest payments were costing £43bn a year, and in its view, this was no time to prevaricate. An indication of the disastrous state of the economy was that the pre-financial crash Budget of March 2007 had envisaged that spending by 2010/2011 would be £674bn, actually £23bn less than the new Office for Budget Responsibility (OBR), set up to independently analyse government policy for the public finances, was now predicting. The 2007 Budget had also assumed total public sector debt would be 38.6% of GDP by 2011/2012 compared to the OBR’s current estimate of 70.3% by 2013/2014. An Emergency Budget in June 2010 sets a fiscal mandate of a current balance in the public finances within five years and total debt to be falling as a percentage of GDP by 2015/2016. All Whitehall departments faced cuts except for education and health implying 25% cuts across the other ‘unprotected’ departments. Most of the fiscal consolidation came from spending cuts rather than tax rises. Labour’s plans had envisaged a ratio of 70% spending cuts to 30% tax rises (70:30). Osborne’s target was 74.26 in 2014/15 and 77:23 in 2015/2016, more than the budgets of previous Tory Chancellors in the last recession in the early 1990s. The new independent Office for Budget Responsibility (OBR), which Osborne set up, estimated that the combination of tax rises and cuts would bring the deficit down to 1.1% in 2015/2016 and achieve its fiscal mandate. The director of the Institute for Fiscal Studies, Robert Chote, soon to move to the new OBR, said, if achieved, the cuts would reverse all Labour’s increases and he added: ‘We are looking at the, longest, deepest, sustained period of cuts to public services spending at least since World War 11.’2 The cuts amounted to 25% over the next four years, later adjusted down to 19% but were higher on some departments like local government as the National Health Service and education were ‘protected,’ albeit receiving below inflation rises. The NHS, for example with, an annual inflation rate in its costs of 4% received 1%, effectively a cut which was to rebound

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years later. In contrast, Government funding for councils fell by 55% from 2010/2011 to 2019/2020. Invariably, most of the cuts would fall on those relying most on the public services that were being cut in local authorities, welfare and police while health and education were largely protected (defence was also hard hit). Many of the major urban metropolitan local authorities covering the Midlands and the North were particularly reliant on government grants, especially those aimed specifically at deprived areas, which were easily axed. The authorities’ other income, council tax on property which made up a quarter of their budgets, was invariably much lower than the prosperous southeast. As the respected think-tank the Institute for Government later noted: ‘All local authorities have experienced cuts but, on average, these have been larger in more deprived areas. This is because the component of local government income that has been cut most sharply over recent years is the revenue-support grant from central government, which on average makes up a larger share of income for councils in more deprived areas.’3 Local authorities, most of whose funding came from central government, were especially hit by austerity losing half their funding between 2010/2011 and the end of the decade. Some council services were affected worse than others as local authorities, responsible for social care, tried to protect it from deep cuts even as demand was rising. Authorities in poorer areas without a substantial council tax base still had to fund social care costs for their elderly residents. The areas facing the brunt of council spending cuts were also the ones struggling with already stagnant local economies. The biggest savings were expected from welfare with the launch of a new and hugely ambitious Universal Credit system merging the complex mix of working age, housing and unemployment benefits. For many benefit-dependent towns, this was a further sucking out of income from struggling local economies for welfare payments were invariably spent locally. Later studies after the 2016 referendum suggested that austerity cuts from 2010 were key to understanding Brexit as they drove voters into the arms of populist parties such as the emerging UK Independence Party and even suggested that without austerity Remain might have won. Conservatives rejected accusations that the cuts were ideologically driven as part of their drive to reduce the size of the state, saying the imperative was to reduce the deficit. A Treasury minister, David Gauke, later insisted the cuts were ‘principally about reducing the deficit and the

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best way was to focus on spending.’4 The Institute for Fiscal Studies said the cuts and tax rises would return the finances to ‘a sustainable position’ but then ‘the same would have been true under the fiscal consolidation plan set out by Labour in its March 2010 Budget.’5 Nonetheless, the money markets welcomed the Coalition’s swift action and the government’s prized Triple A credit rating appeared assured. Unfortunately, not only were the forecast growth figures on which the consolidation plan was based optimistic but events outside the UK cast further doubt on the nascent recovery. The government’s plans were based on the assumption that the recession was over as gross domestic product (GDP) was now positive again, albeit an anaemic 0.9% in 2009. This in turn would lift tax revenues and offset the negative impact of the cuts in public spending on growth. In its analysis of the June Emergency Budget, the OBR envisaged GDP rising by 1.2% for 2010 and at the end of the year even revised this upwards to 1.8% because of better than expected construction output figures. These were not down to an improving economy but the delayed impact of the Labour government increasing spending on housing in 2009 before it lost the general election a year later. This was later supported by the disturbing revelation that in the last quarter of 2010 GDP actually dropped by 0.5%. The government was imposing huge spending cuts before the recovery was fully underway with the danger that a combination of flat private sector activity and a reduction of public investment would rekindle the recession. Furthermore, the eurozone, those countries in the EU that were part of the single currency, was also in crisis. The heavily indebted eurozone countries of Portugal, Italy, Greece and Spain (cruelly dubbed the PIGS) struggled to contain the red ink across their public finances and had to borrow from the International Monetary Fund on the proviso they would slash public spending. Greece was the worst hit but Ireland, one of the UK’s major export markets, also had to fall on the largesse of the IMF and instituted a tough period of spending cuts. The advocates of UK austerity used Greece in particular as a warning of what could happen if the public finances were allowed to deteriorate to such an extent that the government would have to turn to borrowers. It had happened before in the UK in 1976 under a Labour government and no political party ever wanted a repeat of that humiliation.6 To add to the Coalition government’s woes soaring oil prices were forcing up inflation and prices, especially energy, putting pressure on

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household finances and further depressing economic growth. Real household disposable income fell by 2.3% in 2011, a record not seen since the Second World War. If consumers had less money in their pockets they had less to spend in the shops and any prospect of a consumer-led recovery was therefore pushed further into the distance. At the end of 2011, over a year into the Coalition’s austerity programme, the Office for Budget Responsibility revisited its forecast. It now predicted that potential output (GDP) would be 3.5% less than it had estimated the previous March, that total debt would reach 78% of GDP in 2014/2015 compared to the 69% it had thought in March (it was 53% in 2009) and that the eurozone crisis was likely to get worse. The OBR blamed the deterioration in its forecasts squarely on the stagnant economy and lack of consumer spending which meant less tax revenue. The government had to adjust its targets, extending spending cuts for a further two years meaning a total of six years of austerity, well past the next general election which by law had to take place by 2015. Institute for Fiscal Studies director Paul Johnson commented that the Chancellor ‘has ended up on course to be in exactly the place he wanted to avoid – promising further spending cuts in the period after the next general election.’7 In the end, GDP growth in 2011 was a paltry 1.1%, less even than the 1.5% in 2010 while in the last quarter of 2011 GDP actually contracted by 0.1%. At one point, provisional figures for the first quarter of 2012 showed another drop meaning technically, with two consecutive quarters of minus growth the country was back in recession, hardly an auspicious time to be slashing public spending. In fact, the actual figures for the first quarter of 2012 turned out to show nil growth meaning the UK was not after all in recession. The whole year nonetheless showed a dismal growth of precisely 0%. The economy may have avoided the humiliation of entering recession for the second time but it was stagnant along with household incomes. The OBR’s forecasts continued to pile gloom upon gloom, admitting in December 2012 that it was more pessimistic about the economy than even the previous March mainly down to weaker exports, the eurozone crisis and continuing slower than expected tax revenues, especially from financial services. Spending cuts were now extending into 2017/2018. That year, 2012, was a watershed for the Coalition’s fiscal policy. Opponents of its spending cuts argued that the timing was wrong, that the economy was still too weak to sustain such a withdrawal of public money and that cuts along with feeble private sector activity were

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preventing any hope of recovery. The famous economist Maynard Keynes had argued that fiscal policy in a recession should be ‘counter cyclical:’ that is, when private sector activity drops, the state should step in with public money to fill the gap and when the former returns to normal cuts can then be imposed to rebalance the public finances. Labour’s original fiscal consolidation plan had envisaged a more drawn-out programme of cuts but this was before the eurozone crisis up-ended forecasts. External factors like the oil price rise and the eurozone crisis had indeed dragged down the UK’s GDP, pushing the achievement of Osborne’s fiscal consolidation targets ever further into the future. How much of this stagnancy was also down to the further deflationary effect of spending cuts is open to question but the Organisation for Economic Cooperation and Development in its December 2012 forecast warned the UK government not to further tighten the screws in order to get the fiscal targets back on track. Even the usually hairshirt IMF suggested that there might be time for ‘a reassessment’ of the government’s austerity plans, calling for fiscal consolidation to be ‘slow and steady.’8 In a sense, the Chancellor, George Osborne, was already readjusting his plans, well aware that imposing further cuts in order to meet his original targets could push the economy back into recession. The flipside was that austerity and deficit-reduction, instead of being wrapped up by 2015, were stretching well after the election into the next parliament dubbed by critics now as ‘a second parliament of pain.’ The irony is that his critics on the right complained that not only was he not reinvigorating the economy but he was also failing to reduce debt, the cornerstone of the Coalition programme. The left-wing Greek finance minister Yanis Varoufakis later in 2015 even teased Osborne that compared to austerity in Spain and Greece ‘you are not really doing much of it’ though he did warn that even the UK version would backfire on him.9 Worse news, at least politically, came in February 2013 when the credit rating agency Moody’s downgraded the UK’s triple A rating to Aa1 for the first time since 1978, concerned that the sluggish economy meant debt reduction would take longer. Three years into the new government and it seemed most wage-earners were getting the worst of all worlds with a stagnant economy, living standards still below what they were pre-financial crash and tough spending cuts that were shredding public services. The June 2010 Emergency Budget had envisaged the deficit would be down to 1.1% by 2015/2016 following fiscal consolidation. The deficit in fact ended up at 4.1%, the

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same figure that the June 2010 Emergency Budget had forecast would occur without any attempt to reduce it. But just as it seemed the Coalition’s fiscal strategy was in tatters and that austerity, as its critics claimed, had indeed simply made a weak economy even weaker, light appeared at the end of the tunnel. The problems in the eurozone, the UK’s biggest export market, had been a severe drag on the British economy but in summer 2012 Mario Draghi, president of the European Central Bank delivered a strong hint that he would do ‘whatever it takes’ to shore up the euro. The message blew confidence back into the money markets and over the next few months this fed into the UK economy aided by an uplift in consumer spending, lower unemployment, a drop in inflation and a mini boom in the housing market aided by rock bottom interest rates. The first quarter of 2013 saw a modest rise in GDP of 0.3% followed by a larger rise of 0.6% in the second quarter while total growth for the year ended at 1.9%, the strongest annual rate since 2007. However, there was no let-up in the targets for spending cuts while further cuts of £11.5bn for the year 2015/2016 were announced, especially in welfare which would be capped for the next four years. Welfare amounted to 29% of public spending and had risen by 58% in the decade to 2011. Labour now pledged not to reverse the cuts should it win the 2015 general election unless these could be paid for by savings elsewhere or extra tax revenue. More borrowing, however, was not on the table.

Was Austerity Necessary? Several salient facts stand out in the period 2010–2015. In 2010, the British public had come to accept a deficit of almost 11% of GDP and ballooning debt was unsustainable. The main political parties differed only in the timeframe in which they intended to reduce this deficit. The Coalition’s fiscal targets, so stringent when announced in 2010, were largely missed. The Coalition forecast the deficit would be 1.1% by 2015/2016 when in fact it ended up as 4.1%, admittedly still less than half what it had been in 2009. The Coalition government borrowed £100bn more between 2010–2011 than it had forecast in its 2010 Autumn Statement. Out of 31 advanced economies, only Japan had higher structural borrowing than the UK in 2015. In October 2015, public sector debt was 80.5% of GDP whereas the 2010 Emergency Budget predicted it would be 67.4%.

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But in the Coalition’s defence, the eurozone crisis blew a hole through the 2010 forecasts as it would have done with the Labour government’s earlier deficit-reduction plans. There were genuine concerns Greece could leave the euro and the eurozone could implode with a devastating impact on the UK economy. At the same time, the spectacle of countries like Greece enduring the agony of its near-bankruptcy as it argued with its lenders over huge spending cuts was a salutary warning for the British public of what could occur if public debt spiralled out of control. It partly explains why spending cuts did not lead to riots on British streets on the scale they had done during the cuts of the early 1980s. The Coalition therefore missed its targets yet still managed to give the impression it was driving down debt—which it was, albeit at a slower rate than it had envisaged in 2010—and pursuing a policy of fiscal consolidation, or austerity. The IMF recognised this dexterity when its managing director Christine Lagarde commented in 2014: ‘Fiscal consolidation has been a key policy anchor for the UK economy. The deficit has been halved to 5.75% of GDP over the past four years. While adhering to the medium-term framework, the government has shown welcome flexibility in implementation.’10 Danny Alexander, the Treasury chief secretary, later argued that it could hardly be said a 5% deficit—the 2015 figure—was exactly hairshirt and might even be termed Keynesian.11 To those who maintained that austerity impeded the recovery from 2010–2012, the question is what then led to the economy bouncing back from 2012? Some commentators suggested the difference was the European Central Bank pledging in summer 2012 ‘to do whatever it takes’ to support the euro; in other words, it was the problems in the eurozone that slowed the UK recovery and when these were addressed, the UK economy was then able to expand again. The Institute for Fiscal Studies though maintained that had the government stuck with Labour’s last Budget strategy in March 2010, tax might have been lower and spending higher but debt would also have been higher and spending cuts post-2015 would have been deeper.12 Danny Alexander, defending austerity, later said that without it interest rates would have risen ‘and markets would have lost faith.’13 IMF chief Christine Lagarde told a press conference in London in 2012: ‘When I look back to 2010 and what could have happened without fiscal consolidation I shiver.’14 Ultimately, the voters had the chance to give their verdict on the Coalition’s austerity programme in the 2015 general election. Even after five years, deficit-reduction still had cross-party support with the main political

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parties only differing on the extent of further cuts. Far from announcing that austerity had done its job and the deficit had been halved from its peak of 10%, of GDP the Conservatives went into the election promising even more stringent measures to outdo their opponents. These included £12bn cuts in welfare, freezing working age benefits for two years and reducing the benefit cap from £26,000 to £23,000. Their manifesto proposed a 1% cut in spending in real terms for two years, the same rate as the previous five, or a further £30bn of fiscal consolidation on top of the £120bn already ‘identified and delivered.’ For the subsequent two years, the manifesto then pledged to turn the deficit into a surplus by 2019/2020—not achieved since 2001—with spending growing only at the rate of inflation. Some commentators believed the Conservatives deliberately exaggerated their austerity pledges so they could drop some of them as part of negotiations with their Liberal Democrat partners should there be another hung Parliament. In the end, there was no need. The Conservatives won an overall majority of 12 while the Liberal Democrats ironically bore the brunt of any electoral anger over austerity and were reduced from 57 seats to a rump of just eight. In Scotland, the anti-austerity Scottish National Party became the lightning rod for dissatisfied voters and won by a landslide with 56 out of 59 seats, taking votes from Labour. However, whatever the voters thought about austerity their opinion was not enough to turn the Conservatives out of office. Some months afterwards, Chancellor George Osborne rowed back on his tough election pledges with a four-year programme of milder cuts, as much as 20% of GDP less than the previous five years, although welfare caps continued. But by then, the focus was on a potentially much greater threat to his fiscal plans—the referendum to leave the EU.

Did Austerity Cause Brexit? One of the curiosities for economists of the Great Recession was that it did not follow the usual pattern of previous recessions with a huge surge in unemployment followed by recovery and boom. Although unemployment rose, peaking at 10%, it never reached the levels of previous recessions while in contrast recovery was anaemic, wages stagnant and the standard of living for most people a decade after the trough of the recession was still lower than pre-2007. The result was a nation of discontented workers, especially in poorer ex-industrial areas, in employment

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but feeling trapped, often in part-time work or in zero hours contracts. Spending cuts stripped down benefits, adding further financial pressures to already struggling households. During the recession, private sector employment fell by 800,000 from peak to trough, but recovered quickly and by 2015 grew by almost 2.2 m (1.4 million higher than its prerecession peak). By contrast, public sector employment rose gradually throughout 2008 and 2009, but then fell by 430,000 from late 2009 through to 2015.15 This was put down to a reluctance of employers to invest in technology because it was cheaper to carry on using unskilled or semi-skilled labour as wages were static during the downturn. The ‘gig’ economy with zero hours contracts further shifted power from employee to employer, driving down labour costs. In addition, many employees took part-time work rather than claim unemployment benefit. The Institute for Fiscal Studies noted a ‘particularly large rise in the proportion of part-time workers who would like to work full-time hours, which nearly doubled from 9.9% in 2007 to 19.0% in 2012 before falling back slightly to 18.1% in 2014.’ The IFS added that ‘on any measure, average earnings remain well below their pre-crisis level in real terms and any growth remains weak.’16 This then led to the second puzzle which was persistent low productivity, especially in lower income areas. There was of course a link: poorly paid work at least provided jobs but it was usually in industries with low profit margins and little investment in either technology or training and in services like retail or call centres with minimum wage salary levels. A think-tank report later commented: ‘Following the financial crisis, the lingering costs of the recession were instead reflected in unprecedented weakness in productivity, resulting in a stagnation in incomes. One of the primary drivers of the slow recovery was the need for financial institutions to strengthen their balance sheets which limited the supply of credit to the real economy. This was reinforced by weak investment demand on the part of firms and an increase in labour supply by households. These factors combined to result in weak productivity growth and, ultimately, weak income growth. So even though the rise in unemployment was smaller than after the 1980s and 1990s recessions (despite a larger hit to GDP) the inflation-adjusted value of incomes continued to fall for around six years after the financial crisis.’17 When the economy modestly improved from 2013, the usual consequence from past recoveries was a rise in labour costs and therefore inflation requiring a correction with increases in interest rates. But labour

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costs did not rise, productivity remained poor and the bank rate was fixed at a record low of 0.5% from 2009–2016 to cope with the eurozone crisis and the sluggish economy. However much the government trumpeted the increase in GDP, the vast majority of households were worse off than pre-recession. The Institute for Fiscal Studies said ‘this represents an extremely unusual period historically, with wages and incomes recovering much more slowly than is usual coming out of a recession.’ In a later study, in 2018, the IFS estimated that the economy was 16%, or £300bn, smaller than it would have been had there been no recession and GDP had carried on at the pre-financial crash rate. As a result, GDP per head was £5,900 per person lower than it might have been (though this assumed no external shocks like the eurozone crisis). It was a huge drop in potential income and in tax revenue that could have met the rising costs of health and social care. The IFS put the slow recovery from the recession down to not just a fall in output but also ‘dreadful productivity performance’ since 2008 during which ‘measured productivity per hour’ had grown by just 0.3% against an historical trend of 2% a year. This hit pay packets with median real earnings for employees even as late as 2018 still 3% below where they were in 2008. The IFS commented: ‘We should never stop reminding ourselves just what an astonishing decade we have just lived through, and continue to live through. The UK economy has broken record after record, and not generally in a good way: record low earnings growth, record low interest rates, record low productivity growth, record public borrowing followed by record cuts in public spending.’18 After the referendum result in 2016, researchers seeking to find answers as to why deprived areas, especially in the North, the Midlands and declining seaside towns, voted so strongly for Leave, often against their own economist interests, concluded it was partly a protest against austerity, among other grievances. There was little doubt that spending cuts, especially in local government, particularly affected poorer areas more reliant on government funding and welfare than wealthier parts of the country and these areas also voted Leave. The think-tank Centre for Cities argued further that it was urban areas that bore the brunt of austerity, shouldering 74% of council cuts equal to £386 per person in cities because 62% of social housing residents, 62% of those on unemployment benefit and 80% of those living in the 10% most deprived areas of England were in cities. The centre said that seven of the ten cities with the largest cuts were in the North East, North West or Yorkshire with the

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ex-mining area of Barnsley in Yorkshire being the city hardest hit. In the referendum, Barnsley voted over two to one to Leave.19 The Centre maintained that austerity contributed to the Leave vote, itself a protest against globalism because poorer areas, especially those in former industrial heartlands whose heavy industries had disappeared and were replaced by lower paid services, had to some extent been insulated from the excesses of globalism by government funding and welfare. When this welfare funding was withdrawn through spending cuts under austerity, the poorer areas were exposed to the brutal winds of global recession. Support for the anti-EU UK Independence Party (UKIP) rose after 2010 in areas where the cuts were greatest. One analysis of the link between welfare cuts and the rise of UKIP concluded starkly that ‘the EU referendum could have resulted in a Remain victory had it not been for a range of austerity-induced welfare reforms.’ The author added: ‘Voters hit hardest by the cuts were more receptive to the Leave campaign, which shouldn’t be surprising as campaigners promised fiscal windfalls from leaving the EU that could prop up ailing public services.’ Welfare cuts also drained revenue from already struggling local economies, the same analysis estimating that ‘for every pound in benefit-income that was lost, local area incomes contracted by around £2.4 due to the multiplier effect.’20 Belatedly, it dawned on the government that austerity was hitting those local economies least able to withstand further cuts in revenue after the devastation of the Great Recession, and that resentment was fuelling support for UKIP which in turn was channelling it into Euroscepticism. It was not the most auspicious time therefore to test the public’s view of the EU with an in–out referendum. And yet that was precisely what Prime Minister David Cameron now intended.

Notes 1. For a fuller analysis of austerity politics and its history see Michael Burton. (2016). The Politics of Austerity (Palgrave Macmillan). 2. Institute for Fiscal Studies. (June 2010). Emergency Budget report. 3. Institute for Government. (2019). Performance Tracker 2019: Neighbourhood Services. 4. Quoted in The MJ (Municipal Journal), February 24, 2020. 5. Institute for Fiscal Studies. (February 2011). Green Budget. February 2011.

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6. For an account of this period see Michael Burton. The Politics of Austerity (2016) (Palgrave Macmillan). 7. Institute for Fiscal Studies. (November 2011). Report on the Autumn Statement. 8. BBC Radio 4. January 24 2013. 9. Yanis Varoufakis. Adults in The Room (London, Vintage, 2017, p. 34). 10. International Monetary Fund. Press release No. 14/263. (June 6, 2014). IMF Mission completes the 2014 Article IV Consultation Discussions with the UK. 11. Michael Burton. (2016). The Politics of Austerity (Palgrave Macmillan, p. 105). 12. Institute for Fiscal Studies. (February 2015) Green Budget. 13. Michael Burton. (2016). The Politics of Austerity (Palgrave Macmillan, p. 108). 14. BBC News. (May 22, 2012). 15. Institute for Fiscal Studies. (February 2015). Green Budget. 16. Ibid. 17. Resolution Foundation, UK. (16 April 2020). Doing More of What It Takes. 18. Centre for Cities. (January 2019). Cities Outlook. A decade of austerity. Centre for Cities. 19. Jonathan Cribb and Paul Johnson, Institute for Fiscal Studies. (September 2018). 10 Years on Have We Recovered from the Financial Crisis? 20. Thiemo Fetzer. (2018). Did austerity cause Brexit? Working Paper. Coventry: University of Warwick. Department of Economics. Warwick economics research papers series. 2018. Also Harvard Business Review, August 23 2019. Did Austerity in the UK Lead To the Brexit Crisis?

CHAPTER 7

Cameron Opts for a Referendum

British Prime Minister David Cameron never intended Europe to define his premiership. Back in October 2006, he had told his party conference to ‘stop banging on about Europe.’ In 2010, there appeared to be no major EU treaty revisions on the horizon now that Lisbon was signed, and he did not expect Europe to form a major part of his forthcoming agenda. His overriding priority having formed a Coalition with the Liberal Democrats, was sorting out the public finances, reducing the record 10% deficit and setting out ‘compassionate’ Conservatism. But as with his predecessors John Major and Margaret Thatcher, he soon found that Britain’s problematic relationship with the EU was never far from his in-tray and that European issues had a habit of infecting UK domestic politics. The curtain to the drama that would destroy Cameron’s premiership and political career six years after taking office, opened with the key actors already in place and others yet to enter the stage. A deep recession, stagnant living standards, a stark socio-economic divide, the MPs expenses scandal, historically high rates of immigration, a financial crisis in the EU’s cherished eurozone, war in the Middle East, Islamic terrorism and a refugee calamity created a toxic mix of public resentment against the socalled establishment at home and fear and disgust at the turbulent world beyond the English Channel that found expression in the populist right and nationalism. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_7

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The spark to this combustible mix was Cameron’s decision in 2013 to hold a referendum on leaving the EU. Critics of the decision said it was done to placate the Conservative Eurosceptics, prevent the party plunging into another round of internecine warfare and fend off the mounting threat from the populist right in the form of UKIP. Cameron vigorously denied this, especially in his 2019 memoirs when he went to some lengths to defend his policy on Europe. He claimed that as early as January 2012 ‘long before the UKIP threat,’ he had concluded a referendum was likely after 2015.1 Although this was not in the Conservative manifesto for the 2010 general election a pledge in the Coalition agreement, agreed with the Liberal Democrats in May 2010, said that any proposed future treaty that ‘transferred areas of power, or competences,’ would be subject to a referendum on that treaty—a ‘referendum lock.’ Cameron said that he had always favoured referendums if European treaties involved constitutional change that transferred powers from the UK to Brussels and in particular he had called for one on the Lisbon Treaty. Although Tony Blair had agreed to a referendum on Lisbon, his successor Gordon Brown did not and Lisbon was duly signed by the UK in 2009 before the general election and hence before Cameron was in a position to make any difference. Cameron vowed, that should proposals for further constitutional change occur again while he was Prime Minister he would put them to a referendum. Although previous Conservative Prime Ministers like Edward Heath and Margaret Thatcher were no fans of referendums, believing they circumvented Parliament, Cameron argued there was already a wellestablished precedent with the 1975 referendum on whether to remain in the EEC, as well as regional referendums, on Scottish and Welsh devolution in the 1970s and 1990s. Indeed, as part of the deal with the Liberal Democrats in the Coalition, he agreed a referendum in 2011 on whether to change the voting system. However, he opened a Pandora’s Box by maintaining, as he did later in his memoirs, that the public feared rules were set by an elite from which they were excluded and that referendums gave them ‘control,’ an argument used with great effect by campaigners wanting to leave the EU.2

The Rise of the Right In a sense, however, the Westminster voting system to elect 650 MPs to the House of Commons was ‘elitist’ in that representation was confined to a small number of political parties. Unlike elections to the European Parliament or even in elections for the devolved Scottish Parliament,

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Welsh Assembly and London Assembly, the system to elect MPs was based on ‘first past the post’ in their constituencies. The candidate with the highest number of votes was the winner even if the majority was one. This meant that smaller parties with electoral support diffused across the country but never concentrated enough in one place to elect an MP could win thousands of votes but not have a single representative in Parliament. The advantage of the system was that it generally led to stable government, either Labour or Conservative, without the need to placate a myriad of small parties in the Commons. The disadvantage was that smaller fringe parties, such as from the more extreme right or the far left, were absent from the Commons and felt therefore excluded from the political system. It was further ammunition for campaigners claiming that power was exercised by an establishment elite, whether Labour or Conservative. But in 2010, the opportunity arose for change. Among critics of the system were the Liberal Democrats (Lib Dems) who felt their voter support nationally was not fairly reflected in the number of MPs. In the 2010 general election, they won 23% of the popular vote and 57 MPs yet Labour with 29% of the vote—just 6% more—ended up with 258 seats. The creation of the Coalition between Conservatives and Lib Dems, the first in over 70 years, now gave the Lib Dems a window to reform the system. As part of the Coalition deal—which included a boundary review to reduce the number of MPs and fixed-term Parliaments—Cameron agreed to holding a referendum on dropping the ‘first past the vote’ arrangement in favour of the AV system. Under AV voters rank, one or more candidates in order of preference. If no candidate gets more than half of the votes of the first preferences then those with the least are eliminated, and their second preferences are added to the remaining candidates and so on till a winner is found. The advantage for the Libs Dems, and smaller parties, was that second preference votes from Conservative and Labour voters could tip the balance in their favour in marginal seats. It also preserved the vital link between an MP and their constituency. Cameron and the Conservatives campaigned against AV arguing it would make government weaker and open up the Commons to small, extreme parties. In the referendum that took place in May 2011, the voters agreed, rejecting AV by 68 to 32% on a low turnout of 42%. We will never know, if voters had backed AV, whether smaller parties like UKIP, benefiting from second preference votes from right-wing Conservative voters and working-class Labour voters, might have fared in the elections

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of 2015, 2017 and 2019 and whether exposure to scrutiny on the floor of the Commons would have enlarged or diminished their appeal. But what is true is that in European Parliament elections held under proportional representation—as opposed to first past the post—UKIP became the UK’s largest party and gave it momentum whereas it could make no impression in UK general elections. For UKIP was indeed becoming a growing extra-parliamentary presence in British (or more specifically English politics since its support was primarily in England). Since its launch in 1993 to campaign to leave the EU, it had been a minor one-issue fringe party dismissed by Cameron as filled with ‘fruitcakes’ and riddled with infighting though it had its sympathisers on the right of the Conservative Party. In the 1997 general election, UKIP gained just 0.3% of the vote but in the 1999 European Parliament elections it benefited from the new proportional representation system, winning three seats and 6.5% of the vote. One of its new MEPs was Nigel Farage. In the 2004 European elections, it did even better, coming third with 16.1% of the vote and gaining 12 seats but still made little impact domestically, winning 2.2% of the national vote in the 2005 general election. To many voters it remained a single issue, far right party. A combination of unrelated factors transformed UKIP’s fortunes. In 2006, the charismatic Nigel Farage was elected leader. The 2007 financial crisis and consequent recession hit poorer households in particular as well as stoking resentment against banks, rampant capitalism and globalism in general. The MPs expenses scandal in 2009 shredded the reputations of Parliament and the main political parties. In the 2009 European Parliament elections, UKIP became the second largest party after the Conservatives with 13 MEPs but the momentum stalled in the 2010 general election when it won just 3.1% of the votes (though nearly a million in number) but no seats. The major political change for the party was Farage. The son of a stockbroker, he was educated privately and initially worked in the City. A Conservative Party activist, he left the party over Maastricht, joined UKIP and became an MEP in 1999 which gave him a political base, albeit funded by the European taxpayers. Despite his middle-class background, Farage cultivated the image of a beer-swilling, cigarette-smoking man of the people who spoke pithily and was always good for a quote. Often interviewed in pubs with a pint in his hand, he soon became a media star

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garnering publicity out of all proportion to the party’s minority share of the popular vote. But Farage’s big impact on UKIP was to move it away from its far right cul-de-sac and widen its appeal not just to Conservative voters but also to those mainly ethnically white English working-class Labour voters who felt disenfranchised by the political system. In effect, he began to create an alliance that straddled both main parties, picking up voters’ concerns about their stagnant living standards, immigration, globalism, overpaid bankers and decaying neighbourhoods and using the EU as the scapegoat. The election of the metropolitan, progressive, South Eastcentric Cameron as Tory leader then Prime Minister provided UKIP with the opportunity to attract those Conservative supporters uneasy about Cameron’s socially liberal direction of travel. With Labour’s new leader Ed Miliband (elected in September 2010, see Chapter 11), a former special adviser like Cameron and also like Cameron a middle-class cosmopolitan liberal, the party’s traditional working-class voters in the industrial areas of the Midlands and the North who felt their concerns over immigration and stagnant living standards had been ignored by the Labour government were potential recruits to Farage’s sound bite solutions to their problems. A study by political scientists Goodwin and Ford concluded that UKIP’s electoral basis was clearly defined as old, male, working class and less educated with 57% over the age of 54 and only 10% under the age of 35. These were the people who would provide the core Leave base in 2016.3 While UKIP would draw much of its support from working-class Labour areas it seemed a greater threat electorally to the Conservative Party whose wounds over Europe were still raw (see Chapter 5). Cameron, however, hoped that with the Lisbon treaty signed there would be no further troublesome treaty changes to reopen old scars within the party and he looked forward to a constructive, if robust, dialogue with European leaders, especially those who sympathised with his anti-federalist, anti-statist sympathies. He was also firmly in favour of remaining in the EU—although opposed to joining the euro—while his Coalition’s Lib Dem partners were enthusiastic Europhiles. Also, UKIP performed poorly in the 2010 general election with just 3.1% of total votes.

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Crisis in the Eurozone An early sign that Europe was not going to be sidelined as an issue was the eurozone crisis in debt-crippled Greece which reached its zenith in 2010/2011 and offered British voters a grim display of the single currency’s structural weakness and the EU’s division between rich and poor members. Opponents of Economic and Monetary Union (EMU) in the EU argued that without fiscal union the currency would be unable to overcome the huge disparities between the economies of its various members. This division was coincidentally geographic with the Northern European countries, longstanding EU members, being the wealthier half of the eurozone with well-developed financial services infrastructures and sophisticated systems of public finances. In contrast, the Southern European states, notably Portugal, Italy, Spain and Greece, who were later arrivals to the EU, were poorer with less developed financial and public finance systems. When the euro was originally adopted as the future currency of monetary union in the 1992, Maastricht Treaty and its members were expected to adopt strict financial criteria such as a budget deficit of no more than 3% of GDP and total public sector debt at no more than 60% of GDP to avoid them from irresponsible borrowing, neither of these precautions were policed, with disastrous results. In 1999, the euro was introduced into the first tranche of 12 EU member states, Austria, Belgium, Finland, France, Greece, Germany, Ireland, Italy, Luxembourg, Netherlands, Portugal and Spain, their separate currencies ceasing to be legal tender from 2002, until eventually 19 out of the 27 EU member states were in the eurozone. But from the beginning, there were fundamental structural weaknesses in the euro. The economies of the member states were widely diverse with those of the Southern Europe countries like Spain, Portugal and Greece considerably less developed than those in the North like Germany, France and the Netherlands. The European Central Bank (ECB) which managed the euro adopted low interest rates that incentivised the wealthier Northern European members to lend to the poorer Southern states which in turn were incentivised to borrow because money was cheap. The result was a build-up of unsustainable debt and mounting public spending deficits in the Southern countries whose tax systems were also often chaotic. Technically alarm bells should have been rung when the countries breached the maximum 3% deficit/60% debt of GDP rule but this was ignored. In addition, as eurozone members were locked into the euro and had no

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control over their own currencies anymore, they were unable to use devaluation to reduce the cost of exports and create an export-led recovery in the event of recession. The bubble burst with the fiscal crisis in 2007/8 and the collapse of confidence in the banking system. Foreign capital investment into countries with huge debt—Portugal, Italy, Greece and Spain, dubbed the PIGS—dried up as funds sought safe havens elsewhere causing a foreign exchange crisis and soaring borrowing costs for the indebted countries who were unable to honour their loans. To plug their deficits, some of these near bankrupt countries raised taxes and slashed public spending provoking social and political disorder. In October 2009, the Greek government, the worst hit of the PIGs, shocked financial markets by revealing its deficit was far higher than it previously stated being now 12.7%—more than four times greater than its technical maximum of 3% under euro rules which clearly had never been applied—and it needed a bail-out. The International Monetary Fund and European Central Bank eventually lent the Greek government 110bn euros in May 2010 with stringent conditions attached including tax rises and spending cuts. This was followed by further loans and further tough austerity conditions which only sent the Greek economy into a tailspin, its GDP declining by 6.9% in 2011. Ireland, hit by the collapse of its over-heated property market, also borrowed 85bn euros from the so-called troika of the IMF, EU and ECB (making the PIGS, the PIIGs), while loans were made to Portugal in 2011 and Spain in 2012. The austerity cuts caused political turmoil in the PIIGS but met lack of sympathy among politicians in the Northern member countries. They blamed the indebted plight of the Southern Eurozone states on weak political and economic management and saw no reason why their own voters’ taxes should fund such irresponsibility. The European Central Bank agreed. This was dire news for the UK economy, currently undergoing its own austerity programme to reduce a deficit that had hit 10.2% in 2009/10, as 50% of the UK’s exports went to the EU. In summer 2012, however, with the Greek crisis getting worse, the ECB had a change of heart and promised ‘to do whatever it takes’ to shore up the euro, even to the extent of buying debt from the PIGS to force down their borrowing costs. The pledge restored confidence in the euro and ultimately helped Portugal, Ireland, Spain and Italy to recover and exit from the bailout programme, Ireland emerging from recession in 2013, its GDP hitting 5% in 2014. The Greek tragedy, however, continued, the austerity measures causing

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huge social and economic suffering, a political crisis and the election of a left-wing government led by the Syriza party, opposed to spending cuts. There were rumours that Greece might even quit the Euro and the EU altogether in a ‘Grexit’ with catastrophic results for the entire EU. In July 2015, a Greek referendum rejected the IMF/ECB/EU’s latest loan conditions and Grexit loomed. In the end, the Syriza government compromised, a new deal was signed and the worst of the crisis passed though it was by no means over and Greece’s financial turmoil continued for another two years. The eurozone crisis provided plenty of ammunition for British Eurosceptics who argued that it was proof the single currency was a disaster and that even though the UK was outside the euro it would still as an EU member be increasingly and negatively affected by eurozone rules. The crisis exposed the central weakness of the eurozone, the lack of fiscal consistency among members, the major differences in debt, competitiveness and tax and spend policies, in short the lack of a fiscal union. Logically, therefore to strengthen the euro meant more integration, not less. This was the heart of the EU debate. The eurozone and now the crisis were pulling the EU in the direction of greater integration, or ‘ever closer union,’ which British governments, with varying degrees of intensity, had opposed since the 1980s. Cameron hoped that he could arrest the process of further integration, at least for the UK, through a new treaty with Brussels which would allow the UK to find its own looser membership arrangement: the British people could then endorse the new treaty in a referendum closing the matter for a generation. It was a decidedly optimistic view bearing in mind that the eurozone had been on the brink of collapse and that its 19 members were determined to avoid a repeat of the crisis by reducing their underlying differences through greater integration whether or not this suited the UK.

Pressure Mounts for a Referendum Nor was UKIP fading back into obscurity. The media-savvy Nigel Farage had briefly resigned as leader in 2009 but was re-elected in summer 2010 with 60% of his party’s vote. The fact that the Lib Dems, despised by the Conservative right who were never greatly keen on the Coalition, were also ardent Europhiles helped stir the Eurosceptics in the Tory party who

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in turn put increasing pressure on Cameron to take a more strident tone with Brussels. In autumn 2011, a public petition calling for a referendum on continued EU membership garnered 100,000 signatures which automatically triggered a debate in Parliament. In October 2011, the House of Commons voted on a backbench motion on whether to hold an in/out referendum. Although backbench motions can be ignored by governments, Cameron feared that Labour would abstain and 120 Tory MPs would back it, enough to carry it.4 Rather than give his MPs the opportunity to release the genie of Euroscepticism from the bottle, Cameron insisted on a three-line whip ordering them to support the government’s rejection of the motion. Despite this, a total of 81 Tory MPs defied the whip even though the government won the motion by 483 to 111. It was the biggest backbench rebellion since the Major years and the genie was released. Worse was to follow. The eurozone crisis affecting the indebted southern EU members, Greece, Portugal and Spain plus Ireland compelled the EU to introduce a Fiscal Compact Treaty for Eurozone members to prevent such debts from piling up again. The UK, being outside the zone, was unaffected directly but feared the treaty would harm its vital financial services sector and demanded guarantees. When EU leaders refused to deliver them in a marathon negotiating session in Brussel in December 2011, Cameron used the nuclear option by employing the power of his veto to block the entire treaty. The treaty that he had vetoed went ahead anyway, the other member states later making it ‘intergovernmental’ and therefore outside EU structures. Cameron’s veto produced hugely favourable headlines in the Eurosceptic UK media and among his own MPs but it also whetted the appetite of the Eurosceptics in his party who could see more opportunities looming to battle with Brussels. In June 2012, Tory backbencher John Baron delivered a letter, signed by over 100 Tory MPs, to Cameron urging him ‘to place on the Statute Book before the next General Election a commitment to hold a referendum during the next Parliament on the nature of our relationship with the European Union.’ A Conservative website said ‘the letter is yet another sign of deepening Euroscepticism within the Conservative Party5 while longstanding Eurosceptic Tory MP John Redwood wrote on his website that month: ‘I have been speaking in other constituencies in recent weeks, meeting Conservative members and voters. The overwhelming wish they have is

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to hold a referendum on the EU… Conservatives say that if we can have a referendum on the Alternative Vote, referenda on elected mayors, maybe a referendum on Lords reform, and if Scotland can have a vote on staying in the UK, why can’t the rest of us have the one referendum we want, a referendum on our relationship with the EU?’6 In October 2012, rebel Tories inflicted a defeat on the government by joining Labour in calling for a cut in the EU’s budget. Cameron later wrote in his memoirs that he realised his party, in tune with much of the country as he alleged, was becoming ‘increasingly ungovernable’ on Europe while the eurozone crisis was pulling the EU steadily away from the UK, a non-member of the single currency.7 UKIP’s shift in focus to targeting white working-class voters began to reap electoral dividends in English local council elections which gave it a momentum nationally, its support fuelled by resentment against austerity spending cuts which disproportionately hit poorer areas. In the 2012 council elections it won just nine seats. In the May 2013 more widespread council elections UKIP won 147 seats, an increase of 139 compared to the last similar local elections in 2009 representing 19% of the vote, making it the fourth largest party locally. Cameron now felt the time had come to lance the EU boil. In January 2013 with the eurozone crisis still raging Cameron announced his fateful decision to hold an in–out referendum on remaining or leaving the EU. The announcement was made at the trendy City of London offices of US financial media firm Bloomberg. Like Thatcher’s Bruges speech much of Cameron’s was initially devoted to extolling Britain as a European nation, the EU as a force for good in preventing war and the single market to drive trade but also like Bruges there was a sting in the tail, or in this case in the middle. He maintained that ‘public disillusionment with the EU is at an all-time high,’ because of opposition to EU rules and because the EU was ‘heading for a level of political integration that is far outside Britain’s comfort zone.’ He repeated his complaint that EU treaty changes had occurred without referendums and he took a swipe at what Leavers would later dub the ‘establishment’ or as Cameron called them in his speech, ‘our political and business leaders’ for previously supporting the UK joining the euro which was now in crisis. What he called ‘the people,’ he added, ‘haven’t noticed many expressions of contrition’ from the business and political elite. The eurozone crisis stimulated moves to more closely integrate its members thus creating a gap with non-eurozone members like the UK

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and making a new treaty more probable therefore in turn providing an opportunity for the UK to redefine its relationship with the EU. Cameron said: ‘At some stage in the next few years the EU will need to agree on Treaty change to make the changes needed for the long term future of the euro and to entrench the diverse, competitive, democratically accountable Europe that we seek. I believe the best way to do this will be in a new Treaty so I add my voice to those who are already calling for this.’ His conclusion was that the British people needed to be consulted for their views over the future direction of the EU after the eurozone crisis on the grounds that if such a consultation were left too late then they might reject the EU altogether. However, he said such a referendum must not happen immediately but after some time had passed to allow the EU to propose its new structures in a treaty after the eurozone crisis and so the public could then see into what type of body it had evolved. A new negotiated treaty with membership rules redefined for countries like the UK could then be put to a referendum, most likely halfway through the next Parliament i.e. around 2017. Having begun his speech insisting the UK was a European nation, then arguing that the British public no longer regarded the EU as serving their best interests, that inevitably a new treaty would have to be drawn up to deal with the eurozone and that the British people should be consulted in a referendum Cameron ended his speech by insisting that nonetheless the UK should remain in the EU. He concluded: ‘Britain’s national interest is best served in a flexible, adaptable and open European Union and that such a European Union is best with Britain in it.’8 Cameron maintained he thought about the referendum pledge more than any other decision he made as Prime Minister. He rejected allegations that it had been made just to placate the Tory Eurosceptics or take the wind out of UKIP’s sails or indeed that he never expected to win the next general election in 2015 so the pledge had no weight or that he expected to win the referendum so could afford to promise one. All these, he wrote in his memoirs, were concerns but ‘not the determining force.’9 The bigger puzzle was why Cameron believed there was any chance the British public would vote to stay in the EU considering all its defects which he had so eloquently outlined in his speech or that somehow he could renegotiate a treaty which would then transform sceptical public opinion. When Cameron appeared in the House of Commons straight

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after his speech, he was greeted with cheers by his backbenchers. Labour opposition leader Ed Miliband said they were cheering not because they wanted to vote ‘yes’ in an in/out referendum but because they intended voting ‘no.’ The decision to hold a referendum dismayed the Europhiles, veteran Cabinet minister and former Chancellor Ken Clarke calling it ‘startling and catastrophic’ and ‘reckless and irresponsible’10 and adding in his own memoirs: ‘A quick campaign and a vote on a broad-brush simple question which obscures a myriad of sub-issues within it about the role of Britain in the world and the best base for our future economy has always seemed to me to be reckless beyond belief.’11 More importantly, Cameron’s close ally and friend George Osborne, the Chancellor of the Exchequer, also opposed the decision though backed it in public while the Lib Dem leader Nick Clegg reminded Cameron that the Coalition agreement’s ‘referendum lock’ applied only if an EU treaty transferred powers to Brussels and not before. In the short term, the speech did indeed placate the party though not the most hardened Eurosceptics who wanted a referendum before the next election, rather than in 2017. In May 2013, 114 Tory MPs signed an amendment expressing ‘regret’ that a referendum was not earmarked for the current Parliament which would end in 2015. The Bloomberg speech did not deflate UKIP’s appeal, its leader Farage claiming credit for Cameron’s decision. Indeed, Ken Clarke reckoned it ‘made’ Farage who in his view before the referendum announcement was ‘a fringe player.’12 That UKIP was now a serious threat was confirmed in May 2014 when local council elections (held under the first-past-thepost system) and European Parliament elections (held under proportional representation) took place on the same day. In the councils up for elections, UKIP increased its seats from three to 163, the party coming fourth. In the European Parliament elections, UKIP won a stunning victory, increasing its seats from 13 to 24 and emerging as the largest UK party with 26.6% of the vote, overtaking the Conservatives (who lost seven seats down to 19) on 23% and Labour on 24.4%. Of particular note was that UKIP won European Parliament seats in every region of England, plus Scotland and Wales with its lowest showing in London and its best in the South East, North West and Midlands, an early indicator of what would be the referendum result. Although a threat to the Conservatives in its siren call to Eurosceptic Tories for a referendum, UKIP was also winning substantial votes from traditional Labour voters in working-class areas. Closer examination of

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the local council results in May 2014 showed UKIP doing especially well in Labour towns with stagnant economies like Rotherham in South Yorkshire where it became the official opposition, North East Lincolnshire (which included the declining fishing port of Grimsby) and the struggling seaside resort of Great Yarmouth in Norfolk. In cosmopolitan London’s 32 boroughs, UKIP won just 12 seats in three councils, of which seven were in one outer London borough. UKIP’s parliamentary breakthrough soon came when Douglas Carswell, the Conservative MP for the Essex seaside town of Clacton, defected, resigned and stood again as the UKIP candidate, winning the by-election. A second Tory MP from a Kent constituency also defected, resigned and won in the by-election giving UKIP two Westminster MPs for the first time in its history. But the party’s most important contribution to the debate over Europe was helping to ‘persuade’ Cameron to hold a referendum. For this to happen, the Conservatives had to win the 2015 general election with an overall majority for the first time in 23 years and following five years of austerity. It was a mountain to climb for Cameron but the stakes could not be clearer: no majority, no referendum.

Notes 1. David Cameron. (2019). For The Record (London, William Collins, p. 340). 2. Ibid., p. 288. 3. Robert Ford and Matthew Goodwin. (2014). Revolt on the Right: Explaining Support for the Radical Right in Britain (London, Routledge). 4. David Cameron. (2019). For The Record (London, William Collins, p. 331). 5. Tim Montgomerie. (June 28, 2012). Conservative Home website. 6. John Redwood. (June 26, 2012). What Conservatives Want. MP’s website. 7. David Cameron. (2019). For The Record. (London, William Collins, p. 339). 8. David Cameron’s EU speech at Bloomberg Cabinet Office. Gov.UK. (January 23, 2013). 9. David Cameron. (2019). For The Record (London, William Collins, p. 407).

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10. Ken Clarke. (2016). Kind of Blue. (London, Macmillan, pp. 462,472). 11. Ibid., p. 473. 12. Anthony Seldon and Peter Snowdon. (2015).Cameron at 10 (London, William Collins, p. 270).

CHAPTER 8

Pulling Up the Drawbridge

British Prime Ministers focus on domestic policy, then become absorbed in foreign affairs with sometimes disastrous results. Labour’s Tony Blair earned international praise over his intervention to prevent massacres in Rwanda and the Balkans but his participation in the invasion of Iraq in 2003 followed by a bloody aftermath of civil war and terrorism tarnished his legacy. David Cameron was determined not to follow suit yet as soon as he became Prime Minister in May 2010 he found himself sucked into a series of international crises that had immediate ramifications for domestic policy, in particular Brexit. The first crisis he faced was the 2010/2012 financial meltdown in the eurozone countries as a result of the 2007/2008 fiscal crash (see above). Then the ‘Arab Spring’ outbreak of pro-democracy demonstrations in 2011 among Middle East dictatorships promised a new era of liberalism that soon degenerated into infighting and terrorism dubbed ‘the Arab Winter.’ Cameron’s intervention in Libya to topple its longstanding dictator Colonel Gaddafi achieved its aim of ending tyranny but left a vacuum to be filled by warlords and Islamic extremists. The prodemocracy uprising also provoked a bitter civil war in Syria which sucked in neighbouring foreign states, created millions of refugees, spawned terrorist off-shoots in western countries and destabilised the entire Middle East for the rest of the decade. In Iraq the political vacuum a decade after the invasion by the British and Americans was filled by new fanatics calling © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_8

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themselves Isis who set out to create an extreme Islamic ‘caliphate’ and use it as a base to kill westerners in their own lands. The financial crisis in the eurozone with its nightly TV news of financial meltdown in the poorer member countries of Greece, Spain and Portugal was grist to the mill for British Eurosceptics who cited it as a warning of where the EU was heading. The wars in the Middle East and North Africa produced huge numbers of refugees, many of whom tried to reach European countries just as the policy of open borders that underpinned the EU’s single market was under threat from populist far right movements. Added to this were economic refugees from other failed states and dictatorships like Afghanistan, Eritrea, Iran and from Africa, many of whom ended up in squalid settlements around Calais, France in their attempt to reach England. In the UK the number of refugees, though a fraction of that of many European countries, was nonetheless exploited by the populist far right in the run-up to the EU referendum as a further example of the consequence of open borders. The combination of eurozone turmoil, war, terrorism and refugees gave added impetus to a view among many Britons, especially the elderly, that the world was a dangerous place, that foreigners brought only trouble and it was time to retreat from European and global involvement. The 2016 EU referendum provided an ideal opportunity for them to register their disgust at the world beyond the white cliffs of Dover.

Crises in the Middle East and North Africa Events in the Middle East in the five years leading up to the EU referendum in 2016 now added a political dimension to anti-globalism sentiment as war, terrorism and in particular the worst refugee crisis in 70 years engulfed the region and spread into Europe. The UK, as an island, was largely insulated from the turmoil but the perception that beyond the English Channel lay chaos, terrorism and potentially waves of mass immigration helped stoke latent xenophobic tendencies as well as fear about home-grown Islamic terrorism and in some cases hostility to refugees already settled in the UK. To the majority of the British public the Middle East was a region of baffling complexity whose ethnic, religious and political divides appeared insoluble. For decades the region was dominated by the conflict between Israel and the Arab states over Palestine. Following the 9/11 Al-Qaida terrorist attack in New York in 2001 the focus shifted to the so-called

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war on terror, to Afghanistan and to Iraq’s dictator Saddam Hussein, toppled by the American-led invasion of Iraq in 2003. The collapse of his dictatorship caused a political and military vacuum, years of sectarian violence between rival ethnic and religious militias and the rise of Isis and other terrorist groups. In Afghanistan the war against the Taliban ground on relentlessly. To the instability of Iraq was then added turmoil in the rest of the Middle East and North Africa. What became dubbed ‘the Arab Spring’ and convulsed the dictatorships of the Middle East began in December 2010 with the self-immolation of a Tunisian street trader in a small town protesting against petty harassment by government officials. The ultimate expression of extreme frustration was a catalyst to violent demonstrations releasing pent-up anger among the Tunisian people, especially the young, against high unemployment and living conditions and led to the resignation of the president after 23 years in power. The spontaneous outbreak of protests then spread from 2011 to Algeria, Jordan, Egypt, Syria, Yemen, Iraq and Libya. The Arab Spring came as a surprise to the British government and indeed the rest of the developed nations. Britain welcomed the new democracy movements but was nervous that the growth of violent Islamic groups, even though the latter had little involvement in what were spontaneous uprisings, might fill the vacuum created by the retreat of the dictatorships. Religious and ethnic tensions in the region were also exploited by the regional powers of Iran, Turkey and later Russia while the US was also militarily involved and to a much lesser degree the UK. Following pro-democracy demonstrations in Libya in early 2011 its longstanding dictator, Libya’s Colonel Gaddafi, refused to resign and turned the army on the opposition provoking a civil war. Aided by NATO air cover initiated by Britain and France the rebels defeated government troops and Gaddafi was killed. Libya however later descended into further civil war and anarchy as two governments vied for power and became the epicentre for refugees attempting to cross the sea into Europe. In Iraq, still chaotic a decade after the US-led invasion, a brutal force calling itself the Islamic State of Iraq and Syria (Isis) was carving out its self-styled caliphate, taking over key cities in early 2014 and controlling a third of Iraq. The group gained worldwide infamy for its beheadings of relief workers and journalists and war crimes against civilians. An international coalition led by the US mounted a counter-attack but it would be three years before Isis was defeated and driven out of the territories it had

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conquered. In the meantime Isis encouraged naïve and often emotionally troubled sympathisers in the west through sophisticated social media messaging to launch terrorist attacks on their home soil. By 2014 as many as 500 Britons were thought to have left the UK to join what David Cameron called ‘this death cult.’1 A much bloodier and prolonged civil war erupted in Syria in spring 2011 where pro-democracy demonstrations calling for the removal of dictator President Assad were violently suppressed by the regime. A loose alliance of opposition forces, ranging from Islamic extremist groups like the al-Nusra Front and Isis to more pro-democracy movements like the Free Syrian Forces, fought the Syrian military. The war was both complicated and extended by becoming entangled in neighbouring wars involving Isis, the Kurdish independence forces, Sunni and Shia conflicts in Iraq and the involvement of external powers including Iran and its proxy Hezbollah, Turkey, the US and Russia. The victims of the longest and most brutal war of the twenty-first century were inevitably civilians and it produced the largest refugee exodus in 70 years. Of Syria’s 22m population some 4m fled the country from 2012 to 2016 ending up either seeking asylum or living in refugee camps mainly in Turkey as well as Lebanon, Jordan and Egypt. Large numbers also fled to the perceived safe haven of Europe. Many made the trip in unseaworthy boats believing the risk to their lives was still better than remaining in a warzone; in 2014 more than 200,000 refugees and migrants fled for safety across the Mediterranean Sea and thousands drowned. According to official Eurostat figures for 2015, 1,255 600 first time asylum seekers applied for international protection in the EU, more than double that of the previous year. The number of Syrians seeking international protection also doubled in 2015 compared with the previous year to reach 362, 800, while the number of Afghans quadrupled to 178,200 and that of Iraqis multiplied by seven times to 121,500. In total, Syrians represented the main citizenship of asylum seekers in twelve EU member states. Afghanistan (14% of the total number of first time applicants) remained the second main country of citizenship of asylum seekers in the EU in 2015.2 The huge numbers of refugees arriving in Greece and Italy plunged the EU into perhaps its gravest crisis since its foundation. On August 16 2015 the German Chancellor, Angela Merkel, gave an interview to the German public broadcaster ZDF, stating that ‘the issue of asylum

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could be the next major European project,’ one that would ‘preoccupy Europe much, much more than the issue of Greece and the stability of the euro’.3 In the single month of October 2015, 210,000 people arrived in Greece. At one point, nearly 8,000 people arrived on the Aegean islands in one day. As the numbers increased the reaction of EU countries became steadily more hostile. The House of Commons Home Affairs committee reported: ‘Migration into Europe has been a longstanding challenge for EU countries, including the UK. However, the situation has now become a crisis, in large part because of the Syrian war, and the continuing instability in Libya and other parts of North Africa. Although current migration flows are a continuation of patterns that have ebbed and changed over many years, the current numbers of people seeking to move into Europe are unprecedented in modern times…The EU and its Member States failed to anticipate the scale of migrant flows, and did not have the structures and mechanisms in place to cope. As a result, the EU has been too slow to respond in a coordinated way.’4 Under the EU’s 2003 Dublin Regulation asylum seekers were processed in the country in which they arrived. The trouble with this system was that most of the migrants arrived by boat across the sea to countries nearest to the Middle East and North Africa, primarily Italy and Greece. The Regulation had never been designed to deal with such a huge influx so the EU tried to amend it to allow all EU member states to share responsibility. However apart from Germany the other members, especially the new Central and East European states, were extremely reluctant to allow in refugees in any numbers and even put up physical barriers to block them. Poland, Slovakia, Hungary and the Czech Republic particularly resisted being part of any mandatory scheme. Because of its geographic location off Northern Europe far from the war zones of the Middle East the UK was insulated from the influx of dispossessed refugees. The UK’s share of the EU total number of first time asylum applicants was 3.1% or 38,370 in 2015, up by 19% on 2014, compared with Germany’s much more generous share of 35%, which was up by 155% in 2015 over 2014.5 Since so few refugees were able to get into the UK directly the Dublin Regulation meant the UK never had to face the numbers arriving in Greece or Italy. However once inside the EU with the borders open under the Schengen Agreement—of which the UK was not a member—a few thousand did make the journey to the Channel ports paying unscrupulous people smugglers in mostly forlorn attempts to cross the sea to the UK. The Commons Home Office committee

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reported that ‘the UK’s attractiveness as a destination for both refugees and migrants has created specific challenges, including that presented by people gathering in Calais and other Channel ports hoping to find ways to cross into this country.’6 Needless to say Britain was one of the EU countries that opposed any change to the Dublin Regulation. The migrant crisis was a reputational blow for the EU. Coming so soon after the eurozone turmoil, the spectacle of Brussels unable to provide a workable system to manage the huge number of refugees, its member states refusing to share the responsibility for receiving them and a possible change to the EU Dublin Regulation increasing migration to the UK added further fuel to British Euroscepticism. The migrant crisis also provoked across the EU a nationalist backlash against immigration and against Islam, since most of the refugees were from Muslim-dominated states, which found expression in rising support for populist right-wing parties, most of them anti-EU. A think-tank, the Pew Research Centre, found much of the disaffection with the EU among Europeans was down to Brussels’ handling of the refugee issue. In every country surveyed, overwhelming majorities disapproved of how Brussels dealt with the problem, including 94% of Greeks, 88% of Swedes and 77% of Italians. The EU’s handling of economic issues also came under fire with majorities in Sweden (59%) and the UK (55%), including 84% of UKIP supporters, also disapproving of the EU’s handling of the eurozone crisis.7 Public attitudes in the UK to refugees and asylum seekers, whose numbers were a fraction of those in Germany and other EU states as a proportion of population, were influenced by hostile, often sensational, media coverage from the right-leaning, Eurosceptic press. The United Nations High Commissioner for Refugees (UNHCR) commissioned the respected Cardiff School of Journalism in the UK to find out why, despite heartbreaking human interest stories of individual refugees, the European mainstream media was so hard-hearted. It looked at media coverage in five European countries, Spain, Italy, Germany, Sweden and the UK, the last from December 2014 to March 2015. The subject matter was some 300 stories per country about any Middle Eastern or African migrants, refugees, immigrants or asylum seekers arriving, travelling or living within the EU and stories about immigration and asylum policy. It found that the UK press was most negative towards refugees and migrants and that ‘amongst those countries surveyed, Britain’s rightwing media was uniquely aggressive in its campaigns against refugees and

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migrants.’ It added: ‘Parties with more liberal attitudes towards immigration and asylum such as the Liberal Democrats, and particularly the Greens, struggled to be heard across the press… Overall this meant that when domestic political voices were heard they were overwhelmingly talking about refugees or migrants in a negative way.’ Headlines associated refugees with crime, terrorism, abuse of welfare and saturation of public services like health and housing.’8 With unfortunate timing, as the migrant crisis gathered pace and the agonies of the eurozone were still being played out, the European Parliament elections were held in May 2014. Regarded by most voters as a verdict on the EU itself Eurosceptic parties across Europe took a quarter of the seats on a record low 42.5% turnout. In the UK the biggest victory went to UKIP which took 27.5% of the votes, the largest of any of the parties, winning them 24 seats, one in every region and country of the UK and more ominously for the Labour Party gathering support in traditional Labour areas of Wales and the North of England. The party’s victory turned Nigel Farage into a national celebrity and UKIP into a serious contender for the votes of not just Conservative Eurosceptics but those from Labour. It was a threat which augured badly for Cameron as he prepared for the 2015 general election. In particular it cast another cloud in an increasingly darkening sky over his chances of winning the referendum he had pledged to deliver three years previously over whether to remain in the EU.

Notes 1. 2. 3. 4. 5. 6. 7.

David Cameron. (2019). For the Record (London, William Collins, p. 540). Eurostat news release, 4 March 2016. AFP, 16 August 2015. Commons Home Affairs Select Committee. (July 2016). Migration Crisis. Eurostat press release March 4, 2016. Commons Home Affairs Select Committee. (July 2016). Migration Crisis. Pew Research Centre. (June 6, 2016). Overwhelming Majorities Unhappy with EU’s Handling of Refugees, 70% of UK Disapproved. 8. UNHCR/Cardiff School of Journalism. (December 2015). Press Coverage of the Refugee and Migrant Crisis in the EU: A Content Analysis of Five European Countries.

CHAPTER 9

The Disrupters

The second decade of the twenty-first century saw the eclipse of longestablished institutions from the print media, bookshops and black taxis to high-street shops and travel agents as brash new online competitors, mostly from the US, muscled into their markets. Aided by the fast-developing technology of the smart phone, these disruptive newcomers relied on minimal overheads, sophisticated online platforms, high customer engagement and notably a flexible workforce. Nowhere were these disrupters more influential than in their impact on the control and flow of information through social media. It was a force for good, empowering citizens who felt excluded by the mainstream media, influencing democratic opinion, enabling government to communicate directly with citizens, spreading ideas and shaping the social and political agenda from the grassroots, such as helping to activate the Arab Spring. It was also a force for bad, offering a platform for hate, terrorism, prejudice and lies which hitherto would never have found a media outlet and which became increasingly active during elections. Social media was to play a vital, even defining role in the EU referendum, especially for Leave campaigners who quickly grasped the benefits of social media’s immediacy and its clear, simple messaging. Theresa May, Prime Minister from 2017–2019, said in a speech on standards in public life: ‘Social media is one of the defining technologies of our age. For millions of people, particularly young people, it is the means by which they © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_9

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engage with the world, express opinions and communicate with family and friends. In many cases this is clearly a force for good. More voices can find clearer and wider expression. Campaigns can gain publicity and traction. But as well as being places for empowering self-expression, online platforms can become places of intimidation and abuse.’1 A review into the impact of the disrupters on the media summed up the issue as follows: ‘This process of “creative destruction” was first described by the economist Joseph Schumpeter in the 1940s and has repeated itself many times since the Industrial Revolution drove coachmen and hand weavers out of business. It can be painful in the short run, but typically brings significant benefits to consumers and society in the long run. But it is not just firms that have to adapt when a technological revolution occurs. As industry transforms, regulatory frameworks often must change too. The economics of the internet are fundamentally different from those of the pre-digital age, and are likely to require new policies too.’2 Social media was only a few years old at the start of the twenty-firstcentury’s second decade. The first social media site to reach 1m active users was MySpace in 2004. Launched in 2003, it was until 2008 the world’s largest social networking site until it was overtaken by Facebook, itself launched in 2004. YouTube was founded in 2005 and bought by Google a year later while Twitter first appeared in 2006, Tumblr in 2007, Pinterest in 2010, Instagram in 2010 (bought by Facebook in 2012) and Snapchat in 2011. With millions of voters rapidly gaining their information online, no politician could afford to ignore the huge potential of being able to target them directly without having to use the filter of the established media. President Obama owed part of his election in 2008 to his sophisticated social media operation. The exponential take-up of social media was immense. By 2012, the White House YouTube channel was its seventh top news organisation producer.3 That year 100m users posted 340m tweets on Twitter and a year later it was one of the ten most visited websites. By 2014 75% of the adult population online was using social media. By 2015, Facebook’s turnover was over $18bn, it had 2m regular advertisers and 1.2bn users.4 As a 2012 inquiry into Britain’s newspapers commented about social media: ‘Their [social media sites]growth has been little short of phenomenal. Ten years ago there were no social networks; now the largest social networking site, Facebook, has over 800m users worldwide…The rise of Twitter has been similarly rapid. Founded in 2006, it now counts

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over 100 million active users each month, sending a billion tweets every four days.’5 Their growth was helped by fast-developing digital technology. Only a few years earlier household access to the internet had been via dial-up in a fixed spot near a phone connection. Hotels still charged for wi-fi or had none at all. Access to the internet outside the house was almost non-existent. Some cities began offering citywide wi-fi and in 2010 there were a few trailblazer boroughs like Westminster and Islington in London while that year Boris Johnson, then Mayor of London, pledged to roll wi-fi throughout the capital by 2012. As wi-fi became standard at home and improved broadband connections meant faster and larger downloads so users’ internet experience became an effortless link to information across the globe and they loved it. Added to this the mobile phone was becoming the ubiquitous technology with which to access it, Apple’s iPhone launching in 2007 and the first Android device in 2008 while the revolutionary iPad tablet computer appeared in 2010. The business disrupters could not have made their fortunes without the technological geniuses that provided fast access to the internet anywhere from a phone that could slip into a user’s pocket or a tablet the size of a book. But the disrupters and the geniuses needed the fast connections and the public soon understood how much their personal lives as well as business now relied on the internet; it was no longer a luxury but an essential part of living. In turn the public put pressure on governments to roll out the infrastructure for high speed connectivity from 3 to 4G and then to 5G. The digital revolution seemed a virtuous circle of technology allied to entrepreneurship and in turn allied to government for the benefit of the consumer and business: but all was not as it appeared. One issue was whether the social media sites were publishers or simply aggregators of content. This was not merely an academic question. If it was the former then they had to take responsibility for what was appearing on their sites even if the content was posted by users over whom they had no control. The traditional media had to adhere to guidelines as well as the law both for editorial and advertising concerning content that was racist, sexist, pornographic or violent. A racist letter appearing in a newspaper was still the responsibility of its editor and publisher even if they never wrote it. The social media sites, in maintaining they were not publishers, ducked responsibility for their content, removing it only if it broke their own guidelines, while blogs and tweets were unregulated except where they broke libel or contempt of court

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laws. The 2012 Leveson inquiry into the UK media stated: ‘Despite the efforts made to comply with national law, it is clear that the enforcement of law and regulation online is problematic. Although the law with regard to online content is clear, and UK hosted content is by and large compliant, the ability of the UK to exercise legal jurisdiction over content on Internet services is extremely limited and dependent on many things which are rarely aligned.’6 A House of Commons select committee report commented that ‘social media companies cannot hide behind the claim of being merely a “platform” and maintain that they have no responsibility themselves in regulating the content of their sites.’7 A government minister later complained: ‘For too long the response from many of the large platforms has fallen short. There have been no fewer than fifteen voluntary codes of practice agreed with platforms since 2008. Where we are now is an absolute indictment of a system that has relied far too little on the rule of law.’8 The social media conglomerates also competed for advertising against the traditional media. Revenues from advertising and sales of printed newspapers dropped by 50% between 2007 and 20179 while UK digital advertising expenditure grew 2.6% to £2.59 billion in the first half of 2012.10 Without advertising to support the costs of publishing the traditional media’s income was under pressure but the social media sites did not regard themselves as publishers. They believed they were just platforms with minimal responsibility for the content and so whatever happened to newspapers, radio and television was not their problem and certainly not their fault. The established media complained the disrupters were taking their business but not taking responsibility. Although still influential Britain’s newspapers, national and local, were in terminal decline. Research by the British trade magazine Press Gazette in December 2016 found that 46 regional and local titles had closed in the previous 18 months and there were 198 fewer regional and local titles than in 2005. Total daily circulation of all national newspapers in 1990 was 15m: by 2011 it was 9.45m, and the decline was especially marked in the popular press, The public were getting their information elsewhere, primarily online. The 2012 Leveson inquiry into Britain’s newspapers commented: ‘Over 70% of adults in the UK have access to broadband. All media organisations, whether newspapers, broadcasters, or others now have some form of established internet presence, and the internet has opened up access to UK citizens to news coverage from across the world; some of this is from professional media organisations, but it also includes “citizen journalism” from individuals sharing their experience of, and

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views on, events that occur. Nearly a quarter of all the time that adults spend engaging with media is spent on the internet.’11 The newspapers’ argument that social media was becoming more powerful and influential than them and yet was only lightly regulated was put on the back foot by a scandal in 2011 over newspaper journalists illegally hacking into the phones of celebrities. The public outcry forced publisher Rupert Murdoch to close his 168-year old Sunday tabloid the News of the World and Prime Minister David Cameron launched an inquiry into the wider ethics of the British newspaper industry chaired by Lord Justice Leveson. In his report recommending tougher selfregulation for newspapers Lord Leveson wrote: ‘A press considering itself to be above the law would be a profoundly anti-democratic press, arrogating to itself powers and immunities from accountability which would be incompatible with a free society more generally.’12 Commentators pointed out that while it was all very well to impose tougher regulations on a media industry in decline there was far less attention paid to the media that was in its ascendancy. The problem was that it was difficult, even impossible, to regulate the torrent of blogs and tweets appearing every second on social media, much of it highly opinionated, from ‘citizen journalists’ or individuals with particular prejudices or grievances. Because Twitter was anonymous, anyone could air abusive and hateful views which were then circulated within seconds. The epithet ‘internet trolls’ to describe inflammatory and abusive tweets soon became accepted language. Never had the phrase ‘a lie is halfway round the world before truth has got its boots on’ been so applicable to social media trolls. Some years later, the then Prime Minister Theresa May commented: ‘‘Social media and digital communication – which in themselves can and should be forces for good in our democracy – are being exploited and abused, often anonymously… When trusted and credible news sources decline, we can become vulnerable to news which is untrustworthy.’13 Referring to ‘fake news,’ as in the term for misinformation and lies not whatever content a politician happens to disagree with, a review into journalism said: ‘Whereas public-interest news contributes to a wellfunctioning democracy, fake news does the opposite. To the degree that online consumption makes it harder for public-interest news to reach audiences, but easier for fake news to do so, this is clearly a significant public policy concern.’14 Social media was ideal for spreading simple, emotive and angry messages, especially when it came to Twitter’s 140 characters, but was not

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geared for analysis. The most effective comment was pithy, to the point, provocative and simple to understand. This was ideal for pro-leavers in the debate over Britain’s future role in the EU who were strong on passion but light on detail. A later analysis commented: ‘Twitter users tend to be highly motivated (with an axe to grind), younger than average (though not exclusively young) and are likely more often men when engaged in political debate. So any insights are partial. That said, Twitter is a reflection of spontaneous, motivated behaviour.’15 The subject, considering the EU to date had rarely inspired much emotion in the average Briton, now provoked torrents of online invective and abuse from both sides, whether to remain in or leave the EU. Later analysis, however, showed that those wanting to leave the EU were much more prevalent on social media than those wanting to remain. The case for leaving was simple and emotive, ideal for dissemination across social media as opposed to the more complex economic case put forward by those wanting to stay in the EU. Brexiteers, as they were to be later termed, were also angry in their comments, again ideal for social media and were greater users of Facebook, Twitter and Instagram than their opponents. In a later analysis of how Brexiteers won the social media campaign, academic Vyacheslav Polonski noted that ‘considering that the reasons for Leaving were more emotional, and that the average Internet user was exposed to a deluge of Brexit posts on a daily basis — both from friends and strangers online — we warned that a British exit vote could be a real possibility.’ Polonski noted the irony of David Cameron’s position, in welcoming a media that would ultimately destroy him politically, adding the Prime Minister had once described the internet in 2009 ‘as an “amazing pollinator” that “turns lonely fights into mass campaigns; transforms moans into movements; excites the attention of hundreds, thousands, millions of people and stirs them to action.” This power has now been turned against him, as millions of people were motivated, persuaded and mobilised through the Internet to vote for Brexit.’16 Looking back on the campaign, a study of Twitter concluded: ‘Leave continued to dominate in Twitter, throughout the campaign. This likely reflected the intensity of motivation for those in favour of Leave. Despite very public splits in the Leave camp, there has been an impassioned commitment from Leave supporters to their cause, and a shared antiestablishment position, that is clearly deeply motivating and highly salient to those individuals… The smaller proportion of pro-Remain tweets

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compared with pro-Leave may be explained by this lack of intense impassioned motivation to champion the cause of EU membership.’17 There were also rumours that disinformation in social media coverage during the EU referendum was spread by ‘bots’ from Russia. In 2020, a report from the Commons intelligence and security select committee said: ‘Since 2014, Russia has carried out malicious cyber activity in order to assert itself aggressively in a number of spheres, including attempting to influence the democratic elections of other countries.’ It referred to ‘widespread public allegations that Russia sought to influence the 2016 referendum on the UK’s membership of the EU’ but the threat was only fully appreciated by the UK’s intelligence agencies after the 2016 US elections. The committee concluded: ‘Had the relevant parts of the Intelligence Community conducted a similar threat assessment prior to the referendum, it is inconceivable that they would not have reached the same conclusion as to Russian intent, which might then have led them to take action to protect the process.’18 This is not, however, to suggest that the national press was a beacon of truth and objectivity. Most of the tabloid newspapers had for years been virulent opponents of the EU, inventing fanciful stories about Brussels diktats. Tony Blair’s former press chief Alistair Campbell wrote that ‘In my time in Number 10, I can recall variously having to rebut stories from the right wing rags that bent bananas and cucumbers were going to be banned; the British Army was going to vanish; Cheddar cheese and Scotch whisky were going to have to be renamed; lollipop ladies were to be outlawed; we were going to have to drive on the right; Brussels was going to set all our tax levels; the British passport was to disappear; some Luxembourg or Belgian nonentity was going to replace the Queen.’19 Most of the readers of the anti-EU tabloids were working or lower middle class, the mainstay of the Leave vote in 2016, while readers of the anti-EU mid-market Daily Express and the more upmarket Daily Telegraph had a substantial readership among older and retired people, a majority of whom would also vote Leave. The pro-EU Guardian and Financial Times were both highly respected in the corridors of power but their circulations were a fraction of the tabloids. In the battle for hearts and minds David Cameron, as he prepared for a general election in 2015 and were he to win it the EU referendum he had promised voters back in 2011, was therefore already at a disadvantage when it came to persuading the public to stay in Europe. The

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declining but still powerful and predominantly anti-EU national press was now lined up with its disruptive competitor, social media, in fanning the winds of Euroscepticism into millions of homes.

Notes 1. Theresa May Speech on Standards in Public Life. (February 6, 2018, Manchester). gov.uk/government/speeches/pm. 2. The Cairncross Review. (February 12, 2019). A Sustainable Future for Journalism. 3. Journalism Project Staff, Pew Research Center. (July 16, 2012). You Tube Video Creation—A Shared Process. 4. Statistica, November 2019. 5. The Right Honourable Lord Justice Leveson. (November 2012). An Inquiry into the Culture, Practices and Ethics of the Press. 6. Ibid. 7. House of Commons Digital, Culture, Media and Sport Committee. (February 2019). Disinformation and Fake News. 8. Speech, February 5, 2019 by Margot James MP, Minister for Digital, at the Department for Digital, Culture, Media and Sport. Quoted in House of Commons Digital, Culture, Media and Sport committee. (February 2019). Disinformation and Fake News. 9. The Cairncross Review. (February 12, 2019). A Sustainable Future for Journalism. 10. The Right Honourable Lord Justice Leveson. (November 2012). An Inquiry into the Culture, Practices and Ethics of the Press. 11. Ibid. 12. Ibid. 13. Theresa May Speech on Standards in Public Life. (February 6, 2018, Manchester). gov.uk/government/speeches/pm. 14. The Cairncross Review. (February 12, 2019). A Sustainable Future for Journalism. 15. Claire Llewellyn and Laura Cram. EU Referendum Analysis 2016. Political Studies Association/Bournemouth University. (2016). What Did Social Media Tell Us About the EU Referendum? 16. Vyacheslav Polonsk. EU Referendum Analysis 2016. Political Studies Association/Bournemouth University. (2016). Impact of Social Media on the Outcome of the Referendum. 17. Claire Llewellyn and Laura Cram. EU Referendum Analysis 2016. Political Studies Association/Bournemouth University. (2016). What Did Social Media Tell Us About the EU Referendum?

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18. House of Commons Intelligence and Security Select Committee. (July 2020). Russia Report. 19. Alistair Campbell blog March 12, 2016. ‘To call out the union of media barons’ lie machine and their anti-democratic role in the EU referendum.’

CHAPTER 10

The Recovery That Wasn’t

The year 2012 was a watershed for the Conservative-led Coalition government. The UK successfully hosted the Olympic Games and the president of the European Central Bank, Mario Draghi, said that he would do ‘whatever it takes’ to shore up the troubled euro, thus stemming the rocketing borrowing costs of the indebted PIGS countries, Portugal, Italy, Greece and Spain. But whereas millions around the world that summer were glued to their TV screens admiring the Olympics at an intermittently sunny London few people outside the financial markets paid much attention to Mario Draghi’s comments: yet, they were to have a far greater impact on Britain than the Games, however, brilliantly organised. The Olympics was a high watermark for the image of Britain as a global, cosmopolitan, multiracial society and the event itself was a triumph, especially for the host city, London, whose flamboyant Conservative Mayor, Boris Johnson, just elected for his second four-year term, actively trumpeted its diversity and openness. The Olympics seemed to confirm London not just as the world’s financial dynamo but also a cultural and economic behemoth, a magnet for the ambitious from across the globe. Media commentary was overwhelmingly favourable, the Sydney Morning Herald saying the games ‘were superbly organised. The Olympic Park’s setting, in one of Britain’s poorest boroughs, proved inspired’ while The Washington Post said the UK had ‘reminded itself of its uncanny © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_10

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ability to punch above its weight.’1 The Games also offered Mayor Boris Johnson a huge publicity opportunity which he seized with panache, the media speculating that he was now a potential leader of the Conservative Party. One commentator said it was because he had ‘a winning combination of authentic Conservatism and an ease with modern Britain which still eludes many party figures.’2 Just as the Olympics portrayed a dynamic, multiracial Britain so the cross-party appeal of the capital’s Mayor was put down to his liberal Conservatism and his embrace of an outward-facing, multicultural society. Under the surface, however, all was not quite as depicted. The New York Times alluded to Britain’s problems when it said: ‘The Games have hit this country like an extra-strength dose of a mood-enhancing drug. The question being asked here now is whether this national euphoria can last or, better yet, lead the country out of its recent economically driven malaise.’3 Only the previous year, the capital had been racked by an outbreak of riots and looting, the economy was stagnant, and the crisis in the eurozone was impeding the UK’s recovery since half the country’s exports went to the EU. The Olympics put the spotlight on the financial powerhouse of London but the economic picture for other regions of the UK was markedly more gloomy. As one Institute for Fiscal Studies economist later headlined his slides at a presentation: ‘Terrible economic growth since 2008 – National income 14% below the level implied by March 2008 forecasts – Remarkably slow recovery by historical standards. A decade of weak growth, welfare cuts, reasonably large tax rises.’4 The Coalition government had set out in 2010 to reduce the deficit, then running at an unsustainable 10% of GDP, through spending cuts, especially in welfare and local government, and tax rises (see Chapter 6, Austerity). Its ministers argued that the Great Recession ended in 2009 and that as GDP improved the time was therefore right to repair the battered public finances, ‘to mend the roof while the sun was shining.’ The problem was the sun was not shining. In the last quarter of 2010, GDP actually declined by 0.5% and forecasts for 2011 proved optimistic, ending up at 1.1% for the year, 0.4% less even than the year before. Without an expanding economy, tax revenues were static while real pay levels fell by 6.7% between 2009 and 2014.5 The earlier decision not to join the euro was now confirmed, as if there needed to be much confirmation following the troubles in the eurozone, as an adroit move. Whereas the indebted southern European states were trapped within the euro’s fixed exchange rate, sterling was

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able to float downwards after the recession by almost a third to find its natural level thus helping exports. The pound was particularly weak after the recession because of the UK’s dependency on financial services but at least it was free to float. The downside was that it pushed up the cost of imports, increasing inflation. Soaring commodity prices forced up household utility costs with the result that real disposable household income fell by 2.3% in 2011, a post-war record, while the eurozone crisis was a further drag on the UK economy. In June 2010, the Office for Budget Responsibility (OBR) had predicted growth in 2012 would be 2.6%. In November 2011, it now predicted growth for 2012 would be just 0.7% in 2012 and that the eurozone crisis would get worse before it got better. Critics of Chancellor George Osborne’s austerity drive said spending cuts in the absence of private sector growth were only further depressing the economy while his forecasts for reducing public sector debt, the purpose of austerity, were pushed further into the future. In the Autumn Statement, in December 2012, debt was forecast at 79.9% of GDP in 2015/16, or 7.5% higher than predicted in March 2011. Worse news was to follow when eurozone growth declined by 0.6% in the last quarter of 2012, the largest quarterly fall since 2009, while in March 2013, the OBR now forecast UK growth for 2013 at a paltry 0.6%. To add to the Chancellor’s woes the International Monetary Fund, hardly a beacon of leftist economics, now questioned the austerity drive, wondering whether it was a contributing cause to the stagnant economy. In July 2012, Mario Draghi, president of the European Central Bank representing the 17 eurozone nations, announced he would do ‘whatever it takes’ to shore up the troubled euro including buying up sovereign debt. In signalling his readiness to the money markets that he would intervene to protect the currency he took speculative pressure off the indebted southern European eurozone countries. It was not the only reason for the UK economy’s uplift but it was certainly a major cause of a return of confidence to the UK’s biggest export market. It would take a few months for the impact of his comments to feed into the stagnant UK economy but from the summer of 2013, the economic statistics at last began to move in the right direction. In the second quarter, UK GDP grew by 0.6% following a first quarter growth of 0.3%, and for the whole year ended on 1.9%, the strongest annual rate since 2007 while unemployment fell, consumer spending rose and the housing market entered a mini-boom. A fall in oil prices leading to a drop in inflation also helped consumer spending, in turn pushing up GDP throughout 2014.

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The Low Unemployment, Low Pay Puzzle Although the recovery was good news, six years after the financial crisis caused the Great Recession, its impact on the standard of living for those on low to middle incomes was anaemic. As Institute for Fiscal Studies economists later said: ‘We had got used to the economy, and with it the public finances and household incomes, bouncing back strongly following previous downturns. That has not happened this time.’ They added: ‘GDP (national income) is just 11% higher today than it was at its precrisis peak in 2007–2008. As a result the economy is 16%, or £300 billion, smaller [in 2018] than it would have been had it followed the pre-crisis trend. GDP per capita is now £5,900 per person lower than it might have been had pre crisis trends continued.’6 Another think-tank, which referred to ‘the worst pay squeeze in a hundred years’ commented: ‘In 2014 the UK economy appeared ready to turn a corner. By the end of that year output had grown for seven consecutive quarters, pay growth had turned positive again, and unemployment was returning to a rate similar to (if still around a percentage point above) where it was on the eve of the crisis. Economists expected that more robust wage growth would soon follow. Unfortunately, a significant uptick in nominal wage growth never materialised, with real wage growth temporarily driven more by low inflation.’7 In 2014/15, 7.4m people were living in poverty after housing costs despite being in a working household, up from 5.4m in 2004/5.8 Economists began to refer to the years since the financial crisis as ‘the lost decade’ because real incomes for many employees actually declined. Commenting on latest pay figures in November 2013, James Plunkett of the Resolution Foundation said: ‘This latest release of data means that annual wage growth (excluding bonuses) has now been outpaced by inflation for 48 months in a row. Annual [Consumer Price Index] inflation has now been higher than average wage growth for the last 48 months of data. But it’s only when you look at the cumulative impact of this squeeze on pay that you see how big the hit to living standards has been. Under pretty much any measure of inflation, we’ve now had an entire lost decade for pay, with average real wages having either fallen or seen no growth in the last ten years… four years of falling wages now put us well and truly in uncharted waters.’9 One think-tank estimated that 70% of employees experienced a decline in their real pay after the recession and that by 2014, real wages were 7% lower than in 2008. It added: ‘In March 2014 the Office for Budget

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Responsibility projected that nominal wages would grow at an average rate of 3.3 per cent per annum between 2014 and 2018; in March 2015 they projected average annual growth of 3.1 per cent; and in March 2016 3.2 per cent. In reality, nominal wages grew at an average rate of 2.2 per cent a year between 2014 and the first quarter of 2018.’ The think-tank report pointed out the conundrum that while after the downturn, output fell by 6.2%, unemployment only rose by 2.8% adding: ‘One of the reasons for such a muted rise in unemployment was because employers were able to cut workers’ real pay; nominal wage cuts were not more common, but real pay falls certainly were. In the recession of the early 1990s around 50 per cent of employees remaining in the same job over a year experienced a reduction in their real wages. This figure jumped to around 70 per cent in the wake of the recent crisis.’10 Stagnant wages were linked to two other factors, strong employment and low productivity. For one of the early mysteries of the Great Recession was its comparatively subdued impact on jobs. Throughout the post-crisis period, employment continued to be resilient, puzzling economists who had expected it to fall sharply as in previous recessions. The reason was that the growth was in low-paid and part-time work as employers ceased to invest in technology finding it cheaper to employ low-paid staff instead. Employers countered the impact of high inflation caused by the weak pound through below inflation pay rises which meant lower wage costs. The result was comparatively low unemployment but low tax revenues, stagnant household incomes and very poor productivity. Without better productivity, a real increase in the standard of living was elusive as pay remained static or even below inflation. As one report noted: ‘Between 1979 and 2006 productivity increased at an average rate of 2.3% per year and real wages increased by 2%. Between 2014 and 2017 productivity rose at 0.8% and real wages 0.6%.’11 One commentator called the phenomenon the car wash problem as ‘20 years ago, car washes were already fully automated, but now they consist of five men and a bucket - less productive, not more.’12 There were more people working but earning less in real terms and with little prospect of improving their lot. One of the reasons was the depreciation of sterling following the recession, which was good news for exports but bad news for inflation. Think-tank the Resolution Foundation (RF), which focused on low pay trends, explained it thus: ‘The squeeze on real earnings is the result of both the significant downturn, broadly lasting between 2009 and 2014, and then a relatively sluggish recovery… Although firms were no more

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likely (compared to previous recessions) to impose nominal pay cuts on their employees, the pain of adjustment clearly did come through wages. This was because a significant rise in inflation allowed wages to fall in real terms. Because the UK economy suffered a relatively deeper downturn than many other advanced economies, there was a significant depreciation of the pound. This in turn caused inflation to spike, which meant that to a certain degree firms were able to adjust to the drop in demand by “cutting” real wages rather than cutting employment.’13 This depreciation-driven rise in inflation meant that firms could adjust to the fall in demand by allowing pay packets to fall (in real not nominal terms) rather than cutting jobs. The result was a squeeze on real pay which surpassed that in other countries. The Resolution Foundation said that based on comparable data between 2010 and 2014, ‘real hourly pay declined by 7.1 per cent in the UK, not as high as Greece (-15.1 per cent), but much more severe than the US (-2.8 per cent), Germany (-2.1 per cent) or France (where pay did not fall in this period, but rather grew by 0.7 per cent).’ It added: ‘That the UK economy adjusted to the recession through depreciation and then higher inflation rather than job losses is the primary reason why our pay squeeze was worse than the experience in other countries or during past recessions.’14 So who was most affected by the pay squeeze? The RF concluded that ‘managers and associate professionals combined’ accounted for just 10% of the total decline, while those in elementary occupations, skilled trades and caring and leisure roles accounted for approximately 40% adding: ‘There was also significant decline in real hourly pay for many mid- and lower-paying occupations, such as process, plant and machine operators, skilled trades and caring and leisure roles.’15 According to the Institute for Public Policy Research (IPPR): ‘Three in five of all workers on low pay (below two-thirds of median wage) work in just four industries: wholesale and retail, hotels and restaurants, health and social work, and administration and support services Yet, these industries account for only two in five workers.’16 Adding to low pay in the private sector were stagnant wages in the public sector due to austerity with a pay freeze from 2011 and a pay cap from 2013 for public sector employees. At the heart of the low unemployment/low wage/low productivity conundrum were lack of skills. Employers in the UK spent half as much on continuing vocational training as the EU average while employer investment per employee in training declined by 13.6% per employee in real terms between 2007 and 2015. With a ‘long tail’ of low productivity

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firms at the bottom end of the labour market workers in low wage sectors tended to be less qualified than those in Europe with their employers investing less compared to the European equivalent. Even those with skills were often under-used said the IPPR in a report on skills, adding that ‘poor skills utilisation helps explain why significant improvements in the level of qualifications among the working-age population over the last decade has not been matched by improvements in key economic outcomes.’17 Aware that prosperity was skewed to London and the South East George Osborne, Chancellor of the Exchequer and MP for a northern constituency in Cheshire, launched the Northern Powerhouse initiative in 2014. Its aim was to create the concept, if not the reality, of an economic super-region linking Manchester with Leeds, Newcastle, Sheffield and Liverpool which could then compete globally. Critics said it was just a marketing slogan, although it did come with devolved powers and some funding. It was not the first time a government had attempted to boost the regions of the North West, North East and Yorkshire and Humberside, Labour launching an initiative called the Northern Way in 2004 with the then three Regional Development Agencies (RDAs). Ironically, this ended when the Coalition announced it was scrapping the RDAs in 2011. Osborne launched the Northern Powerhouse in June 2014, in a speech in Manchester in which he said that while London had ‘become a global capital, the home of international finance, attracting the young, the ambitious, the wealthy and the entrepreneurial from around the world in their tens of thousands…the cities of the north are individually strong, but collectively not strong enough. The whole is less than the sum of its parts. So the powerhouse of London dominates more and more.’18 By boosting transport, scientific innovation and devolving more powers to directly elected mayors, the idea was to create a critical economic mass that would enable the three northern regions to compete globally. It was a wellreceived concept, lasted beyond Osborne’s term of office and inspired a similar idea in Birmingham with the so-called Midlands Engine but its economic impact was mixed. The Centre for Cities, while commenting on the fifth anniversary of the Northern Powerhouse that ‘long may it continue’ nonetheless later pointed out: ‘Extra money and new powers for metro mayors came seven years into local government austerity… cities have suffered twice as much as the rest of the country from cuts to local

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government since 2010, and Northern cities twice as much as those elsewhere in the South outside of London… The government must end local austerity if it wants to ensure cities can play their role in improving local growth and ensure the public realm and services on offer the country are equal.’19 A later report from the Resolution Foundation concluded that living standards slowed during 2016, the year of the EU referendum, that real incomes after housing costs for low and middle-income households were still lower than in 2003 and the longstanding gap between the highest and lowest performing regions in England remained.20 These low to middleincome earners who would later be dubbed ‘the left behind’ by politicians formed the core of voter support for Brexit in 2016 and for Boris Johnson in the ‘get Brexit done’ general election of December 2019.21 Many years later, in December 2019, a former deputy chief of staff at Number 10 Downing Street and later chair of a think-tank wrote a fanciful article considering what might have been had economic growth continued on its pre-2007 trajectory. He imagined an economy £300bn larger, a workforce a quarter more productive with wages £7000 a year higher and better resourced public services, ‘a sketch of the economy the UK might have today if it hadn’t just lost a decade of economic progress.’22

Notes 1. Quoted on BBC website. (August 13, 2012). London 2012, How the World Saw the Olympic Games. 2. Tim Donovan. (July 31, 2012). BBC website. Is there an Olympics Games Bounce for Boris? This book’s author, an Olympics volunteer at Trafalgar Square, London giving tourists directions that summer of 2012, recalls being asked by a reporter from a US news agency what directions he would give London Mayor Boris Johnson, shortly to give a press conference in the square, if he were to ask for them. ‘If he were to ask the way to Number 10, Downing Street I would point him down Whitehall,’ this author replied jokingly knowing that was just what the reporter wanted to hear. The comments duly appeared in the US media. 3. Quoted on BBC website. (August 13, 2012). London 2012, How the World Saw the Olympic Games. 4. Thomas Pope, Institute for Fiscal Studies. (March 2018). Spring statement.

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5. Resolution Foundation. (October 9, 2018). Count the Pennies: Explaining a Decade of Lost Pay Growth. 6. Jonathan Cribb and Paul Johnson, Institute for Fiscal Studies. (September 12, 2018). 10 Years on Have We Recovered from the Financial Crisis ? 7. Resolution Foundation. (October 9, 2018). Count the Pennies: Explaining a Decade of Lost Pay Growth. 8. Joseph Rowntree Foundation quoted in Joe Dromey, Clare McNeil and Carys Roberts. IPPR. (July 2017). Another Lost Decade? Building a Skills System for the Economy of the 2030s. 9. James Plunkett. (November 13, 2013). Public Finance magazine. 10. Resolution Foundation. (October 9, 2018). Count the Pennies: Explaining a Decade of Lost Pay Growth. 11. Ibid. 12. Jonty Bloom. BBC website. (April 5, 2019). UK productivity continues lost decade. 13. Resolution Foundation. (October 9, 2018). Count the Pennies: Explaining a Decade of Lost Pay Growth. 14. Ibid. 15. Ibid. 16. Joe Dromey, Clare McNeil and Carys Roberts. IPPR. (July 2017). Another Lost Decade? Building a Skills System for the Economy of the 2030s. 17. Ibid. 18. George Osborne. Speech at Manchester Museum of Science and Industry (June 23, 2014). 19. Centre for Cities. (blog post, June 27, 2019). Has the Northern Powerhouse Been a Success? 20. Resolution Foundation. (July 15, 2017). The Living Standards Audit 2017 . 21. Charlie McCurdy, Laura Gardiner, Maja Gustafsson and Karl Handscomb, Resolution Foundation. (February 2020). Painting the Towns Blue. Demography, Economy and Living Standards in the Political Geographies Emerging from the 2019 General Election. 22. Gavin Kelly. (December 31 2019). Financial Times.

CHAPTER 11

Labour Turns to Populism

Soon after losing the 2010 general election Labour’s leader and Prime Minister Gordon Brown resigned. The favoured candidate among Labour MPs to replace Brown was the former Foreign Secretary David Miliband. Party members however had become disillusioned with the ‘New Labour’ years, especially after Blair’s controversial involvement with the US-led invasion of Iraq in 2003 and its long and bloody aftermath of internecine warfare. Left-wing party members also felt the Labour government had become too relaxed about the rampant capitalism represented by the financial sector which had led to the 2007 crash. When it came to Labour’s leadership election process it was David Miliband’s more leftwing brother Ed, also a former Cabinet minister, who was elected in September 2010 by a margin of 1.3% in the electoral college thanks to support from constituency parties and trade unions. Even with a new leadership it was never going to be possible for Labour after 13 years in power from 1997 to avoid blame for what occurred during those years. The Conservatives accused Labour of being unprepared for the financial crash, of failing to run a surplus on the public finances when the economy was strong and taxes were flowing into the Treasury’s coffers and not keeping a lid on public spending with the result that the deficit peaked at a record 10.2% of GDP in 2009/10. This was to become their mantra throughout the 2010–2015 Coalition government. It was misleading in that Labour had run a surplus in the early 2000s and © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_11

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only a small deficit just before the fiscal crash and furthermore had won three elections in a row but Labour’s leadership under Ed Miliband from 2010 found it difficult to refute the allegations, however exaggerated. The Conservatives maintained that had borrowing been in surplus instead of in deficit, albeit only 2.6% of GDP in 2006–2007, the economy would have better weathered the downturn. In fact international comparisons by the International Monetary Fund put the UK’s public sector debt in 2007 at halfway compared to other advanced countries, at 11 out of 21.1 Assailed on one side by Conservatives who accused Labour of being irresponsible with the nation’s finances when in government, Labour’s new leadership after September 2010 also came under pressure from its left-wing party members and MPs for opposite reasons. They blamed the recession on greedy bankers who having brought the global financial system almost to bankruptcy then walked away with their bonuses and left taxpayers to foot the bill. To the left the Coalition’s austerity economics (see Chapter 6) was a con in which the poor and low paid were forced to pay for the excesses of the wealthy and they wanted Labour in opposition to attack spending cuts. On the so-called soft left of the party the new leader Ed Miliband was sympathetic to his members’ antipathy to spending cuts but this presented him with a problem. At a time when public opinion was broadly in favour of reducing the huge deficit and public debt Miliband felt he had to support the principle of fiscal consolidation, if not all of its practices, to offset accusations from Conservatives that Labour was economically illiterate and could not be trusted to run a government again. But there were other more deep-seated problems for Labour. The party, although historically rooted in the urban working-class and trade unions, had also been an alliance between them and the liberal middle classes. In recent decades, and notably under New Labour, as the unions declined along with the nation’s manufacturing base, so the party became more middle class, more cosmopolitan and more pro-European. As leader from 2004 and then Prime Minister from 1997 Tony Blair and his rebadged ‘New Labour’ managed to broaden the party’s appeal away from its traditional blue-collar working-class base to the aspiring skilled working and lower middle classes across the UK who had once voted for Thatcher. They delivered Blair three consecutive election victories in 1997, 2001 and 2005 helped by the lamentable performance of the Conservative opposition which was stuck in its right-wing comfort zone, divided over Europe and led by a succession of weak leaders.

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But Labour’s grip on its traditional blue-collar core voters, from Scotland and Wales to the industrial areas of England in the North and the Midlands, was loosening with only cosmopolitan and multi-ethnic London remaining solidly pro-Labour. In Scotland the left of centre Scottish National Party was eating into Labour’s vote where the Scottish Labour Party had held most seats in every general election since the 1960s. In 2007 the SNP emerged as the largest party in the Scottish Parliament elections and its leader Alec Salmond became First Minister. The SNP also became the largest party in Scotland in the 2009 European elections and won a safe Labour seat in Glasgow in a by-election in 2008. Although the SNP’s success failed to translate into more seats at the 2010 general election where it held six Scottish seats against Labour’s 41 out of the total 59, Labour could no longer guarantee a walkover north of the border. In the 2011 Scottish Parliament elections the SNP won an outright majority. In England long-standing Labour working class voters in the Midlands and the North, disillusioned by lack of economic progress after 13 years of Labour government, resentful about immigration from the EU, ravaged by the recession and austerity and unable to turn to the traditional protest party, the Liberal Democrats who were now in government, were increasingly attracted by the emerging right-wing Eurosceptic UK Independence Party (UKIP). In the 2009 European elections UKIP won 13 seats and became the second largest UK party in the European Parliament, pushing Labour into third place. In the 2010 general election Labour lost 91 seats across the UK, worse than its last worst result in 1970 when it had lost 77 seats, and faring especially poorly in Southern England seats such as the Eastern region where it only won two out of the 14 it had won in 2005. Under pressure in its core support Labour was also losing the floating voters Blair had so assiduously courted and which had helped him to three election victories. As the party moved leftwards from 2010 during his almost five years as Labour leader and opposed the Coalition’s austerity policies Ed Miliband, who lacked the charisma of either Blair or Cameron, struggled to make an impact on the electorate. His message that austerity was bad but that Labour would still be tough on spending gave out mixed messages. Just as George Osborne, Shadow Chancellor, had agreed to stick to Labour’s spending plans until 2008 so Miliband agreed to continue the Coalition’s fiscal consolidation of spending cuts. This put him at odds with those areas, mainly Labour heartlands, which had been hit twice, first by the

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recession then by spending cuts in local government and welfare from 2010. It was not however enough to convince the wider electorate that Labour would be responsible about reducing the deficit which in 2012 was still a high 7.2% of GDP, just 3% less than its record peak of 10.2% in 2009/10, the last year of the Labour government. Miliband was widely derided in the media when he delivered a Labour conference speech in September 2014, months before a general election, making no reference to reducing the deficit. He claimed he had forgotten the section in his speech as he was speaking without a teleprompter. He insisted in interviews afterwards that his policy was to eliminate the deficit ‘in the next Parliament’ but opponents argued the omission was proof he was not serious about the economy. Immigration was another issue which put Labour on the rack. In principle the party was in favour of immigration and in government had opened the UK to workers from the new East European states joining the EU. Now immigration was becoming an electoral issue especially among Labour’s working class voters. Miliband himself was the son of immigrants and a cosmopolitan Londoner but his constituency was in the town of Doncaster, a Labour fiefdom in South Yorkshire and the 39th most deprived area in England.2 Based on the 2011 census Doncaster’s population was 91.8% ‘white British’ and only 3.4% ‘white other’ (mainly East European) but immigration was nonetheless an issue (and the town would vote over two to one to leave the EU in 2016).3 In a speech in June 2012 to a think-tank audience, just as the UK was about to welcome the world to the Olympics in London, Miliband said that politicians must not fall into ‘the trap of wishing away public concern about immigration, failing to address it, and hoping it goes away’ and that his constituents in Doncaster North ‘worry about immigration’ and that therefore ‘we must listen to those anxieties.’ Britain, he added, ‘was experiencing the largest peacetime migration in recent history’ but in government Labour had been ‘too dazzled by globalisation’ and failed to recognise the impact of immigration on community cohesion, job security and the exploitation of cheap foreign labour by unscrupulous employers.4 The party’s electoral base continued to erode. In 2011 the SNP won an overall majority in the Scottish Parliament elections. In the 2014 European elections UKIP emerged as the largest UK party, winning a sensational 24 seats, an increase of 11, pushing Labour into second place with 20. On the same day in English local council elections UKIP gained 163 seats with a strong showing in Midlands and Northern areas. UKIP

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was chasing Labour voters: out of 19 parliamentary by-elections between 2010 and 2015, UKIP came second to the winning Labour candidate in six but second to the winning Lib Dem candidate in only one and second to the Conservatives also in only one. UKIP did especially well in Labour areas such as Barnsley Central in South Yorkshire where it achieved its best parliamentary election result to date winning 12.2% of the vote in the 2011 by-election, Rotherham in South Yorkshire in 2012 where it won 21.8% of the vote, Middlesbrough in the North East in 2012 with 11.8%, South Shields in the North East in 2013 with 24% and Wythenshawe and Sale East in Greater Manchester in 2014 with 18%. In October 2014 in a by-election in the solid Labour seat of Heywood and Middleton in Greater Manchester Labour’s majority was cut from almost 6000 in 2010 to just 617 while UKIP’s share rose from 1,215 to 11,000, an astonishing 38.7% of votes cast, pushing it into second place and almost winning the seat. With immigration an increasing issue, fanned by UKIP and a general election approaching, Miliband attempted to shore up Labour’s vote in its working class heartlands by sounding tough on EU immigration but also tough on unscrupulous employers using migrants to undercut local pay rates. In a speech in December 2014 in the economically struggling seaside resort of Great Yarmouth, Norfolk, Miliband, recognising as he said ‘how big an issue’ immigration was in the town, called for longer border controls when new countries join the EU, no entitlement to benefits for new arrivals and a crackdown on employers undercutting indigenous workers by using lower paid migrants.5 Great Yarmouth, whose 92,500 population was 93% white British with the next ethnic group being ‘other white’ (mainly East Europeans) at 3.5% according to the Census 2011 data, later voted in the EU referendum almost three to one to leave the EU. But Miliband’s most dramatic legacy, though obscure to the majority of voters at the time, would alter the course of history. In 2014 the party agreed a change to the way it elected its leader. Previously the leader, including Miliband, had been elected by a mix of MPs, party members and trade unions and affiliated societies. Under the new system the leader would be elected by party members who each had a vote while mass membership was encouraged by allowing ‘registered supporters’ to join at low cost.

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The principle behind the change was to give party members wider influence over the election of their leader, making the process more democratic, but in the law of unforeseen consequences when the new rules came to be used in 2015 they enabled the election of a complete outsider: he would become the final piece of the jigsaw that mapped the UK’s departure from Europe.

Cameron’s Election Surprise Under new rules introduced in 2011 fixing elections at five yearly terms, the general election was due in May 2015. The timing was fortuitous in that the economy was on the mend, GDP rising by 2.6% in 2014 and 2.4% in 2015, jobs were expanding and the Coalition was boasting that the UK was the fastest-growing economy in the developed world. Prime Minister David Cameron however was cautious about his chances of winning, reckoning on an above 50% chance of being the largest party but barely considering the possibility of an overall majority and with good reason.6 Underneath the buoyant economic statistics was the reality that for most lower paid employees their standard of living had declined in the past decade, there were substantial areas of ingrained deprivation in former industrial and seaside cities and towns and productivity was low through lack of investment leading to stagnant wage rates. The Coalition’s top priority in its 2010 programme for government, its pledge to put the public finances back in order, was also in question. The Coalition’s Emergency Budget in June 2010 had optimistically aimed to reduce the deficit to 1.1% in 2015/16. After five years of austerity spending cuts the deficit, which had been a record 10.2% in 2009/10, was still 5.6% in 2013/2014 and 4.8% in 2014/15 although heading downwards. By October 2015 total public sector debt was 80% of GDP whereas the Emergency Budget had forecast it to be 67.4% of GDP by 2014/15. The IMF estimated that out of the developed countries only Japan had higher borrowing than the UK in 2015.7 Critics of austerity argued that spending cuts had only prolonged the recession. In contrast supporters maintained that the eurozone crisis had derailed the Coalition’s earlier timetable and yet Chancellor George Osborne, who could have re-forecast his debt reduction plans and made them even more stringent, had stuck to the original programme. Either way, as the respected Institute for Fiscal Studies commented in April 2015: ‘Whoever forms the next government still faces the task of finishing

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the job of reducing borrowing back to sustainable levels.’8 All main political parties therefore entered the election campaign promising to further reduce the deficit, though detail in their manifestos was light. The Conservatives aimed to turn the deficit into a surplus by 2018/19 while Labour’s target was to reduce it to 1.4% by the same year (a more realistic forecast as it transpired) and the Liberal Democrats to reduce it a year earlier. In effect the Conservatives were still the party pledging the biggest spending cuts and a continuation of some form of austerity hoping to expose Labour as irresponsible on the public finances. But electioneering is more than presenting stacks of economic figures at voters. For much of the campaign Conservatives and Labour were level in the polls but the arithmetic of parliamentary seats was moving in favour of the former. Firstly, the SNP was set to win a landslide in Scotland, not only depriving Labour of seats but enabling it to have a key role in the next government should there be no overall majority and if Labour were to be the largest party potentially leading to a Labour/SNP coalition. This enabled Conservatives to claim a vote for Labour could be a vote for a Labour/SNP government dominated by Scottish pro-referendum nationalists, a prospect which spooked English voters across the political divide even though Labour denied any such alliance. The Conservatives also turned on their erstwhile partners, the Liberal Democrats, targeting their seats with the same message that voting Lib Dems would let in a Labour/SNP government. Liberal Democrat leader Nick Clegg said that again and again on the doorstep he saw evidence of the plan working.9 Despite opinion polls predicting no overall control the election result was a sensation. The Conservatives gained 24 seats to win 330 giving them an overall majority of 12, their first election victory in 23 years and enabling them to form their first government since 1997 while Labour lost 26 seats. But almost as dramatic as Cameron’s victory were the results for the SNP and the Liberal Democrats. The SNP gained 50 seats giving them a total of 56 across Scotland wiping out Labour’s dominance north of the border where Labour lost 40 out of its 41 seats, the victim of the SNP’s dominance of left of centre politics in Scotland and its canny appeal to the protest vote (against Westminster) despite being the government (in Scotland) The Liberal Democrats, hammered from their right by the Conservatives’ ruthless but effective campaign against them and from their left taking the blame for unpopular austerity cuts, lost 49 seats (27 to the Conservatives) leaving them with a rump of just eight seats. The vagaries of the first past the vote system meant that the SNP won 4.8% of

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all votes but won 56 seats, the Lib Dems won 7.9% of votes but only eight seats and UKIP won 12% of the vote and was second in 120 constituencies but won only one seat, its leader Nigel Farage failing to win Thanet South in Kent. Within a few weeks the leaders of Labour (Miliband), the Liberal Democrats (Clegg) and UKIP (Farage) all resigned, though Farage’s offer to his party was rejected and he remained. After five years of austerity voters had returned the party which promised the most spending cuts while for Labour Scotland appeared a lost cause. Logically Labour might have concluded it needed to appeal to a broader section of the electorate, find a more charismatic leader, work on winning back the loyalty of blue-collar voters and in particular take on the SNP. Labour MPs were inclined to learn the lessons of their defeat but party members, always more to the left of their MPs and their voters, regarded failure at the polls as down to the party being insufficiently left-wing—just as they had concluded previously in 1979 and to a lesser extent in 2010. They were now in a position to choose a leader who agreed with them because the new ‘one member, one vote’ rules established by Miliband in 2014 meant the leader would be selected by party members and registered and affiliated supporters such as trade union members under the alternative vote system, in which members rank their choices in order. Of the four candidates for the Labour Party leadership, two were former ministers in the 1997–2010 Labour government, now increasingly discredited by left-wing members, and three were in the Shadow Cabinet though none could be described as household names among the electorate. The fourth, Jeremy Corbyn, was regarded as a complete outsider. A long-standing left-wing critic of his own Labour leaders and an MP for fashionable, middle class Islington, north London since 1983, he had never held office and there were even suggestions he had been symbolically nominated by the requisite 15% of MPs just to make the line-up of candidates look more representative of Labour’s political balance. One former minister who nominated him said ‘at no point did I intend to vote for Jeremy myself, nor advise anyone else to do it.’10 The leadership election campaign was accompanied by a wave of new applications to join as affiliated or registered supporters and there were allegations, denied by the party, that these new members joined specifically to elect Jeremy Corbyn who to the dismay of many in the Labour parliamentary party soon emerged as the frontrunner. The number of fulltime members rose by almost 100,000 between May and August with a

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further 121,000 paying £3 to join as affiliated members and 189,000 joining through their trade unions. When the results were announced in September, Jeremy Corbyn was the clear winner with 59.5% of the total 423,000 votes cast. He won 49.6% of party members, 83.8% of registered supporters and 57.6% of affiliated supporters on a turnout of 76.3% of eligible voters. Whereas Miliband had won the leadership by a margin of 1.3% Corbyn’s victory was an overwhelming mandate for his brand of politics and for himself. It signalled a seismic change in the UK’s political make-up, the election of a rebel outsider whose parliamentary career had been spent opposing even his own party in government. Many Labour MPs were aghast, fearing that under his leadership the party would never win another election while Conservative ministers were delighted for the same reason. But Corbyn tapped into the same seam of discontent that had led to the triumph of the SNP in Scotland and the rise of UKIP, a protest against the political establishment with its cosy cabals out of touch with public opinion, anger at injustices that politicians were unable or unwilling to address like pay inequalities, the housing crisis, stagnant living standards, emasculated trade unions, overpaid business chiefs, climate change and austerity. Many of the new supporters of Corbyn were young, experiencing politics for the first time, having come of age in a time of austerity. Among the older traditional left-wing supporters there was a nostalgia for a pre-Thatcher past when trade unions were powerful and protective of workers, manufacturing flourished, foreign competitors were non-existent and globalism was in its infancy. Their concerns echoed the nostalgia of UKIP for a pre-globalist age: both far right and far left had more in common than they would ever admit. The adulation by the mainly young supporters of the bike-riding, bearded, softly-spoken, 66-year-old vegetarian was dubbed ‘Corbynmania.’ His adherents liked his modest personal lifestyle, his straighttalking and his bold ideas for addressing society’s many problems. His party’s grandees regarded him as an ageing left-winger who had never changed his views in 40 years and were baffled at his popularity. One academic commented: ‘The thing about Jeremy Corbyn, whether you agree or disagree with him, is that he has a new narrative and I think that’s what’s exciting people. The success of UKIP and the SNP show there is discontentment with the status quo and an appetite for new ideas. A lot of people inside the Westminster bubble are yet to catch up with this.’11

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Corbyn was an anti-politician, an outsider offering simple but genuinely-held answers to life’s conundrums, a blank canvas for supporters on which to paint their ideal figurehead, even a Moses figure to lead them to a promised land. He was evidence that politics was in an age of populism. After him, in the same groundswell of voter support, would come Emmanuel Macron in France, Donald Trump in the US, Boris Johnson in the UK—and Brexit.

Notes 1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11.

Institute for Fiscal Studies. (February 2011). Green Budget. Index of Deprivation. (2010). UK government statistics. Census. (2011). A picture of Doncaster. Ed Miliband. (June 22, 2012). Speech to IPPR. Ed Miliband. (December 15, 2014). Labour List. David Cameron. (2019). For the Record (London, William Collins, p. 562). Institute for Fiscal Studies. (February 2011). Green Budget. Institute for Fiscal Studies. (April 2015). Election Briefing Note. Anthony Seldon and Peter Snowdon. (2015). Cameron at 10 (London, William Collins, p. 515). BBC. (August 13, 2015). Where Is Labour’s ‘Jeremy Corbyn Mania’ Coming From? Ibid.

CHAPTER 12

Dress Rehearsal for the Referendum

There were three referendums during David Cameron’s six-year tenure as Prime Minister. One passed relatively uneventfully, the second almost broke up the UK and the third terminated Cameron’s political career. No wonder politicians tended to steer clear of directly consulting the people. Cameron however was not one of them. He believed it was right to ask the public’s views on constitutional changes and cited precedence going back to referendums on staying in the European Community (1975) and devolution for Scotland, first in 1979 and again (with Wales) in 1999. If he had been Prime Minister at the time he would have held a referendum on what became the Lisbon Treaty in 2009 because it involved constitutional changes and a shift of powers from the UK to the EU. As part of the Coalition deal with the Liberal Democrats in 2010 Cameron agreed to a referendum on a different voting system for electing MPs in Westminster which his new partners hoped would give smaller parties fairer representation in the House of Commons. On May 5 2011 in a low turnout of 42% reflecting their lack of interest the public rejected changing the voting system by a margin of 68 to 32%. Cameron’s next referendum however in 2014 was much more controversial and like his third on the EU two years later demanded a simple answer to a hugely complex subject. Just like the EU poll Cameron was over-confident he could win it and then park the matter for a generation. Apart from almost breaking up the UK the 2014 referendum opened © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_12

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up a political and constitutional Pandora’s Box that outlasted Cameron’s tenure at Number 10 and became entwined with the Brexit vote and its messy political aftermath. The 2014 referendum in question was over Scottish independence, Scotland having been part of Great Britain since 1707, and it was provoked by the rise of the Scottish National Party (SNP) whose emergence from early obscurity was greatly assisted by devolution and the decline of the Labour party in Scottish politics. Since its launch in 1934 the SNP had in its early years been a single-issue nationalist party, partly left and partly right, never winning more than 1% of the vote in general elections during the 1950s. Even in the 1966 general election which brought Labour’s Harold Wilson to Number 10 the SNP only polled 5% of Scottish voters. In 1967 however it sensationally won a by-election in what had been a safe Labour seat, Hamilton in Lanarkshire, a victory described as a pivotal moment in Scottish politics (though the SNP lost it in 1970). From then on the SNP always had at least one MP in Westminster and in the October 1974 general election won 11 seats. What gave the SNP a new lease of life was the quadrupling of Middle East oil prices in 1973 and the discovery of North Sea oil, most of it off the Scottish coast. Flowing tax revenues from North Sea oil, benefiting the UK Treasury, now provided the independence movement with the case that the oil belonged to Scotland, and Scotland could live off its revenues as an independent nation. Historically Labour had been the dominant political party in Scotland. To counter the SNP threat and the appeal of independence the 1974–1979 Labour government agreed to set up a devolved Scottish Assembly but only if there was sufficient public support. Its 1979 Scottish referendum however—unlike that of 2014— included a clause stipulating that approval had to be given by at least 40% of Scotland’s registered electorate. A total of 51.6% of those who voted backed a Scottish Assembly, a tiny margin of victory, but as this only represented a third of the registered electorate it was not enough and devolution was dropped. In a fit of pique the SNP later voted in 1979 against the Labour government in a Commons vote of no confidence which led to the latter’s fall, a general election and 18 years of Conservative government under Margaret Thatcher opposed throughout to devolution. The fall of Labour also propelled the SNP back into the wilderness, since it won only two seats in the 1979 general election and continued to perform poorly in subsequent polls.

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During the Thatcher years the Conservative presence in Scotland steadily reduced, from 22 seats in the 1979 general election to ten in 1987 as the Scots turned against what they saw as an English Tory government imposing policies for which they had not voted, such as the unpopular poll tax in 1989. It was Labour which benefited being by far the dominant party in Scottish politics winning 50 Scottish seats in 1987 against the SNP’s three. Devolution however remained on Labour’s agenda, if largely to ensure its continuing dominance in Scotland, and in 1997 the new leadership of Tony Blair, educated as it happened at a Scottish school, and his Shadow Chancellor Gordon Brown, a Scottish MP, included in the party’s general election manifesto a commitment to hold another referendum on devolution. Following Labour’s landslide victory in May 1997 the referendum was held in September 1997. It asked voters two questions, whether they supported a Scottish Parliament and whether it should have tax-raising powers. A majority voted ‘yes’ to both questions, with almost 75% backing a Parliament. In 1998 the Scotland Act set up a Scottish Parliament for the first time since the Act of Union in 1707, along with a Scottish government under a First Minister. In the new Parliament’s first elections in 1999 the SNP won 35 MSP (Member of the Scottish Parliament) seats, becoming the official opposition to a Labour-Liberal Democrat coalition under Labour First Minister Donald Dewar. It took another eight years for the SNP to form a minority government, winning 47 of the 129 MSP seats in 2007 and becoming the largest party but it was still difficult to break into Westminster, winning six seats in the 2010 general election, the same as in 2005. In contrast in the Scottish Parliament elections of 2011, the by now left of centre and pro-EU SNP won 69 MSP seats, enough to win an overall majority. This was an extraordinary achievement because the voting rules for the Scottish Parliament, the Additional Member system, made it difficult for one party to win an outright majority unlike the Westminster first-pastthe-post system (Scottish local authorities were elected under yet another system, the Single Transferable Vote). The SNP under its mercurial leader and now Scottish First Minister Alex Salmond, a former Westminster SNP MP, demanded a referendum on Scottish independence. It was after all now Scottish Government policy. Cameron agreed, arguing the same reasons as he did for holding the EU referendum in 2016, namely that the subject was not going to go away so it may as well be dealt with now rather than be endlessly

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kicked down the road. While he recognised the risk he believed it was the right risk. He also insisted on holding a simple ‘in/out’ question asking ‘Should Scotland be an independent country?’ The agreement to hold a referendum under the first-past-the-post system on September 18 2014 was signed with Salmond in October 2012 in the euphoric days after the successful London Olympics. Unusually the referendum also allowed 16 and 17 year olds to vote for the first time, a concession not extended to the rest of the UK. Because Labour was so dominant in Scottish politics with 41 MPs in the 2010 general election and the Conservatives so unpopular it was Labour that took the lead in campaigning ‘no’ and remaining part of the UK. One of the key issues in the SNP’s favour was resentment that Scotland was ruled by a party, the Conservatives, which had just one MP from a Scottish constituency. The campaign for a ‘No’ vote against independence was led by a cross-party group Better Together headed by the last Labour Chancellor and Scottish MP, Alistair Darling. Indeed Cameron took a low profile during the campaign itself believing that his Englishness and the Conservatives were a hindrance though from January to September 2014 he took 12 trips to Scotland and made six speeches. On paper the ‘No’ campaigners had cast-iron arguments on their side. North Sea oil revenues were in sharp decline, thereby refuting the ‘Yes’ campaign’s claim oil would fund an independent Scotland’s public services. Later official figures would show that North Sea oil tax revenue fell by 24% in 2013/2014 compared to 2012/2013 and that public sector revenue per person in Scotland was lower than in the UK by £200–£300 a year.1 There was confusion among the ‘Yeses’ over whether an independent Scotland would keep sterling while it would also have to re-apply to join the EU. Against this was the powerful argument that the Toryled Coalition was imposing policies like austerity on Scotland which never voted for them. The biggest danger for Cameron was that Scots would vote for independence as a protest against him and his government. On September 2 the ‘No’ campaigners were shocked by a poll showing their lead falling from 14 to 6%. Even worse was to follow when on September 7 another poll put the ‘Yes’ campaign in the lead. Number 10 went into meltdown. There was now a serious prospect that Scotland could vote for independence and the UK break apart. Business registered its own dismay when on September 8 £2.6bn was wiped off the value of companies on the FTSE100 with Scottish links. A frantic round of last-minute campaigning, a tactful intervention by the Queen urging

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voters ‘to think very carefully about their future,’ and energetic intervention by the Scots former Labour Prime Minister Gordon Brown swung support behind the ‘No’ campaign. On polling day, September 18, Scottish voters rejected independence by 55.3 to 44.7% on a turnout of 84.6%, the highest in any UK election since 1910. The 10.6% majority on such a huge turnout was a resounding declaration of support for the union but the campaign had been at one point perilously close; some even maintain that it was Brown, a well-respected figure in Scotland, who saved the day for the ‘No’ campaign.2 One factor contributing to the close result was the extension of the vote to 16 and 17 year olds, agreed by the Scottish Parliament but opposed by the Conservatives. A survey later found that 71% of that age group voted for independence and 29% against.3 Apart from UKIP and the Conservatives, other main parties also campaigned for the vote to be extended to 16 and 17 year olds in all elections. Has this been agreed at the same time as the Scottish referendum then it would have applied to the EU referendum 21 months later which would have seen a million and a half 16 and 17 year olds added to the voter list. Since young people overwhelmingly voted Remain the extra numbers would have made a crucial difference in the eventual result in which Leave won by just over 1.2m votes. The referendum however opened the Pandora’s Box of English nationalism, hitherto associated with the far right, football and the working class. Constitutionally devolution created a legislative anomaly. Some English MPs had long argued that it was unjust that Scottish MPs—or Welsh and Northern Ireland MPs—could vote on English issues in the House of Commons while English MPs had no say over devolved issues in Scotland, Wales or Northern Ireland. This anomaly, known as the ‘West Lothian question,’ had existed ever since plans to devolve powers had been mooted back in the 1970s. Promises during the referendum to give more devolved powers to Scotland which helped sway the result further boosted the campaign for more devolution for England and ‘English votes for English laws.’ In his speech the morning after the result Cameron stoked this nationalism when he said: ‘I have long believed that a crucial part missing from this national discussion is England. We have heard the voice of Scotland - and now the millions of voices of England must also be heard. The question of English votes for English laws - the so-called West Lothian question -requires a decisive answer.’4

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It was a comment that struck a sour note, attracting strong criticism from supporters of the winning ‘No’ campaign and providing fuel for the SNP. The media saw it as an attempt to outflank his right-wing and UKIP. Cameron’s biographer wrote that ‘the referendum has poked a hornet’s nest.’5 Cameron later regretted having made the comment saying that while he had to bring up the subject he should have done so later at party conference.6 His ‘decisive answer’ to the West Lothian question came in the form of a commission and later changes to the way MPs decided on English issues. But encouraging English nationalism created the risk that it could be channelled into anti-European sentiment. As one commentator noted: ‘Polling shows that if you identify yourself as English, then you are more likely to be Eurosceptic. English nationalism has become the hallmark of angry, disillusioned sections of English society that feel left behind in the modern world and modern Britain.’7 These were the people who later voted Leave in 2016. The Scottish referendum was not, as Cameron had hoped, the end of the pressure for independence. The SNP continued to rule in Holyrood. Brexit would provide another opportunity to re-open the issue and create an even deeper rift between a pro-Leave England and proRemain Scotland with renewed calls for independence. But in September 2014 Cameron’s gamble, which almost led to the end of the UK not to mention his own political career, appeared to have succeeded. In his third and final referendum he would not be so lucky.

Notes 1. Government Expenditure and Revenue Scotland (2012/2013). 2. Anthony Seldon and Peter Snowdon. (2015). Cameron at 10 (London, William Collins, p. 418). 3. BBC Newsbeat, September 19 2014. Scottish Referendum: How First Vote Went for 16/17 year olds. 4. David Cameron speech. (September 19 2014). BBC website. 5. Anthony Seldon and Peter Snowdon. (2015). Cameron at 10 (London, William Collins, p. 421). 6. David Cameron. (2019). For The Record (London, William Collins, p. 555). 7. Tim Oliver. LSE. The Rise of English Nationalism Is Something British Politicians Can No Longer Ignore. Tim Oliver. LSE. July 12 2016.

PART III

The Brave New World

CHAPTER 13

Road Map to the Referendum

The Conservative election victory in May 2015 was Prime Minister David Cameron’s personal triumph. He was the first Conservative leader to win an election outright since 1992, his former political allies were reduced to a rump and the main opposition party was now led by an outsider in Jeremy Corbyn whom even most of his own MPs thought incapable of ever winning a general election. At the age of 48 Cameron faced the luxury of at least five more years as Prime Minister with a working majority in Parliament and should he so choose, another likely term in office potentially making him the longest-serving Conservative Prime Minister since Lord Liverpool in 1812. No wonder Cameron described the election result to supporters at his party’s HQ as ‘the sweetest victory.’ Cameron however in a pre-election interview had surprisingly and perhaps unwisely ruled out a third term, meaning potential rivals could begin planning for succession before 2020. There was also the matter of the EU referendum he had promised to hold should he win a second term. Now he was back in Downing Street with his own majority that promise had to be fulfilled especially since the Liberal Democrats, who had opposed it and could therefore have given him an excuse not to proceed, were no longer his allies to block it. He was confident that once a reasonable deal was negotiated with Brussels he could present it to the British people with a recommendation it be accepted, that a majority

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would agree and vote for the UK to remain in the EU and the subject could be put to rest for a generation. Negotiating with Brussels and getting agreement from all other 27 EU member states was enough of a challenge in itself but as we have seen from earlier chapters in this book there were underlying socio-economic issues in the UK that suggested Cameron’s gamble was in trouble from the start, whatever the deal. The referendum threatened to become a lightning rod for all kinds of voter resentment, much of it down to the UK government’s policy failures and not all related to the EU. These included anger over stagnant living standards caused by the long tail of the Great Recession, the negative impact of globalism on manufacturing in area like the Midlands, Wales and the North, resentment over immigration, not all it from the EU, fury over the widening gap between the very rich and the poor and ‘squeezed middle,’ disgust with MPs and the political establishment arising from the expenses scandal in 2009 and with the traditional media over the newspaper phone-hacking outrage in 2011, disillusion with politicians from all main parties, in essence a view among many especially older, poorer voters that the rich and powerful were doing very nicely while everyone else struggled. Added to these layers of bitterness were the increasing appeal of UKIP as a populist anti-establishment party also opposed to the EU, the rise of social media which gave oxygen to uninformed, malicious and extreme commentary that would otherwise never find an outlet, the eurozone and refugee crisis with its display of EU confusion and the decades of Eurosceptic coverage in the UK media. The toxic mix of multi-faceted grievances, a rampant social media and emerging anti-establishment populism should have warned Cameron, or at least his advisers, that the referendum was no longer just about the EU and that whatever agreement he extracted from Brussels could never persuade voters to back him because their anger was not about Europe. Into this formidable line-up of reasons why the referendum looked like an increasingly close vote was now added another complexity. Cameron needed Labour, a staunchly pro-EU party, to campaign alongside him to remain in the EU. There was a recent precedent. Despite being opponents Conservatives and Labour had campaigned together against Scottish independence during the 2014 referendum (see Chapter 12) when last minute intervention by the former Labour Prime Minister Gordon Brown was regarded as having swung vital votes to the cause of Scotland staying in the UK. Labour’s reward was to lose almost all its seats in Scotland in

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the 2015 general election and the party hierarchy was in no hurry to save Cameron’s skin for a second time. Furthermore, though this was not fully appreciated at the time by his admiring, young and mostly Europhile supporters, Jeremy Corbyn, Labour’s new leader elected in 2015, was no fan of the EU. Like many of his generation of ageing left-wingers he regarded the EU as a capitalist club dominated by bankers and obsessed with markets and in the 1975 EU referendum he even voted to leave. He also voted against the Maastricht Treaty in 1993 and the Lisbon Treaty in 2008 on the premise the EU was reducing the powers of the UK Parliament, a sentiment shared with the Conservative right. There were also practical reasons for sounding lukewarm on the EU for while the parliamentary Labour Party was overwhelmingly pro-EU as were party members, Labour voters in its industrial heartlands were Eurosceptic and Corbyn needed to entice them away from the siren anti-EU calls of UKIP. Despite this unappetising backdrop to his negotiations Cameron forged ahead with his promise to offer a referendum on EU membership. On May 28 the Foreign Secretary Philip Hammond introduced the European Union Referendum Bill. A fortnight later it passed its second reading by 544 to 53 with support from all parties except the SNP. Hammond said: ‘We have had referendums on Scottish devolution, Welsh devolution, our electoral system and a regional assembly for the north-east, but an entire generation of British voters has been denied the chance to have a say on our relationship with the European Union. Today we are putting that right.’ He added: ‘My assessment has been for a long time and remains that the great majority of the British people want Britain to remain inside the European Union provided we can get the reform of the EU and of Britain’s relationship with it that satisfies and answers the crucial points we have set out.’1 At its third reading, the last stage, the majority was still 316 to 53 in favour. The Bill was passed into law in December, supported by Labour which also said it backed staying in the EU, and stipulated a referendum had to be held before the end of 2017. The result of the referendum however was not binding; in theory the government could ignore the result as it was only ‘advisory,’ there being no constitutional provision for it to be implemented, though in reality this was extremely unlikely. A suggestion by one MP that Cameron’s deal from Brussels could be rejected without the UK having to leave the EU was turned down by Foreign Secretary Hammond.

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The Act however contained features which were unhelpful to the proEU cause even though passed by a Parliament mainly sympathetic to remaining within the EU. There was a strong argument that because 16–18 year olds, who were not entitled to vote, were nonetheless much more affected by the referendum result because of their youth than older people who were entitled to vote, then 16–18 year olds ought to have the opportunity to make their views known. Backbench MPs’ attempts, including an amendment by the SNP, to bring the voting age down from 18 to 16, as it had been in the Scottish referendum albeit decided as a local Scottish decision, failed. The loss of this cohort of young mainly pro-European voters was yet another obstacle to Cameron winning the referendum even though he was opposed to lowering the voting age. The draft Bill also planned to allow government business to carry on as normal throughout the campaign till close to polling day, Cameron arguing that it was after all government policy to remain in the EU. However opposition parties insisted in a vote there should be a so-called purdah period, just as it was with other elections, meaning government or public bodies could not comment on or write about policy six weeks before the poll. Without the civil service machine Cameron complained his Whitehall staff was therefore reduced to ‘a platoon of political advisers.’2 A particular blow to the pro-EU cause was the wording agreed on the ballot paper. The original Bill asked ‘Should the United Kingdom remain a member of the European Union?’ with a yes/no response as with the Scottish referendum and indeed with the 1975 EU referendum. The Electoral Commission, which monitors elections, felt this wording favoured the status quo and hence the pro-EU case and so unsurprisingly did UKIP. The commission said: ‘We have concerns about the perception that this question will encourage voters to consider one response more favourably than another. These views raise concerns about the potential legitimacy, in the eyes of those campaigning to leave and some members of the public, of the referendum result – particularly if there was a vote to remain a member of the European Union.’3 The government fatefully agreed an amendment, since no government had ever overturned a recommendation from the Electoral Commission, and the final agreed question was: ‘Should the United Kingdom remain a member of the European Union or leave the European Union?’ with voters ticking one of the two options. Think-tank the Constitution Unit, part of University College, London, in October 2015 however now questioned whether the new wording might favour Eurosceptics and

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presciently noted that Leave could ‘plausibly form part of a campaign slogan for “Brexit”: indeed, two anti-EU campaign organisations have emerged over the last few weeks, called Leave.eu and Vote Leave.’ In contrast ‘remain,’ it said, ‘offers a less helpful starting point: the new pro-EU campaign group is cumbersomely called Britain Stronger in Europe. The difference may seem small, but such apparent details always have the potential in referendum campaigns to trigger unpredictable bandwagons.’4 Another issue was why the Referendum Act, considering the huge long-term constitutional implications, did not stipulate that a winning vote had to be a minimum percentage of the electorate such as in the 1979 referendum for Scottish and Welsh devolution when it was set at 40%. Some opponents of a minimum percentage vote maintained it was because the referendum was only advisory which ignored the fact Cameron wanted to use it to settle Britain’s relationship with the EU, one way or the other, for a generation. More pertinent was the argument that the 2014 Scottish referendum had been conducted on a simple majority basis and it would be unfair to change the rules. Either way, a hugely complex and far-reaching decision affecting the future of every person in the UK, especially those aged 16–18 who could not even vote even though their future was directly affected, would be decided on an in/out ballot by the first past the post system, even if the victorious side won by one vote.

Cameron Goes into Battle Armed with the parliamentary backing to hold a referendum Cameron sallied forth to do battle with Brussels and the 27 other member state leaders hoping that they would be so alarmed at the prospect of the EU’s second largest economy and bankroller quitting they would come to their senses and negotiate a good deal. The last piece in the referendum jigsaw was the negotiation with EU leaders and Brussels to produce a new settlement that Cameron could then recommend to voters as the case for remaining in the EU. The Brussels mandarins were experts at brinkmanship though Cameron himself was no stranger to playing hardball. However, considering the factors stacking up against a vote to stay in the EU much was now riding on his fellow EU leaders appreciating Cameron’s domestic concerns and addressing them,

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even if it meant bending the rules, to maintain the UK as a member state: it was an optimistic assumption considering the rigidity of EU law. During the referendum Bill debate in the Commons Pat McFadden, a former minister for Europe in the Labour government, was disdainful of Cameron’s strategy to extract a deal from Brussels and then put it to the UK voters saying: ‘Holding a gun to our head and saying to our European allies, “Give us what we want or we’re going to shoot ourselves,” is not the only negotiating strategy available to the United Kingdom. Either the Prime Minister will cave in to his colleagues’ demands or, sooner or later, there must be a reckoning between the Prime Minister and those in his party who are determined to take Britain out of the European Union.’ McFadden warned: ‘The Prime Minister will come back and claim victory. Like the emperor in the fairy tale, he will say, “Look at my wonderful new clothes.” Many of his back benchers will look at him with relief and loyalty, and say that he has got a good deal. However, we know that plenty of them will say that there is not a lot keeping him warm, and conclude that it is not enough.’5 Negotiations took place with other member state leaders and the European Council, the EU’s supreme political body which defines the EU’s political direction and priorities and sets the policy agenda. In a letter to Donald Tusk, European Council president (2014–2019) and a former Prime Minister of Poland, in December 2015 Cameron wrote that what he desired was ‘flexibility’ and laid out the four areas in which he wanted reform. First, was an insistence that non-members of the euro must not be adversely affected by decisions taken in the 19-member eurozone, that their taxpayers must not be expected to bail out the eurozone and that these guarantees must be backed by ‘legally binding principles that safeguard the operation of the Union for all 28 Member States and a safeguard mechanism to ensure these principles are respected and enforced.’ Cameron also called for a target to reduce the burden of regulation on business. In the crucial area of sovereignty, Cameron wrote: ‘I want to end Britain’s obligation to work towards an “ever closer union” as set out in the Treaty. It is very important to make clear that this commitment will no longer apply to the United Kingdom. I want to do this in a formal, legally-binding and irreversible way.’ He also wanted a reduction in the powers of the European Parliament by allowing groups of national Parliaments to block ‘unwanted’ proposals for legislation. In the sensitive area of immigration Cameron said ‘our net migration is running at over 300,000 a year. That is not sustainable. We have taken

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lots of steps to control immigration from outside the EU. But we need to be able to exert greater control on arrivals from inside the EU too.’ He wanted ‘to reduce the current very high level of population flows from within the EU into the UK. These have been unplanned and are much higher than forecast - far higher than anything the EU’s founding fathers ever envisaged.’ One proposal to reduce the flow was to curb the immediate availability of welfare payments by people coming to Britain from the EU by insisting they must live here and contribute for four years before they qualify for in-work benefits or social housing. Cameron concluded by saying these reforms ‘would address the UK’s concerns and provide a fresh and lasting settlement for our membership of the European Union.’6 In a letter to the European Council in turn Donald Tusk hoped these areas of concern could be addressed saying ‘The UK has played a constructive and important role in the development of the European Union and I am sure that it will continue to do so in the future.’7 Following intense negotiations with EU member states European Council President Tusk put forward proposals to the European Council on February 2 2016. Tusk, a former Polish Prime Minister, said the differences between eurozone and non-eurozone members would be recognised and backed by a set of principles so long as these did not constitute a veto or delay for any changes in the eurozone states. He was vague on reducing red tape and on sovereignty while respecting the UK’s position that it was ‘not committed to further political integration.’ If Cameron hoped for a major policy change on the fourth issue, immigration, such as relieving the UK from some free movement stipulations, he was to be disappointed. Tusk was firm that ‘we need to respect the current treaties in particular the principles of free movement and nondiscrimination’ though he suggested there could be further discussions on benefits. Following more intense discussions involving Tusk and European heads and European Parliament leaders the European Council on February 18/19, after a marathon overnight negotiating session, passed the substance of Tusk’s letter in a deal signed by all 28 EU leaders including Cameron. The agreement allowed ‘those that want to deepen integration to move ahead, whilst respecting the rights of those which do not want to take such a course,’ and that the UK was under no obligation to join either the euro or the Schengen Agreement that abolished borders between EU countries. It ‘recognised that the United Kingdom, in the

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light of the specific situation it has under the Treaties, is not committed to further political integration into the European Union’ and that crucially this would be incorporated into future treaties ‘so as to make it clear that the references to ever closer union do not apply to the United Kingdom.’ Considering negotiations had taken place with 27 countries and the UK this commitment was quite an achievement; it confirmed that the UK could take a different path and was not bound to be sucked into further integration and ‘ever closer union.’8 Immigration however was a different matter. Although the Council agreed to reforms on postponing paying welfare to newly arriving EU immigrants for four years and limiting the amount of child benefit that could be passed back to home countries the agreement still insisted that freedom of movement was a sacrosanct part of the single market. However the public’s concerns within the UK about levels of immigration were rarely about welfare payments, despite occasional tabloid hysteria about asylum seekers on benefits, since EU immigrants invariably came for work and indeed drew less on public services than the local population. It meant that Cameron would have to enter a referendum campaign being unable to offer any likelihood that the UK could control the number of arrivals from the EU. During negotiations the refugee crisis worsened as thousands fled the civil war in Syria and other conflicts in North Africa and the Middle East. The tragedy was summed up in September by one photograph of a drowned Syrian boy washed up on a Turkish beach lying face down on the sand. The EU states struggled to cope with the influx of desperate and destitute people arriving on the shores of Greece and Italy and dispersing inland to northern Europe across borders that were open under Schengen, some arriving at Calais, northern France where they lived in makeshift camps in the forlorn hope of smuggling themselves across the Channel to the UK. Added to the refugee crisis were random acts of terrorism against unarmed civilians by Islamic extremists: in June 2015, 30 British holidaymakers were murdered at a resort in Tunisia and in November a deadly attack on a theatre in Paris killed 130. To many Eurosceptic Britons, refugees and terrorism on mainland Europe further convinced them that it was time to bring up the drawbridge against the dangers of the outside world beyond the Channel and that the EU’s freedom of movement stipulation needed to be revised so the UK could control its own borders. Such sentiment was despite the fact that Britain’s share of total asylum seeker applications to European countries was just

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3% of the total, or that since the UK was opted out of the Schengen Agreement it did indeed have some control of its borders, although it was still obliged to accept any citizen of an EU state. The wider issues of immigration in the UK became conflated with the refugee crisis and fears of terrorism, giving oxygen to the far right which UKIP rapidly exploited. In his memoirs Cameron recognised the danger that the refugee crisis and the EU’s inability to deal with it could jeopardise his aim of winning the referendum.9 In a statement to the Commons on February 22 2016 confirming the in–out referendum date of June 23 Cameron laid out the nub of the agreement with the EU. He said that responsibility for supervising the financial stability of the UK would ‘always remain in the hands of the Bank of England’, he had ensured that British taxpayers ‘will never be made to bail out countries in the eurozone and ‘that the eurozone cannot act as a bloc to undermine the integrity of the free trade single market.’ He had also negotiated changes to the benefits system ensuring that EU migrants could not claim Universal Credit while looking for work, that those unable to find work within six months could be required to leave, that EU migrants could be prevented from sending child benefit home at UK rates and that they would have to wait four years before claiming full access to benefits. Cameron said the deal gave the UK ‘the best of both worlds’ and the government would now recommend that voters support remaining in the EU. He stressed that a vote for leave meant leave and there would be no second referendum. He was playing for the highest of stakes.10 The deal agreed between the 28 EU countries however underlined how impossible it was for the UK to be in the single market but still reject freedom of movement. As Cameron told the Commons on February 22 ‘no country outside the EU has agreed full access to the single market without accepting paying into the EU and accepting free movement.’ The opt-outs from the eurozone and Schengen were the limits to flexible membership. Belonging to the EU meant either agreeing to the core principles of the single market, including freedom of movement, or being out of it altogether. The UK was not going to obtain a fundamental reform of the EU and in his memoirs Cameron regarded as his biggest mistake his failure not to make this clear to the British electorate. In particular he came away with no agreement on curbing immigration and in hindsight wondered whether he should have paused negotiations and asked for a cap on immigration even though he answered his own question by admitting

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the EU would not have agreed it. He went into his negotiations creating high expectations that could not be met. In his memoirs he admitted the deal was a failure because it failed its main test, to convince Britons to remain in the EU. Yet had the EU member states been prepared to give the UK some kind of opt-out from freedom of movement as had been done with Schengen and the euro then the 2016 referendum might well have resulted in a marginal vote to remain: they could not do so without renegotiating the single market. Cameron did not of course admit the weakness of the deal at the time. In a government brochure that month explaining why remaining in the EU was its preferred option Cameron in a preface said the deal he had signed ‘gives us the best of both worlds,’ being in with the parts it liked but out of the parts it disliked like the euro, Schengen and ‘ever closer union.’ There was of course ‘more to do’ but the UK now had ‘special status’ backed by law. The brochure said: ‘The unique nature of our membership of the EU gives the UK a special status within the organisation: a status that no arrangement outside the EU could match. This is the best of both worlds – offering us key benefits for jobs and growth that we could not have outside the EU, but the freedom to choose not to take part in other activities, which are not in the UK’s interest.’ Cameron ended his preface with ‘I believe every family, household, business, community and nation within our United Kingdom will be stronger, safer and better off by remaining inside this reformed European Union.’11 . Now he had to prove it.

Notes 1. House of Commons, Hansard. (June 9 2015). 2. David Cameron. (2019). For The Record (London, William Collins, p. 626). 3. Quoted in The Guardian. (September 1 2015). 4. The Constitution Unit. (October 13 2015). The EU Referendum Bill: Taking Stock. 5. House of Commons, Hansard. (June 9 2015). 6. David Cameron to Donald Tusk. (November 10 2015). www.gov.uk/ government/publications/eu-reform-pms-letter-to-president-of-the-eur opean-council-donald-tusk. 7. Donald Tusk to EU Council. (December 7 2015). www.consilium.europa. eu/en/press/press-releases/2015/12/07/tusk-letter-to-28ms-on-uk/.

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8. www.consilium.europa.eu/en/policies/eu-uk-after-referendum/2016-uksettlement-process-timeline/. 9. David Cameron. (2019). For The Record (London, William Collins, p. 610). 10. Prime Minister, Commons Statement on EU and the referendum. (February 22 2016). 11. HM Government. (February 2016). The Best of Both Worlds: The United Kingdom’s Special Status in a Reformed European Union.

CHAPTER 14

The Referendum

For the UK’s Prime Minister David Cameron the referendum was the greatest gamble of his political life. To avoid making it a verdict on himself he deliberately steered clear of making any public commitment to resign should the referendum end in a majority to leave the EU. In fact privately he told close allies that he would quit if that were to occur since he felt he would have no credibility as a pro-Remainer to be negotiating the UK’s exit. He had won his party’s first general election since 1992, faced five years in office with little opposition from a Labour Party in disarray and presided over an economy at last on an upward trajectory. Yet he was about to gamble his good fortune and his reputation on the shifting sands of an unpredictable electorate with its own axes to grind, not all of them to do with the EU. After decades of British governments presenting every negotiation with the EU as a battle to be won the public was now in a matter of weeks supposed to be convinced that the EU had been a force for good all along. The Referendum Act stipulated that the official campaign up until polling day would last ten weeks, from April 15 to June 23. The socalled purdah period which banned government and public bodies from publishing information or commenting on the referendum, as agreed also in the Act, would last four weeks from May 27. It was government policy to remain in the EU so being unable to draw on Whitehall’s resources for the month before the referendum was unhelpful for the remain © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_14

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cause. Under electoral rules the Electoral Commission could provide funding for two groups, one backing remain which became Britain Stronger in Europe (and was dubbed Remain) and the other backing leave, which became Vote Leave (and was dubbed Leave). Cameron, like Harold Wilson in 1975, agreed his Cabinet ministers could campaign on either side although the government’s official policy was Remain. The Conservative Party itself officially adopted a neutral stance. From the start Cameron’s campaign with the support of his loyal Chancellor, George Osborne, who although opposed to holding the referendum also knew they had to win it, focused on the powerful economic arguments for remaining in the EU, backed by reams of statistics and supported by prominent business, City and trade union leaders. The campaign strategy was that as about a third of the electorate was resolutely anti-EU, a third resolutely pro-EU and a third unsure, then the Remain campaign should target the undecided by starkly warning about the financial costs of exiting the EU. The problem with this approach was that it was not only negative but dry and factual. Politics is more than the complex and mundane realities of government and the economy while vision, a narrative and passionate belief, however impractical, are much more likely to arouse the public than trading figures. A New York governor once advised politicians to ‘campaign in poetry and govern in prose,’ but the Remainers stuck to the practicalities and in effect did the opposite and campaigned in prose, heavily overlaid with gloomy forecasts of the damage to the economy should the UK back quitting the EU. In contrast the Leavers campaigned if not in poetry at least with passion and optimism rather than cold, hard reason to promote their cause, overlaid with sunny predictions of a great future for a UK liberated from the shackles of Brussels which of course no one could disprove. This was distilled into the simple but devastatingly effective slogan ‘Take back control.’ The phrase appealed both to the patriotism of what might be termed ‘middle England’ voters and older people but also resonated with those voters who felt alienated from traditional politics, were angry about their stagnant standard of living, austerity and the bankers whom they blamed for causing the Great Recession, were resentful of globalism and social changes of which immigration was a scapegoat, in short those who felt that they were no longer in control of their lives. The government’s argument that business, in particular financial services, would suffer if the UK left the EU cut little ice with those voters who felt they had missed out on any economic recovery while big business and the banks were

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thriving. Remain’s dire warnings about the cost of leaving made little headway among those voters who felt they had nothing to lose anyway. Tom Mludzinski, Director of Political and Social Research at pollster ComRes, later recalled: ‘As referendum day drew closer, the Leave messages were gaining greater cut-through. The main Leave claim that “we can take back control” had the greatest impact, with 44% saying it made them more likely to vote Leave. Indeed, two other Leave promises (an Australian-style immigration system and saving £350 million a week) had more impact than the top Remain message we tested (that Brexit would lead to recession).’1 The government’s economic case for remaining in the EU was blunted by the poor state of the eurozone. Back in 1975, the year of the previous EU referendum, Britain was the economic basket case, forced the following year to request a loan from the International Monetary Fund, while the European economy was robust. The argument then that Britain needed Europe and could not afford to jeopardise its fragile economy resonated with voters. In 2016 the boot was on the other foot. In 2015 growth in the UK was 2.3% but among EU countries 1.9% and in Greece −0.2%. A later study noted: ‘The EU’s poor economic performance was used by Leave campaigners to make the case that Britain would be better off economically if it was not tied to the EU. This connected with many voters who, suffering stagnating incomes and job insecurity in their own lives and with little to lose, were prepared to take their chances outside the EU.’2 The Leave arguments, promoted by a virulently anti-EU tabloid press, were generally based on optimistic visions of what might be in the future, while facts were usually secondary. Whereas the Remainers tried to put forward the often complex but practical reasons for staying in the EU the Leavers focused on short punchy soundbites which were easily disseminated across social media, notably Twitter. The more the Remain campaign piled on the facts, the more the Leavers contemptuously dismissed them as the work of the biased pro-EU establishment. Osborne’s chilling warnings of an economic meltdown if the UK voted to leave the EU were slated as ‘project fear’ while pro-Leave politician and Cabinet minister Michael Gove, when asked to name any pro-Leave economists since there were hardly any, refused and argued that the public had ‘had enough of experts.’ One figure the Leave campaign did use, a claim that leaving the UK would save £350m a week which could be spent on the NHS, was highly misleading as it did not take into account any

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rebates or money the EU sent to the UK. The actual official net figure after rebates according to the Office for National Statistics was £9.9bn a year or £190m a week or 42p per person per day.3 But even citing the inaccurate figure failed to upset the Leave campaign because the more Remainers complained about it, the more it only drew attention to the fact that any taxpayers money was spent at all on the EU. That is not to say that Remain voters, as opposed to the official Remain campaign itself, were devoid of passion or that Leave voters did not also have hard facts to support their case. The EU for many Remain voters had come to symbolise a vision of how they regarded the UK now and for the future, a tolerant, cosmopolitan, outward-looking global player at ease with its multi-racial society, the vision which had been projected during the London Olympics. To them the Leavers were the reverse: narrow-minded, introspective, racist and prejudiced. There was a hint of class war that straddled the political divide with middle-class Labour Remainers uncomfortable about their Labour-voting Leavers. In turn, as we have seen from earlier chapters, there were parts of the country where Leave voters had specific grievances about the EU that were based on real, practical concerns such as fishing rights, or unscrupulous employers using migrants to drive down local wage rates or immigration bringing too rapid social change in small towns. Cameron’s campaign was severely knocked off course by the early loss of two prominent Conservative politicians to the Leave cause. One was his old friend and justice secretary Michael Gove, the other was the charismatic Mayor of London Boris Johnson who after initial obfuscation came out publicly in favour of leaving the EU. The loss of Johnson was both a personal and political blow for Cameron. Johnson, or Boris as he was popularly known, had managed as Mayor for almost eight years of the cosmopolitan, multiracial and mostly Labour-dominated London to straddle the political divide and appeal to liberals across all main parties before also becoming a London MP in 2015. The Olympics and his talent for publicity made him as Mayor a global personality, personifying the UK’s image, at least as presented at the Games, of an outward-facing country at ease with its multi-racial society. His decision in February 2016 to support Leave and front its campaign earned him bitter accusations of betrayal from his erstwhile liberal supporters and from then on his colours were firmly nailed to the mast of Brexit and the right. Cameron’s frustration was also compounded by the reluctance of new Labour leader Jeremy Corbyn to take an active part in the Remain

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campaign though officially he and his party were pro-Remain. Cameron needed Labour’s support, especially as the party itself was strongly proEU, both to persuade Eurosceptic blue collar Labour voters in industrial areas that their jobs depended on EU membership as well as persuade younger voters, who tended to be Remain, to make the trek to the polling booths. Most prominent Labour politicians were keen to campaign for Remain and indeed a former Labour Home Secretary, Alan Johnson, chaired a Labour In for Britain group which supported the official Remain campaign, Britain Stronger in Europe. But Corbyn, a Eurosceptic leftwinger, was in no hurry to bail out Cameron in his hour of need. Labour’s crucial support for Cameron in the Scottish referendum had done it no favours in the 2015 general election when the party lost 40 seats and was trounced by the SNP. Corbyn, no fan anyway of the EU, was not inclined to help keep Cameron at Number 10 after a referendum which Cameron had instigated and which Labour had opposed, and declined to share a platform with the Prime Minister. As a result Labour’s voice for much of the campaign was muted. A Loughborough University study published on June 6 found that Labour was ‘practically ignored’ in media coverage. Report co-author Professor James Stanyer said: ‘Labour is almost invisible in the UK media coverage of the EU referendum. With many believing it will be the Labour voters who ultimately decide the vote on the 23rd , their party’s lack of visibility across press and television will be a major concern.’4 On June 11, days before the referendum. Corbyn said on BBC TV that his passion for remaining in the EU was ‘seven out of ten,’ hardly the ringing endorsement Remainers hoped from the newly elected leader of the largely Remain-backing party in the middle of an in/out referendum. But the Achilles Heel of the Remain campaign was immigration. Had Cameron returned from Brussels in February 2016 with an agreement that the EU would consider the UK a special case and allow it to opt out of freedom of movement rules just as the EU had allowed with the euro and Schengen, then Remain might have won the referendum. Such an agreement was impossible, since freedom of movement was an integral part of the single market laid out in various treaties signed by the UK but for many Eurosceptic voters in Britain this was just further proof of the EU’s rigid inflexibility and therefore a reason to leave. Cameron’s deal over cutting welfare costs to EU arrivals failed to address the nub of the issue which was that a substantial number of voters wanted the UK to have complete control over its own borders and decide

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who should be allowed to settle from the EU and in what numbers. The fact that the UK already had control over non-EU immigrants with little impact on reducing their numbers or that for most communities in the UK the proportion of EU workers, and indeed immigrants generally, was little to non-existent made little difference to the obsession about the subject among Leave supporters. For the Leave campaign immigration was its trump card. The Remain camp responded with well-researched arguments about the positive impact of EU immigrants on the economy, the fact they were mostly young and therefore rarely drew on public services like the NHS or that they were contributing through their taxes for the pensions of the burgeoning number of old British people but this made little impression. It was indeed the case that in a handful of smaller towns the arrival in the previous decade of East European migrant workers had led to social changes about which the indigenous population was uncomfortable but wider opposition to immigration, especially in the many areas of the country where it barely existed, was often a lightning rod for other grievances. With unfortunate timing, the worst of anything in his premiership according to Cameron, and with less than a month before the poll the Office for National Statistics published on May 26 the latest immigration figures. A total of 2.1m EU nationals worked in the UK in January–March 2016, an increase of 224,000 over the same quarter in 2015. In the year ending 2015 net migration (arrivals minus those leaving the UK) hit an all-time high of 333,000, over three times the government’s ambitious and unachievable target of 100,000. In fact the figure was only 10,000 above the previous quarter and this was down to a fall in the numbers of those leaving the UK. Half the new arrivals were from outside the EU and within the government’s control but this did not prevent Leavers from arguing the numbers further proved that the only way to reduce the total was by ending free movement and the only way free movement could be ended was by leaving the EU. Tabloid media coverage also fanned the flames. Stories about immigration more than tripled over the course of the campaign, rising faster than coverage of any other political issue and according to a later study by King’s College, London ‘coverage of the effects of immigration was overwhelmingly negative. Migrants were blamed for many of Britain’s economic and social problems – most notably for putting unsustainable pressure on public services.’5

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Gideon Skinner, head of political research at Ipsos MORI noted later: ‘Whilst the conventional wisdom had been that the decision would hinge on the economy, in actual fact we saw concern about immigration increasing in the month before the election, and Ipsos MORI’s Political Monitor found that immigration was the single issue most likely to affect how people would vote. For Leave voters, the economy only scraped in as the third most important issue, a long way behind sovereignty (32%), with immigration way out in front at 54%.’6 A nadir of the campaign was reached when UKIP leader Nigel Farage, running his own campaign separate to Vote Leave, stood alongside a giant poster showing a queue of dark-skinned people, mainly male, queuing among green fields suggestive of England with the heading ‘Breaking point: the EU has failed us all.’ Its inference was that this was a queue of immigrants to the UK. In fact the photograph was of migrants crossing the Croatia-Slovenia border in the Balkans in 2015. Farage was accused of Nazi-style propaganda. He argued the photograph made the point that many migrants were not refugees but young males looking for work, not to escape wars. The poster drew widespread condemnation including even from the official Vote Leave campaign. Boris Johnson was quoted as saying the poster was ‘not our campaign’ and ‘not my politics’. He instead argued that leaving the EU would be a way of ‘spiking the guns’ of antiimmigrant feeling’ because ‘if you take back control, you do a great deal to neutralise anti-immigrant feeling generally.’7 The campaign degenerated into an exchange of vitriol from both sides unparalleled in British elections as if the genie of decades of pent-up frustration had been released from its bottle. As a later study noted: ‘Eventually the campaign became framed as us-versus-them, proEstablishment versus anti-Establishment, pro-immigration versus antiimmigration, nationalist versus internationalist.’8 The hitherto apparently tolerant, accommodating, even-tempered, phlegmatic British public appeared, at least on social media, to be transformed into two tribes hurling abuse at each other over an issue, the EU, which for decades they had regarded with supreme indifference. Passions on both sides were intense while a lightly regulated social media gave an airing to bigotry, prejudice and abuse especially on the Leave side that would rarely find an outlet in the traditional media, even though the latter’s tabloid press coverage was overwhelmingly anti-EU. The King’s College, London study concluded: ‘Overall, UK media coverage of the EU Referendum campaign can best be described as acrimonious and divisive. Reporting of

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the campaign was highly partisan across almost all non-broadcast outlets. The rancorous, bitter way in which the referendum campaign was fought was both reflected in, and enhanced by, the media coverage. The majority of media organisations that could take sides – excluding public service broadcasters bound by regulations ensuring impartiality – did so, often uncompromisingly… Rather than seek to provide a public space in which each side could fairly challenge the other, many news outlets encouraged and stoked the partisanship.’9 The Electoral Commission, which monitors the conduct of elections, received more than 1,000 complaints from the public about the content of campaign material. Its public opinion research asked whether respondents thought that the conduct of the referendum campaigns was fair and balanced. Just over half of respondents (52%) disagreed with this statement with 34% disagreeing strongly. In contrast only 34% agreed with the statement that the conduct of the campaigns was fair and balanced and only 12% agreed strongly. The Commission said: ‘The main reasons given for thinking that the conduct of the campaign was not fair and balanced were because they believed it was one-sided/unbalanced/biased/partial (31%) and the information was inaccurate and misleading (31%).’10 The rancour was stopped in its tracks on June 16 by the shocking murder of a pro-Remain Labour MP, Jo Cox, near her West Yorkshire constituency office by a man heard to shout ‘this is for Britain,’ suggesting a connection with the referendum. The killer, an unemployed loner with known far right wing views, was later jailed for life. Following the death of Jo Cox the referendum campaign was suspended and Union Jack flags on public buildings flew at half mast. London’s newly elected Labour Mayor Sadiq Khan said the country ‘just needs to pause and reflect’ and make sure the debate is not marred by the ‘climate of hatred, of poison, of negativity, of cynicism,’ that had featured so far.11 Campaigning resumed on Sunday June 19 though with the vitriol markedly toned down. It is difficult to know whether the MP’s murder caused an increase in Remain support though privately many Remainers believed it would since Jo Cox was pro-immigration and pro-EU. One factor which would have an impact on the result was the large number of people registering to vote, 46,500,00, of whom 2m joined just between December 2015 and June 2016 while 8.5m postal votes were issued, the highest number since 2001.12 It seemed likely that the EU referendum, attracting a record number of voter registrations, would also lead to a high turnout on the day with implications for the result. Many of

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the registrations were new, 2m since the previous December, and 83.7% were in England. There was a greater increase in turnout among those with little interest in politics, as compared with the 2015 general election. Of those with no interest in politics 43% voted in the EU referendum, up from 30% in the 2015 general election.13 With Remainers more likely to be already registered it seemed likely that the new voters, people who previously had never bothered to vote, were more pro-Leave than proRemain. Peter Kellner, chairman designate of the National Council for Voluntary Organisations and former president of YouGov wrote: ‘Overall, turnout across the UK was up six points compared with last year’s general election. But the sharpest rises were mostly in the strongest pro-Brexit areas. Almost three million men and women saw little point in choosing one party rather than another, but given the chance a year later to reject the political establishment as a whole, they seized the opportunity to vent their anger.’14 Whereas a vote in a general election in a constituency whose MP had a solid majority was perceived to make little impact, in a referendum every vote counted. As a later study noted: ‘This is an empowering prospect for somebody who previously felt cut off from the political process and who felt that politicians were not addressing his or her concerns. It seems clear, therefore, that many Leave voters were galvanised by a unique opportunity to redress politicians’ neglect of their concerns and used the referendum to do just that.’15 Cameron in his memoirs recognised that turnout, those who actually voted on the day, was key to the result. He estimated that a moderately high turnout, over 55%, would favour Remain since its supporters were more likely to vote but unusually among his team few considered the significance of a very high vote, say over 70%.16 As a guide the 1975 EU referendum had a 64% turnout while turnout in general elections tended to average between 65–70%—in 2010 it was 65.1% and in 2015 66.1%. However the two previous referendums under Cameron were widely different, the proposed changes to the voting system in 2011 having a turnout of only 42% while in contrast the Scottish referendum turnout was a record 84.6%. The EU poll was likely to be at the upper end of the range.

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The Result By the time the polls closed at 10 pm on June 23 there were early signs from private surveys by City hedge fund firms that the Remain side was set to win by a narrow margin while a YouGov poll predicted a 52-48% victory. By 11 pm Nigel Farage was conceding Leave had lost. But voter turnout was a high 72.2% and an hour later the picture began to change as the votes were steadily counted by local authority area. Remain, expected to comfortably win Newcastle, a Labour stronghold in England’s North East, instead scraped through with a majority of 1,800 votes, or 50.7% against Leave’s 49.3% share. The bigger shock was nearby Sunderland, home to the successful Japanese car manufacturer Nissan, which voted overwhelmingly to Leave by 82,394 to 51,930 votes, a margin of 61.3 to 38.7%. The local Labour MP blamed the result on the government’s lack of investment in the area. In nearby Gateshead, next to Newcastle, Leave won by 56.8 to 43.2%, the local MP, also Labour, blaming the result on the government’s austerity cuts. As the night wore on it became clear that Leave was sweeping the board, winning not just in the ailing former industrial cities and seaside towns of England but even in its most prosperous areas such as the wealthy commuter district of South Buckinghamshire near London where Leave won by 570 votes. The breadth of Leave’s triumph meant that even the huge Remain majorities in London and Scotland could not prevent the inevitable. At 4.39am on June 24 the veteran BBC TV broadcaster David Dimbleby who was hosting the channel’s overnight coverage announced to the nation: ‘The decision taken in 1975 to join the Common Market has been reversed by this referendum to leave the EU. Let’s be absolutely clear now that there is no way that the Remain side can win…the British people have spoken and the answer is we’re out.’ To Remainers the vote to leave the EU was not just a defeat at the polls to be refought on another day. The finality of the result after a bitterly divisive campaign came as a profound personal shock to Remain voters, even an epiphany. The EU in the past weeks had become to symbolise for Remainers a vision of how they saw the UK, outward, tolerant, cosmopolitan, multicultural, at ease with the modern world and with globalism, the vision that had been projected during the London Olympics. Conversely in their mind a vote to leave the EU was a victory for the narrow-minded, the intolerant and the prejudiced. Remainers had assumed that although the opinion polls predicted a narrow win common

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sense would return in the last hours and the nation would stick with the status quo just as the Scots had done in their referendum. Instead Remainers awoke on the morning of June 24 to find themselves strangers in their own land, their vision of Britain in pieces, their world changed forever for the referendum result was final. Many summed up their despair with: ‘I thought I knew my country. Now I realise I don’t.’ The Leavers in contrast saw the vote as a snub for the wealthy establishment, the global elite who moved their capital from one country to the next, the multinationals who avoided taxes and paid workers low wages by employing cheap European labour. In particular by ‘taking back control’ the Leavers glimpsed a different future opening before them in which they, their jobs and the country in which they lived would be protected by its empowered government, no longer the satellite state of global forces, while their communities would remain undisturbed by social change. The campaign director of Vote Leave, Dominic Cummings, argued that among the biggest reasons for Leave were the Great Recession, immigration and the eurozone crisis.17 The gulf between the two sides was profound. It split political parties, workplaces, friends and families in a way perhaps only last experienced in the Suez Crisis over six decades before. There was also a strong class element to the division, with lower income earners, the unskilled, the skilled working class and the lower middle class tending to back Leave while the big city, urban middle classes supported Remain. The result also unleashed an ugly, but temporary, spate of racism against mainly European migrants which garnered media publicity and was blamed on politicians stoking xenophobia. A later analysis concluded that there was indeed an increase in hate crimes soon after the referendum which it put down to the negative focus on immigration during the campaign, especially by certain parts of the print and social media.18 The Leave victory made anti-European racism briefly acceptable so that xenophobes felt emboldened to commit acts which previously would have been regarded by their peers as unacceptable. The Trades Union Congress which represented 6m union members, later commented: ‘The immediate aftermath of the referendum on the UK’s membership of the European Union has seen a dramatic upsurge in reports of racist abuse and hate crime directed at EU and other migrants and British BME [black and minority ethnic] communities… it appears that the negative portrayal of migrants during the campaign has given confidence to some with racist attitudes to voice their view publicly, and has increased the visibility of the

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far right…. it could be argued that the referendum campaign fanned the flames of a fire which was already established, and emboldened those with racist attitudes to voice their views publicly rather than in the privacy of their homes or far-right chat rooms and online forums.’19

Which Areas Voted Remain or Leave? Compounding the Remainers’ misery was the narrowness of the vote, just 52 to 48% (51.89% against 48.11%) a difference of 4% (3.78%) or by votes 1,269, 501 out of a turnout of 46,500,001. The gap was barely 1.27m. However closer scrutiny showed a much more mixed picture with greater backing for Leave in England. Although the overall result across the whole of the UK, that is England, Scotland, Wales and Northern Ireland, was 4% in favour of Leave, the margin in England (which included proRemain Gibraltar, a British Overseas Territory, which added 19,322 votes to the Remain total) was a much higher 6.8% to quit the EU with 53.4% voting Leave to 46.6% voting Remain. When the votes were counted up on a regional basis only one out of England’s nine regions voted Remain and that was London by a resounding 19.8%. The others, the South East, South West, Eastern, West Midlands, East Midlands, North West, North East and Yorkshire & Humberside all had majorities for vote Leave. Across 393 local authorities, support for Leave was over 70% in eight authorities, 60% in 102 and 50% in 263. In England the share of the vote for leaving ranged from nearly 76% in Boston, Lincolnshire to 21% in Lambeth, London.20 The margins backing Leave were highest in the northern industrial areas of the West Midlands (18.6%), East Midlands (17.6%), the North East (16%) and Yorkshire & Humberside (15.4%). The North West, which included the pro-Remain city of Manchester, voted by a margin of 7.4% to leave while the Eastern or East of England region, which included ailing seaside resorts and other struggling small towns in the south, delivered a high 13% margin for Leave. Further south the margins to leave reduced with the South West (which included the overwhelmingly pro-Remain city of Bristol) at 5.2%, and the prosperous South East at 3.2%. Of the so-called UK core cities, as the successful cities were termed, two of them, Birmingham (West Midlands) and Nottingham (East Midlands) voted Leave, albeit by small majorities, while the rest, Leeds (Yorkshire and Humberside), Manchester (North West), Newcastle (North East), Bristol (South West), Liverpool (North

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West), Glasgow (Scotland), Cardiff (Wales) and Sheffield (Yorkshire and Humberside) voted Remain. In Scotland the picture was in reverse where the vote was an overwhelming 62% Remain to 38% Leave. Northern Ireland also voted Remain by 55.78 to 44.22% while Wales voted Leave by 52.53 to 47.47%. The referendum therefore exposed a rift between the UK’s four countries with two out of four, Scotland and Northern Ireland, voting to remain in the EU and two, England and Wales, voting to leave. The integrity of the UK was now in peril as the Scottish independence movement received a new lease of life, its supporters arguing that Scotland was being forced to leave the EU against the wishes of its people. In Northern Ireland the Good Friday 1998 peace agreement which had ended the Troubles and which had held fast since its signing was now under threat if the abandoned border between Northern Ireland and the Republic of Ireland were to be resurrected once the UK left the EU. The issue of Ireland had barely even featured in England during the referendum campaign. The divide in the referendum result between the UK’s countries was mirrored by an even greater gulf between towns, cities and rural areas in England, the country which had delivered a 53.4 to 46.6% vote to leave. This 6.8% margin, well over half as much again as the 4% UK overall result, nonetheless contained huge disparities, starkly exposing the country’s deep divide, often on class lines. The local authority area with the highest percentage Leave vote was Boston in the rural East Midlands county of Lincolnshire at 75.6% closely followed by its neighbour, South Holland, at 73.6%. Both districts saw substantial increases in EU migration in the previous decade and the highest number of foreign-born residents in the county of Lincolnshire mainly from the EU accession states. Most of the newcomers were young and economically active, attracted to Lincolnshire by jobs in the food packing industries. However of the 20 UK local authority areas with the highest percentage of Leave votes virtually all included substantial deprivation and all were in England. Apart from one London borough all of them were in five regions, the West Midlands, East Midlands, East of England, Yorkshire & Humberside and the North East. Of these, seven of the highest 20 were in East of England, such as the ailing seaside resort of Great Yarmouth, Norfolk whose Leave vote was 71.5% and Thurrock at 72.3% which included the industrial waterfront regeneration area of the River Thames east of London known as the Thames Gateway. Six out of the 20 were in the East Midlands. The top 20 Leave areas ranged from former

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mining towns like Mansfield (70.9%), Ashfield (69.8%) and Barnsley (68.3%) to ex-manufacturing centres like Stoke-on-Trent (69.4%), Hartlepool (69.6%) and Doncaster (69%), declining fishing ports like Grimsby (North East Lincolnshire local authority area, 69.9%) and deprived rural areas like Fenland in Cambridgeshire (71.4%). Two other areas, Basildon (68.6%) and Harlow (68.1%) in Essex were unusual for being new towns, created in the 1950s and 1960s to relieve overcrowding in East London, with an aspirational working class and relative prosperity. They oscillated between voting Labour and Conservative and were often regarded by politicians as a weathervane for the national picture. In comparison the Remain vote was mainly limited to its prosperous cities. The highest local authority area was the multi-racial south London borough of Lambeth at 78.6% followed by the equally multi-racial north London borough of Hackney at 78.5%. Needless to say the tiny City of London, which includes the capital’s financial centre, voted 75% to 25% to Remain. Out of the top 20 Remain local authority areas 13 were in London and four were in Scotland including Edinburgh. The other three, all with big student populations, were cosmopolitan Oxford, Cambridge and Brighton on England’s south coast, the last often dubbed ‘London by the Sea’ at 68.6%. Close behind the top 20 were Bristol (61.7%) Manchester (60.4%), Cardiff (60%) and Liverpool (58.2%). Not all the local authority areas that voted Leave were deprived and not all areas that voted Remain were prosperous while often neighbouring areas voted in direct contrast to each other. South Bucks in leafy Buckinghamshire just outside the capital, which included some of the highest house prices in the country, voted Leave but its neighbours backed Remain. Test Valley in Hampshire voted Leave but county capital Winchester 16 miles away voted Remain. In Kent prosperous Tunbridge Wells, often derided jokingly as the home of disgruntled retirees who sent letters to the media signed ‘Disgusted of Tunbridge Wells,’ voted Remain but next door Tonbridge and Malling voted Leave. Bracknell Forest, which included corporate European headquarters, nonetheless voted Leave as did Cornwall, despite being a recipient of EU funding. Many Conservative strongholds like Epsom and Ewell in the Surrey commuter belt voted Remain while Labour seats voted Leave. The Oxfordshire local authority area that included David Cameron’s constituency voted Remain as did Islington, covering Labour leader Jeremy Corbyn’s constituency

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(by a three to one majority). The prosperous River Thames-side area of Windsor and Maidenhead, which includes Windsor Castle, voted Remain but next door industrial Slough backed Leave.

Who Voted Remain or Leave and Why? Soon after the referendum economists and think-tanks got to work burrowing into the results to analyse the profile of the voters. Irrespective of their political leanings the exhaustive studies generally concluded that the average Leave voter tended to be poorer, older, less educated, lower skilled and less likely to be a homeowner than the average Remain voter. The level of migration was less important than the pace of change in migration. Those areas where there had been an increase in immigration in the previous decade, especially since 2004 when new countries joined the EU, had higher Leave voters whereas many inner London boroughs with substantial but long settled immigration populations voted Remain. On referendum day pollster Lord Ashcroft surveyed 12,369 voters. He found that older people and pensioners were more likely to back Leave, as were the less educated, white British and Conservative voters. The AB social group (professionals and managers) were the only social group among whom a majority voted to remain (57%). C1s divided fairly evenly; nearly two-thirds of C2DEs (64%) voted to leave the EU.21 The pollster Yougov found that Conservatives voted to Leave by 61% to 39% but Labour and Liberal Democrat voters largely backed Remain at 65% and 68%, respectively, with significant minorities still backing Leave. Only UKIP, where 95% voted for Leave, and the Greens, where 80% voted for Remain, avoided significant internal divisions on the vote.22 The Joseph Rowntree Foundation, which studied poverty and social change, found that ‘put simply, older, white and more economically insecure people with low levels of educational attainment were consistently more likely to vote for Brexit than younger people, degree-holders, minorities and the more secure middle- and upper-classes. There were also clear age differences, with support for Leave among people aged over 65 years some 31 percentage points greater than support among people aged 18–24 years old.’23 A joint report from the pro-free market Centre for Social Justice and Legatum Institute that October showed that ‘poorer and less-well educated voters were more likely to back Leave. The majority of those not in work backed Leave. Those living in council housing and social housing

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tenants backed Leave. Those dependent on a state pension backed Leave. Those over the age of 44 backed Leave.’ That there was a ‘clear link between stagnant, low wages and a vote to leave the EU demands that the government review employment and productivity, which has flatlined for too long.’24 The low pay think-tank the Resolution Foundation (RF) reported that a 10% rise in unemployment was associated with a 1.7% fall in the Leave vote, a 10% rise in the number of people with degrees was associated with a 4.5% fall in the Leave vote, a 10% rise in students led to a 5% fall in Leave and all local authority areas that had experienced at least a 7% rise in the proportion of migrants in the previous decade voted Leave.25 A Conservative peer Baroness Stroud, former director of the Centre for Social Justice, set up by ex-Conservative Party leader Iain Duncan Smith, linked living standards with the Leave vote. On the website ConservativeHome she wrote: ‘The statistics about those who voted Remain and those who voted Leave are stark. Many supporters of Leave feel they have nothing to lose by exiting the EU. They are disproportionately poorer, older and less well educated than those backing Remain. The upper AB income group was the only one in which a majority backed Remain. Income groups C1, C2, D and E all contained a majority for Leave. Of people living in households earning more than £60,000 a year, 65% backed Remain. But this figure plunged to 38% among those earning less than £20,000 a year.’26 The CSJ/Legatum Institute report blamed the result on years of indifference by the establishment commenting: ‘In our view, the vote was a cri de coeur from millions of people who feel Westminster no longer knows, or even cares, how it feels to walk in their shoes. In light of this it is perhaps no surprise that the vote disregarded the dire warnings of the establishment including the Prime Minister, the leader of the Opposition, the Bank of England, the World Bank, the IMF, and President Obama. Their threats and warnings showed that the establishment understood little of the lives of the 52% that voted Leave.’27 If the vote was indeed a cri de coeur by voters feeling ignored by the political establishment then the result certainly reinforced it. Because the counting was done in Britain (but not Northern Ireland) by local authority area it was more complicated to match it up with parliamentary constituencies which had different boundaries. However one analysis by a professor of politics maintained that 421 out of 574 English and Welsh constituencies ‘probably’ voted Leave even though a majority of MPs were pro-Remain.28 Pollster Gideon Skinner, head of political research

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at Ipsos MORI, commented in October 2016: ‘The presumed recovery was not felt by large swathes of the population; the proportion of the public who think the next generation will have a lower quality of life than their parents rose sharply between 2003 and 2011 (from 12 to 35%) and is still growing (standing at 54% in 2016)’.29 This was echoed by the Joseph Rowntree Foundation (JRT) which found that the poorest households tended to vote Leave. Its study found that support for Leave was 30% higher among those with GCSE qualifications (taken at 16) or below than it was for those with a degree and 20% higher among those aged 65 than those aged 25. It added: ‘Groups in Britain who have been “left behind” by rapid economic change and feel cut adrift from the mainstream consensus were the most likely to support Brexit.’ The level of education was key to the result. The JRT found that ‘support for Brexit was strongest in areas where a large percentage of the population did not have any qualifications and were ill-equipped to thrive amid a post-industrial and increasingly competitive economy that favours those with skills and is operating in the broader context of globalisation. For instance, 15 of the 20 “least educated” areas voted to leave while all of the 20 “most highly educated” areas voted to remain.’ It added: ‘Support for leaving the EU was a striking 75% among those who lacked qualifications but just 27% among those who had achieved the highest level of education. It is this educational divide that is absolutely central to making sense of why the country voted to leave the EU.’30 Lord Ashcroft’s referendum day poll of voters found that 57% of those with a university degree voted to remain, as did 64% of those with a higher degree and 81% of those still in full-time education. Among those whose formal education ended at secondary school or earlier, a large majority voted to leave.31 Polling organisation Yougov’s own poll found that 70% of voters with only GCSEs (taken at 16) or lower voted to Leave, while 68% of voters with a university degree voted to Remain in the EU. Those with A levels and no degree were evenly split, 50 to 50%.32 Age was a factor in Leave, the Joseph Rowntree Foundation survey finding that support for Brexit was stronger than average in areas with a larger number of pensioners. Of the 20 local authority areas with the youngest populations 16 voted to remain, but of the 20 oldest authorities 19 voted to leave.33 Lord Ashcroft’s survey found that ‘the older the voters, the more likely they were to have voted to leave the EU. Nearly three quarters (73%) of 18 to 24 year-olds voted to remain, falling to under two thirds (62%) among 25-34s. A majority of those aged over 45

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voted to leave, rising to 60% of those aged 65 or over. Most people with children aged ten or under voted to remain; most of those with children aged 11 or older voted to leave.’ More than half of those retired on a private pension voted to leave, as did two-thirds of those retired on a state pension.34 Yougov found that under-25s were more than twice as likely to vote Remain (71%) than Leave (29%). Among over-65s the picture was opposite, as 64% of over-65s voted to Leave while only 36% voted to Remain. Among the other age groups, voters aged 24–49 narrowly opted for Remain (54%) over leave (46%) while 60% of voters between the ages of 50 and 64 went for Leave.35 The annual statistical survey, British Social Attitudes, saw a link between age and attitudes to immigration. In a post-referendum study it found that while 62% of those with a degree, and 48% of those aged 18–29 believed immigration had a positive impact on the economy in contrast just 29% of those with GCSEs as their highest level of qualification or no qualifications and just 29% of those aged over 70 held the same view.36 Generally, areas with higher average pay recorded lower votes for Leave but there were of course anomalies. The Resolution Foundation’s analysis of results from 378 out of 380 local authority areas divided them into four groups of (a) higher paying and low Leave, (b) higher pay and relatively high Leave, (c) lower paying and relatively low Leave and (d) lower paying and high Leave. Among table (a) were 13 London boroughs and Edinburgh, among (b) were mainly South East and London areas, among (c) were Scottish areas and core cities like Manchester, Liverpool and Cardiff as well as university cities like York, Exeter and Norwich and among (d) were urban towns and cities in the Midlands and North.37 Both the Resolution Foundation and the Joseph Rowntree Foundation concluded that immigration was a Leave factor in areas which saw higher levels of EU migrancy in the previous decade. The JRT commented: ‘Areas that had experienced a sudden influx of EU migrants over the last 10 years were often more pro-leave.’ The RF said: ‘All areas that experienced at least a 7% increase in the proportion of migrants over the last decade voted to leave.’38 The JRT said that nearly 90% of people who thought immigration was bad for the economy supported Leave, compared with just under 10% for those who thought immigration was good for the economy. ‘Similarly, whereas 88% of people who thought that the country should allow fewer immigrants in supported Brexit the

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equivalent figure among people who wanted to keep immigration as it is was just 21%.’39 However there were many areas with high Leave votes that had little immigration, the issue becoming a proxy for other grievances. The annual statistical survey, British Social Attitudes, regarded immigration as a particularly important reason for the Leave vote. It said in its 2016 survey: ‘For the most part the outcome of the referendum reflected the concern of more “authoritarian”, socially conservative voters in Britain – that is, primarily older voters and those with few, if any, educational qualifications – about some of the social consequences of EU membership, most notably in respect of immigration.’40 In general ethnic minorities backed Remain. Lord Ashcroft’s 2016 poll found that ‘white voters voted to leave the EU by 53% to 47%. Two thirds (67%) of those describing themselves as Asian voted to remain, as did three quarters (73%) of black voters. Nearly six in ten (58%) of those describing themselves as Christian voted to leave; seven in ten Muslims voted to remain.’41 The Joseph Rowntree Foundation warned that summer: ‘The result of the referendum, therefore, has thrown new light on deeper social, geographic and cultural divides that often lay hidden below the surface of our national conversation. Looking ahead, it seems likely that these stubbornly persistent and growing inequalities will strengthen.’42 The Leave vote has been interpreted as a ‘small c’ conservative protest against the modern world as represented by globalism and the EU and a vote for national identity and a return to a traditional mono-cultural Britain. But Leave was also a revolutionary act, shaking the foundations of society and shattering the previous three decades of consensus behind the country’s economic, social and political direction of travel with potentially profound effects. It was now up to the Prime Minister, David Cameron, father of the revolution, to face the consequences of his fateful decision.

Notes 1. Centre for Social Justice/Legatum Institute. (October 2016). 48:52 Healing a Divided Britain. 2. Ibid. 3. Office for National Statistics. (May 25 2016). UK Perspectives 2016: The UK Contribution to the EU Budget.

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4. Loughborough University. Centre for Research in Communication and Culture. (June 6 2016). Report Finds Labour Is Almost Invisible in EU Referendum Coverage. 5. Martin Moore and Gordon Ramsay. Centre for the Study of Media, Communication and Power, King’s College, London. (May 2017). UK Media Coverage of the 2016 EU Referendum Campaign. 6. Centre for Social Justice/Legatum Institute. (October 2016). 48:52 Healing a Divided Britain. 7. The Guardian. (June 16 2016). 8. Martin Moore and Gordon Ramsay. Centre for the Study of Media, Communication and Power, King’s College, London. (May 2017). UK Media Coverage of the 2016 EU Referendum Campaign. 9. Ibid. 10. Electoral Commission. (September 2016). Report: 23 June 2016 referendum on UK’s membership of the European Union. 11. The Guardian. (June 17 2016). 12. Electoral Commission. (September 2016). Report: 23 June 2016 Referendum on UK’s Membership of the European Union. 13. British Social Attitudes. (No 34, 2016). The Vote to Leave the EU: Litmus Test or Lightening Rod? 14. Centre for Social Justice/Legatum Institute. (October 2016). 48:52 Healing a Divided Britain. 15. Ibid. 16. David Cameron. (2019). For the Record (London, William Collins, p. 677). 17. The Spectator. (January 9 2017). How the Brexit Referendum Was Won. 18. Daniel Devine. (March 2019). https://blogs.lse.ac.uk/brexit/2018/03/ 19/hate-crime-did-spike-after-the-referendum-even-allowing-for-other-fac tors. 19. TUC. (August 8 2016). Challenging Racism After the EU Referendum. 20. Matthew Godwin and Oliver Heath, Joseph Rowntree Foundation.. (August 31 2016). Brexit Vote Explained: Poverty, Low Skills and Lack of Opportunities. 21. Lord Ashcroft, Lord Ashcroft Polls. (24 June 2016). How the UK Voted on Thursday and Why. 22. Yougov. (June 27 2016). How Britain Voted. 23. Matthew Godwin and Oliver Heath, Joseph Rowntree Foundation. (August 31 2016). Brexit Vote Explained: Poverty, Low Skills and Lack of Opportunities. 24. Centre for Social Justice/Legatum Institute. (October 2016). 48:52 Healing a Divided Britain. 25. Stephen Clarke and Matt Whittaker, Resolution Foundation. (July 2016). The Importance of Place. Explaining the Characteristics Underpinning the Brexit Vote Across Different Parts of the UK.

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26. Centre for Social Justice website. (September 30 2016). 27. Centre for Social Justice/Legatum Institute. (October 2016). 48:52 Healing a Divided Britain. 28. Chris Hanretty, Professor of Politics, Royal Holloway. (blog, June 29 2016). The EU Referendum: How Did Westminster Constituencies Vote. https://medium.com/@chrishanretty/the-eu-referendum-how-didwestminster-constituencies-vote-283c85cd20e1#.i23b9uxbm. 29. Centre for Social Justice/Legatum Institute. (October 2016). 48:52 Healing a Divided Britain. 30. Matthew Godwin and Oliver Heath, Joseph Rowntree Foundation. (August 31 2016). Brexit Vote Explained: Poverty, Low Skills and Lack of Opportunities. 31. Lord Ashcroft, Lord Ashcroft Polls. (24 June 2016). How the UK Voted on Thursday and Why. 32. Yougov. (June 27 2016). How Britain Voted. 33. Matthew Godwin and Oliver Heath, Joseph Rowntree Foundation. (August 31 2016). Brexit Vote Explained: Poverty, Low Skills and Lack of Opportunities. 34. Lord Ashcroft, Lord Ashcroft Polls. (24 June 2016). How the UK Voted on Thursday and Why. 35. Yougov. (June 27 2016). How Britain Voted. 36. https://www.bsa.natcen.ac.uk/latest-report/british-social-attitudes-34/ key-findings/brexit-and-immigration-a-country-divided.aspx. 37. Stephen Clarke and Matt Whittaker, Resolution Foundation. (July 2016). The Importance of Place. Explaining the Characteristics Underpinning the Brexit Vote Across Different Parts of the UK. 38. Ibid. 39. Matthew Godwin and Oliver Heath, Joseph Rowntree Foundation. (August 31 2016). Brexit Vote Explained: Poverty, Low Skills and Lack of Opportunities. 40. British Social Attitudes. (No 34/2016). The Vote to Leave the EU: Litmus Test or Lightening Rod? 41. Lord Ashcroft, Lord Ashcroft Polls. (24 June 2016). How the UK Voted on Thursday and Why. 42. Matthew Godwin and Oliver Heath, Joseph Rowntree Foundation. (August 31 2016). Brexit Vote Explained: Poverty, Low Skills and Lack of Opportunities.

CHAPTER 15

The Merry Months of May

At 8.15 am on the morning of June 24, 2016 as the nation reeled under the news that it was about to turn its back on 43 years of European Union membership Prime Minister David Cameron strode out of Number 10 Downing Street to the waiting media and announced his resignation. He told the world—because the result was indeed headline news across the globe—that ‘I was absolutely clear about my belief that Britain is stronger, safer and better off inside the European Union, and I made clear the referendum was about this and this alone – not the future of any single politician, including myself. But the British people have made a very clear decision to take a different path, and as such I think the country requires fresh leadership to take it in this direction.’ He expected his successor to be in place by October following firstly ballots among Tory MPs to find a shortlist followed by a ballot among party members to choose the winner.1 It was highly unlikely that his successor would be a prominent Remainer since he or she would be overseeing the complex negotiations with the EU for withdrawal. That ruled out Chancellor George Osborne, previously Cameron’s obvious successor, who anyway had burned his boats with Eurosceptic Tories because of his ‘project fear’ warnings during the campaign about the economic impact of a Leave vote. He decided not to stand, ending a successful political career that without Brexit could have given him the keys to Number 10 after Cameron. Equally the © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_15

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parliamentary Conservative Party as well as the country was so bitterly split over Brexit that the next Prime Minister ideally needed to be a figure that could unite rather than further divide MPs. Initially the candidates most likely to win were the pro-Leave Boris Johnson, the party members’ favourite, backed by his pro-Leave colleague Michael Gove standing against the Home Secretary Theresa May, who was moderately pro-Remain but had kept a low profile during the referendum. Johnson however, though popular among Eurosceptic Tories and among the party membership, was toxic to many Remain MPs and ministers and their support began to coalesce around May whose tepid support for Remain made her the least offensive to both sides. The campaign then took an utterly unexpected turn when Gove sensationally announced he was no longer supporting Johnson and intended standing himself. Even more drama followed when Johnson, losing heart, then declined to stand. This left May, Gove and three other candidates who were eventually whittled down by ballots among Conservative MPs to May and a middle ranking minister and Leave supporter, Andrea Leadsom. When Leadsom then pulled out of the race on July 11 Theresa May was left as de facto leader and there was no need for a ballot among party members. As a result, several months earlier than expected, May became Prime Minister on July 13, only the second woman after Margaret Thatcher, and Cameron and his family departed Number 10. The Home Office has been described as ‘a bunker’ and little preparation for Number 10 whose skills include being a good communicator with empathy for public concerns.2 In addition elected by a small number of Conservative MPs because her opponents abandoned the race one by one May never had the chance to hit the campaign trail among party members to win a majority. At the time her rapid election meant an end to a summer of uncertainty. However her accession also meant Theresa May’s abilities at campaigning as leader in the full glare of publicity were untested. Within a year they would be put under an unforgiving media spotlight.

The ‘Just About Managing’ Theresa May seemed the ideal leader to steer the country through what was certain to be years of complex and difficult negotiations. The daughter of a clergyman, politically May was a one-nation Tory and once told the Conservative Party conference in 2002 that it was seen by voters

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as ‘the nasty party.’ She was appointed first woman chair of the party and held various Shadow ministerial posts before being made Home Secretary. She was not the most high-profile Cabinet minister but had a reputation as a safe pair of hands. An MP for Remain-voting prosperous Maidenhead on the River Thames 30 miles west of London since 1997 she was the longest-serving Home Secretary in 60 years since being appointed by Cameron in 2010. The job which included responsibility for law and order, fighting terrorism and managing immigration, was among the most difficult in Cabinet and had ruined the career of many previous occupants but she was regarded as a diligent and no-nonsense operator with an eye for detail who was also not afraid to take on powerful vested interests such as the police trade associations. She talked tough on immigration even though the government’s unrealistic target to reduce immigration to below 100,000 was never met and immigration rose from 256,000 in 2010 to 333,000 in 2015. Although immigration was a key issue in the referendum it did not dent her election chances.3 Her background as a low-profile Remain supporter but with sympathies for Leave meant she lacked the toxicity of either Leave campaigners like Johnson or Remainers like Osborne and could appeal to both camps. Her mix of one-nation Toryism but resolute approach to terrorism, law, order and immigration made her equally attractive to the liberal and right wings of the party. Sensible, assiduous and un-flashy, Theresa May seemed to have arrived at the right time in the right place to manage down the hysteria released by the referendum and lead the nation through what promised to be a uniquely disruptive period in its history. The country was split brutally down the middle by the referendum; people, at home or in their workplaces, were defined by whether they were Remainers or Leavers. There had not been such depths of passion about politics since the Suez Crisis six decades previously. May would have to navigate these intense emotions while also negotiating the UK’s exit from the EU, a process likely to be hugely complex, requiring stamina, patience and attention to detail, with no guarantee it would lead to the promised land expected by Leave voters. The new Prime Minister however did not want just to be remembered for negotiating Brexit but for addressing the ingrained inequalities that had been exposed by Leave. In a speech in Birmingham on July 11 before her election, when she expected the leadership vote to be put to party members, she outlined her vision for the country which was one which ‘works not for the privileged few but for every one of us.’ Her

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government could not be defined just by leaving the EU but by delivering ‘serious social reform – and make ours a country that truly works for everyone.’ She then proceeded to outline the reasons for the Leave vote, the impact of the recession on employment, stagnant wages, low interest rates that helped property owners but not tenants, lack of job security, exploitation by ‘unscrupulous bosses,’ competition for low-skilled work from EU immigrants and high executive pay. It was a robust assault on the big business and the excesses of capitalism. She added: ‘There is an irrational, unhealthy and growing gap between what [the top FTSE] companies pay their workers and what they pay their bosses.’ Yes, the referendum was a vote to leave the EU but ‘it was also a vote for serious change.’ She proposed that workers should be represented on company boards, that shareholder votes on corporate pay should be binding not just advisory, there should be transparency about City bonuses and a crackdown on tax avoidance. This was more than just one-nation. It was an appeal not just to her own party but much wider to those Labourvoting areas which had voted Leave and determined the outcome of the referendum and were now potential converts to what would later be dubbed ‘blue collar Toryism.’4 Official figures published before the referendum showed the scale of inequality between England’s North and South. The 28 towns and cities with the largest percentage of deprived areas were in the North or Midlands of England. Oldham and West Bromwich both had over 60% of their local areas ranked in the most deprived 20% of areas in England. The towns and cities with the largest percentage of least deprived areas of England were Guildford, Woking and St Albans in the South East. By no coincidence the most deprived were strongly pro-Leave and the least deprived pro-Remain. In addressing the economic inequalities highlighted by the referendum in her one-nation appeal May also deftly revealed her sympathies for the Leavers. Having laid out a one-nation agenda, she then further appealed to the Labour Leavers, as well as her own party, by insisting that the Leave vote was final and ‘Brexit means Brexit,’ a harsh rejoinder to those Remainers who somehow hoped there might be an opportunity for the nation to reconsider its verdict once it came closer to knowing what it meant in practice. She went on: ‘I couldn’t be clearer. Brexit means Brexit. And we’re going to make a success of it. There will be no attempts to remain inside the EU, no attempts to rejoin it by the back door, and no second referendum. The country voted to leave the European Union, and as

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Prime Minister I will make sure that we leave the European Union.’ Her comments appealed to the party faithful and to those Leave-voting Labour areas but it gave little succour to the 48% of the UK that had voted Remain, saw success and Brexit as a contradiction in terms and hoped for a signal she might try and unite the two bitterly divided camps: indeed most of her speech ignored the 48% and aimed at the 52%.5 Once Prime Minister on July 13 she confirmed Remainers’ fears by— to much astonishment by MPs and the public—making Boris Johnson Foreign Secretary, sacking George Osborne and creating two new ministries. One was the Department for Exiting the European Union to manage the process of leaving the EU, formed out of the European Directorate and the UK Permanent Representative to the UK based in the Foreign Office and the Europe Unit within the Cabinet Office. The other was the Department for International Trade, to deal with future trading relationships. Both departments were headed by Leave supporters, or Brexiteers as they were now termed. She later elaborated on her campaign speech at the Conservative Party conference in October 2016. At a rostrum badged ‘A country that works for everyone,’ she referred to people who ‘just about manage’ and again insisted that ‘Brexit means Brexit – and we’re going to make a success of it.’ The Conservative Party, she said boldly targeting the Labour Brexiteer vote, was ‘the true workers party, the only party dedicated to making Britain a country that works, not just for the privileged few, but for every single one of us.’6 In her later closing conference speech on October 5 she grasped the wider reasons for the Leave vote recognising that it ‘was about a sense – deep, profound and let’s face it often justified – that many people have today that the world works well for a privileged few, but not for them…It was a vote not just to change Britain’s relationship with the European Union, but to call for a change in the way our country works – and the people for whom it works.’ She went on, providing a cogent analysis of why Remain lost: ‘Our society should work for everyone, but if you can’t afford to get onto the property ladder, or your child is stuck in a bad school, it doesn’t feel like it’s working for you. Our economy should work for everyone, but if your pay has stagnated for several years in a row and fixed items of spending keep going up, it doesn’t feel like it’s working for you. Our democracy should work for everyone, but if you’ve been trying to say things need to

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change for years and your complaints fall on deaf ears, it doesn’t feel like it’s working for you.’ She added: ‘If you’re one of those people who lost their job, who stayed in work but on reduced hours, took a pay cut as household bills rocketed, or - and I know a lot of people don’t like to admit this someone who finds themselves out of work or on lower wages because of low-skilled immigration, life simply doesn’t seem fair. It feels like your dreams have been sacrificed in the service of others. So change has got to come.’ In her attack on capitalist excesses she sounded almost left-wing. It was a speech that drew a line in the sand between her and her predecessor and in its appreciation of the wider causes of Leave showed a much greater sympathy with the victims of the years of recession and austerity than many of her Remain-backing ministerial colleagues in government had expressed. She effectively summed up why Cameron’s bid to Remain in the EU was doomed from the start, even though she herself had been part of his government that presided over the unfairness and inequalities she now derided.7 The new Prime Minister therefore appeared to pitch her policy tent firmly on the side of the Leavers, appealing to those ‘just about managing’ who economically felt abandoned by the government, laying out her one-nation philosophy with its mantra of ‘a country that works for everyone,’ attacking big business and calling for worker directors and pay transparency, and insisting ‘Brexit means Brexit’ and there would be no fudging of the referendum result. Although her speeches about Brexit dismayed Remainers they signalled that she recognised the sense of alienation among Labour-voting Leavers revealed by the referendum. The question was what in practice she would, or could, do to address their grievances.

Brexit Means Brexit Whether or not May wanted her Prime Ministership to focus on helping the ‘just about managing’ and reducing the inequalities and sense of alienation that had led to Leave it was clear her agenda would be dominated by Brexit. Yet despite the complexity of negotiating the withdrawal from the EU there had been no preparation in Whitehall for such an eventuality, not because senior civil servants were pro-Remain, even though they overwhelmingly were, but because the Cameron government had chosen not to instigate such plans on the basis that it was official government

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policy to Remain. One Cabinet minister under Cameron later admitted in reference to planning for a Leave vote: ‘There were discussions around it, but I think it is fair to reflect that in terms of a detailed implementation plan – that was not something that was there and prepared and on the shelf.’8 The respected Cabinet secretary Jeremy Heywood said Brexit was the biggest challenge of his long career at the centre of government. He told 200 senior civil servants soon after the referendum that Brexit was a bigger international challenge than Iraq, a larger constitutional challenge than forming the Coalition, a deeper policy challenge than the financial crash and a greater economic challenge than the ERM crisis.9 This lack of preparation was despite Cameron himself being quite clear that a vote to Leave would mean triggering Article 50 of the EU treaties which would legally start the process of departure with just two years to deliver Brexit itself.10 A report from the Commons Foreign Affairs Committee in July 2016 said ‘the previous Government’s confidence that basic planning for the practicalities of implementing Brexit could be undertaken at a leisurely pace after the vote now appears at best naïve and at worst negligent.’ It added: ‘The previous Government’s considered view not to instruct key Departments to plan for the possibility that the electorate would vote to leave the EU amounted to gross negligence.’11 Lack of preparation time was then exacerbated by May’s swift election since Whitehall mandarins had assumed, like Cameron, that it would be October, not July, before the new leader could be confirmed by a ballot party members. EU leaders and Brussels were barely more prepared than the UK for negotiating departure having assumed that Britons would vote Remain. There were even suggestions that EU leaders hoped the new Prime Minister might return to renegotiate Cameron’s deal, an option May was certainly not considering and one even Cameron had ruled out when he said bluntly in February 2016 that ‘the idea that other European countries would be ready to start a second negotiation is for the birds.’12 No country had ever left the EU before so the process was a steep learning curve on both sides with the UK resolved to extract a good deal and Brussels equally determined to show member states the folly of exit by not giving an inch during negotiations. Early informal talks soon showed that the UK’s hopes it could pick off the 27 member states one by one was a non-starter and so, under pressure from party members, May moved to the formal process of triggering Article 50 of the Lisbon Treaty 2009. This was the necessary legal

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starting gun to exit negotiations, since the referendum itself was legally non-binding. Furthermore the decision was the Prime Minister’s and did not require the consent of Parliament as she was quick to emphasise. At the Conservative Party conference in October she announced that Article 50 would be enacted no later than March 2017, that it was the government’s responsibility and that those insisting it must be passed by both Houses of Parliament, the Commons and the Lords, were ‘insulting the intelligence of the British people’ as ‘Parliament put the decision to leave or remain inside the EU in the hands of the people.’ She also intended introducing a Great Repeal Bill which would abolish EU laws in the 1972 European Communities Act.13 Her announcement delighted Brexiteers but the decision to trigger Article 50 within just a few months suggested there was a detailed plan. There was no detailed plan, not least because so few preparations for Brexit had been made. The date created a self-imposed deadline, narrowing the government’s negotiating powers, though it argued that if necessary it was ready to use the nuclear option of ‘no deal’ rather than accept ‘a bad deal.’ The trouble was that as little thought had been given to preparing for no deal either this was a largely empty threat. There was disagreement between those ministers backing a ‘hard Brexit’ who wanted to leave both the EU single market and the customs union to enable global trade agreements for the UK and to threaten no deal as a bargaining ploy and the ‘soft Brexiteers’ who wanted to stay in a customs union and were opposed to no deal at any cost. The government under-estimated the complexity of exiting the EU, barely even considered the potentially calamitous impact on the peace process of a new border appearing in Ireland between the Republic, an EU member, and Northern Ireland, part of the UK, and continued to maintain that the hard work, winning the referendum, was done and the exit process would be straightforward. The referendum had not been a vote on which kind of exit deal to choose, only on the principle of leaving. Considering that the Leave campaign during the referendum had relied on emotion and soundbites such as ‘Take back control’ with virtually nil attention to the mundane detail of how to actually quit the EU and Leavers were surprised even to win it was perhaps not unexpected that Leave ministers were unprepared. May’s biographer later wrote that the British establishment ‘has not been more collectively guilty of failure of anticipation since appeasement in the late 1930s.’ Given, he added, the splits in the country, Parliament and

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the Conservative Party, the complete lack of clarity about what the referendum result meant and the belief that Brexit would be easy ‘it is hardly surprising that it ended in a car crash.’14 May’s background as a Remainer with Leave sympathies placed her ideally as the unity candidate, appealing across the political divide, laying out for the public the realities of the difficult negotiations ahead and what could and could not be achieved. But it was becoming clear that May was not in the business of binding the nation’s wounds. The difference between Remain and Leave was 4% and yet she sometimes acted as if Leave had won a landslide. The slender majority of 1,269, 501 could easily be whittled down to nil within the two years it would take to exit the EU simply through natural selection, with old people, mostly pro-Leave, dying off, and younger voters, mostly pro-Remain and most affected by the decision, entering voting age. It meant that the UK could leave the EU at a time when Leave was a no longer a majority, one reason why there were increasing calls for a second referendum on the final deal including an online petition which gathered 4.1 m signatures in July 2016. Instead May’s mantra was ‘Brexit means Brexit’ and she spared little sympathy to the 48% of the country that had voted Remain. In her Conservative Party conference speech on October 2 she dismissed the idea that there was a choice between a soft or hard Brexit saying this was ‘too often propagated by people who, I am afraid to say, have still not accepted the result of the referendum.’ In her closing speech on October 5 she laid into the Remainers, telling the audience that they [the Remainers] found ‘[the public’s] patriotism distasteful, concerns about immigration parochial, views about crime illiberal, attachment to job security inconvenient. They find the fact that more than seventeen million voters decided to leave the European Union simply bewildering.’ And referring to ‘too many people in positions of power who behave as if they have more in common with international elites’ she added ‘if you believe you’re a citizen of the world, you’re a citizen of nowhere.’ For the millions who had voted Remain and were not rich but still thought of themselves very much as citizens of the world the comment was especially provocative.15 Her thoughts on Brexit were further outlined in the Plan for Britain three months later in January 2017 in which she laid out 12 objectives for the future relationship between the UK and the EU. For the UK these included control of its own laws, a common travel area with the Republic of Ireland, control over immigration, rights for EU nationals in

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the UK and vice versa, and free trade agreements with the EU as well as outside the EU. She reiterated that the UK would leave the single market but was more vague about continuing in the EU customs union. Leaving the customs union would enable the UK to forge its own global trade arrangements but without the benefit of the EU’s 56 free trade agreements with other countries UK firms exporting to these markets could hit tariff barriers. May said she wanted both a customs agreement with the EU and also the freedom to make its own tariff arrangements but had ‘an open mind’ on how these apparently contradictory positions might be achieved. In particular it left unanswered the question as to how, if withdrawing from the single market and customs union, the UK could prevent a border reappearing between Northern Ireland and the Republic, potentially reigniting the Troubles that had been settled by the Good Friday Agreement in 1998. May insisted in her speech ‘we are leaving the EU, but not leaving Europe.’ The Great Repeal Bill would simply transfer all EU legislation into the UK and then Parliament could decide which bits it wished to keep. She added: ‘The same rules and laws will apply on the day after Brexit as they did before.’ On immigration she said ‘the message from the public before and during the referendum campaign was clear: Brexit must mean control of the number of people who come to Britain from Europe. And that is what we will deliver.’ Leaving the single market was essential but May also wanted ‘an agreement about our future partnership by the time the 2-year Article 50 process has concluded.’ She added: ‘This might be about our immigration controls, customs systems or the way in which we co-operate on criminal justice matters. Or it might be about the future legal and regulatory framework for financial services.’ She also insisted, to the delight of Brexiteers, that ‘no deal for Britain is better than a bad deal for Britain’ meaning she was prepared to accept the prospect of the UK crashing out of the EU without an agreement.16 May was not however mistress of all she surveyed in Parliament, contending with restless Remain MPs on her own side and a strongly Remain House of Lords. It soon became clear that as well as battling with the EU the May government faced trench warfare getting the necessary legislation through its own Parliament, especially with the government’s slender overall majority of 12 and Remain rebels on her own side. A legal challenge by a Remain campaigner to ensure Article 50 could only be triggered after a parliamentary vote rather than by just the Prime Minister won surprising support from the High Court. The government then had

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to swiftly introduce legislation in January 2017 which bounced between the Commons and the House of Lords before finally and after protracted debate and amendments receiving Royal Assent on March 16. The bad tempered parliamentary battle was not a good omen for future negotiations which would only become more, not less, fraught. The letter triggering Article 50 was then taken by train to Brussels on March 29 and delivered in the glare of cameras to Donald Tusk, President of the EU Council. The clock was now ticking: a Brexit had to be completed by March 29, 2019, with or without a deal.

Labour’s Civil War Summer While the new Prime Minister was grappling with the seemingly intractable challenges of implementing Brexit, all was not rosy either in Labour’s garden. Jeremy Corbyn’s lukewarm support of Remain provoked a furious backlash after the referendum among his Shadow ministers. First Corbyn sacked his Shadow Foreign Secretary Hilary Benn on June 26 for allegedly plotting against him. During the course of the day 11 other Shadow Cabinet ministers resigned their posts in protest at what they claimed was Corbyn’s lacklustre leadership and failure to more vigorously campaign for Remain followed by eight more the following day. On June 28 the Parliamentary Labour Party (PLP) passed an overwhelming vote of no confidence in Corbyn’s leadership by 172–40 and another Shadow Cabinet minister then quit just two days after being appointed to replace a previous resignation. Corbyn however refused to step down arguing the vote had no constitutional legality. A subsequent leadership campaign in September backfired. The challenger, a strong Remainer and former Shadow Cabinet Minister called Owen Smith, stood against Corbyn but in a ballot of party members on a turnout of 77% won just 38.2% of the votes against the 61.8% won by Corbyn. The leader actually increased his 59.5% majority achieved in the 2015 leadership election which had propelled him into power. The result was a triumph for Corbyn but a blow for Labour’s longer term prospects as a united party ready for government since it was now split between the leadership, the members, the Parliamentary Labour Party and the voters. The leadership was fully backed by the members but the PLP remained unenthusiastic despite some of the ex-ministers returning to the Shadow Cabinet (including Smith) and the voters were

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unimpressed by the Corbyn regime. An Ipsos MORI poll in October after Corbyn’s re-election found that only a quarter of voters thought Labour was fit to govern, down nine points from September 2015, and put the Conservatives well in the lead.17 An electoral test came in February 2017 with two by-elections. One was in Copeland in Cumbria in England’s North West caused by the resignation of its Labour MP, a critic of Corbyn, who was leaving politics. The seat had been held by Labour since 1935 but in a sensational result was won by the Conservatives on a swing of 8.5% whose successful candidate would go on to hold the seat in the next two general elections. The second by-election in February 2017 was Stoke on Trent in Staffordshire in the Midlands whose Labour MP was also leaving for another job. Labour held onto the seat but with a reduced majority while the Conservatives increased their share. The results were bad news for Labour but they also showed how Brexit was upending traditional party allegiances, exposing Labour’s faultline that while its MPs and party members were firmly Remain its Labour voters in its industrial heartlands were firmly Leave. It gave credence that May’s no-nonsense ‘Brexit means Brexit/No Deal is Better Than a Bad Deal’ mantras would win over Labour voters as well as Conservatives, giving a new populist dimension to her ‘one nation’ politics. Both Copeland and Stoke were not just traditionally Labour but strong Leave areas while in Stoke UKIP came in second place. With Labour in disarray and Brexit eating into its Midlands and Northern heartlands Conservative ministers now wondered whether the time was right to go all out for a general election, win a big majority and steamroller a Brexit deal through Parliament by 2019, still leaving them three years left in government. All now hinged on whether Theresa May would agree.

Notes 1. www.gov.uk/government/speeches/eu-referendum-outcome-pm-statem ent-24-june-2016. 2. Anthony Seldon, with Raymond Newell (2019). May at 10 (London, Biteback Publishing, p. 41). 3. Migration Observatory (July 2020). Net migration to the UK. 4. www.ukpol.co.uk/theresa-may-2016-speech-to-launch-leadership-cam paign/. 5. Office for National Statistics (March 2016). Towns and cities analysis, England, Wales.

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6. www.conservativehome.com/parliament/2016/10/britain-after-brexita-vision-of-a-global-britain-theresa-mays-conservative-conference-speechfull-text. 7. www.telegraph.co.uk/news/2016/10/05/theresa-mays-conference-spe ech-in-full/. 8. Greg Clark, Institute for Government (January 2021). Ministers reflect. 9. Suzanne Heywood (2021). What does Jeremy think? (William Collins, p. 465). 10. David Cameron (February 22, 2016). Speech to the House of Commons. 11. House of Commons Foreign Affairs Select Committee (July 19, 2016). Equipping the Government for Brexit. 12. David Cameron (February 22, 2016). Speech to House of Commons. 13. www.conservativehome.com/parliament/2016/10/britain-after-brexita-vision-of-a-global-britain-theresa-mays-conservative-conference-speechfull. 14. Anthony Seldon, with Raymond Newell (2019). May at 10 (London, Biteback Publishing, p. 121). 15. www.telegraph.co.uk/news/2016/10/05/theresa-mays-conference-spe ech-in-full/. 16. The government’s negotiating objectives for exiting the EU (January 17, 2017). www.gov.uk/government/speeches/the-governments-negoti ating-objectives-for-exiting-the-eu-pm-speech. 17. Ipsos MORI (October 2016). Political monitor.

CHAPTER 16

The Gamble That Failed

A week after returning from an Easter walking holiday in North Wales Prime Minister Theresa May announced to an astonished public on April 18, 2017 that she intended calling a general election for June. On numerous previous occasions since her accession the previous July she had rejected the idea of an election. Her biographer said that the election was the ‘pivot’ of her premiership. Before it she had enjoyed a honeymoon of almost a year. After it she ‘endured two years of the most sustained attack on any Prime Minister in modern history.’1 Yet there was nothing misjudged about the decision, its reasoning or its timing. For some months it had been clear that May’s slender parliamentary majority of 17 was inadequate to withstand the inevitable backbench revolts from both Remainers and Leavers as the Brexit legislation ground its way through the voting lobbies. The battle to pass Article 50 which set Brexit in motion was a portent of what would follow (see Chapter 15). She was also constrained by the Fixed Term Parliament Act which set a five-year term for the government, meaning she was bound to hold the next general election in 2020, just months after the UK would be leaving the EU when the political and economic environment was likely to be at its most turbulent. In practice this Act could be overturned in Parliament but to do so required a two-thirds majority. In addition after almost a year as Prime Minister May still enjoyed popularity. This was unlikely to last as battles over Brexit got underway. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_16

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May was also keen on implementing her agenda to rectify the grievances highlighted by the Leavers in the referendum with more spending on housing, education, industry and infrastructure, spending which spelled an end to austerity but brought her into conflict with the Treasury and her more fiscally cautious Chancellor, Philip Hammond. In short she needed her own personal mandate, a big parliamentary majority that could steamroll through any opposition from the Commons, the Cabinet and even her own party. If she could achieve such a mandate from the electorate the possibilities were immense: she could be Prime Minister until 2022 and with Brexit delivered even expect to win another term at the end of which she would still only be 71. Ten years in office would be ample for her to deliver her domestic agenda and make her mark in history. But however sound the reasons for going to the country they were no guarantee she could win. What appeared to turn the decision to hold an election from a reckless gamble to a one-way bet in May’s favour was the disarray among the opposition. Soon after the referendum, Labour MPs, furious at their Eurosceptic leader Jeremy Corbyn’s lukewarm support of Remain and blaming him for the Leave win and Labour’s poor performance generally in opinion polls, attempted a coup with 21 of his Shadow ministers quitting (see Chapter 15). Corbyn easily saw off a leadership challenge, winning more votes among party members than when he was originally elected leader in 2015. Labour was therefore stuck with a leader who was popular among his new, young and left-wing membership which kept him in power but despised by much of his own parliamentary party and out of touch with its working class voters. Brexit was also upsetting traditional voting patterns. Corbyn’s Euroscepticism—during the referendum he said his passion for staying in the EU was ‘seven out of ten’—alienated Remainers in the party and the country but conversely failed to placate Labour Leave voters in the Midlands and the North who were increasingly a target for Theresa May with her appeal to the ‘just about managing.’ A BMG Research poll in September 2016 showed that almost half of unskilled workers believed Corbyn to be an ‘election loser’ and only 19% believed him a winner while just 22% thought he was ‘in touch with voters.’2 Opinion polls confirmed that Labour’s lacklustre leader was slipping behind Theresa May, still in her honeymoon period. In February a byelection in Copeland, Cumbria, a Leave-voting but long-standing Labour constituency in the North West, was won by the Conservatives for the first

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time since 1924. An Ipsos MORI poll in March 2017 found that half the public were satisfied with May whereas only 23% said the same about Corbyn. In April the same pollster said that the Conservatives led on four out of five of the public’s priorities while May’s personal ratings were even higher than her party’s.3 In April and May a British Election Study poll found that the Conservatives had a lead over Labour of 41–27%.4 On May 4, with the general election campaign underway, local elections saw the Conservatives gaining 563 council seats with Labour losing 382 while a Conservative, Andy Street, won the new post of Mayor of the West Midlands in what was a predominantly Labour-held heartland. Theresa May’s decision, and ultimately it was hers, to hold a general election was therefore based on the sound reasoning that she needed a bigger majority and she was likely to get one. The opposition parties, even though they were staring into the abyss, could hardly reject the opportunity of a general election. On April 19, the day after her announcement, MPs voted by the necessary two-thirds majority stipulated by the Fixed Term Parliament Act to bring forward the next election to June 8. Early forecasts suggested May’s majority could be as large as 100 while 60 seemed easily attainable. The only question was whether voters would be sceptical about her stated rationale for forcing them into an election only two years after the last one. She argued that she needed ‘strong and stable leadership’ to see the country through Brexit negotiations, domestically and with the EU. It was pretty clear that what she wanted was entirely political, namely having more Conservative MPs to support her, but as the local elections on May 4 indicated, this bid for greater power did not appear to damage her chances at this stage.

The Campaign Falls Apart As the electioneering got underway the Conservative campaign machine made the first of many mistakes. Deciding that as May was more popular than her party and her ministers it opted to make her the centrepiece of their campaign using the slogan ‘strong and stable.’ The trouble with putting the media spotlight on May was that her interpersonal skills were not her strongest point, she was often ill at ease with the media and shy in public and tended to come across as reserved and unemotional. She was uncomfortable being the centre of attention and refused to join a TV debate with party leaders which went ahead without her. Media critics soon derided her as ‘the Maybot’ and her repeated mantra of ‘strong

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and stable’ only added to her robotic image. Her party’s chances would have fared better had the campaign not been built around herself but instead presented her as a unifying mother of the nation figure above the electioneering fray and allowed her ministers to feature more prominently. In contrast the exact opposite now occurred with her opponent, Jeremy Corbyn. After months of negative media coverage and consistently poor results in opinion polls Corbyn had everything to gain and little to lose by being in the full glare of an election campaign. But campaigning was his greatest strength since he had practised it all his political life in support of various causes. He was fully at ease with the public, exuded empathy and in TV media interviews despite aggressive questioning from journalists came across as reasoned, polite and articulate. Media attempts to resurrect stories of his alleged past sympathies for various revolutionary causes cut little ice with many voters for whom these were mostly ancient history. The Conservative Party campaign was also hampered by disputes at the top about how it should be managed as well as by a disastrous manifesto. Although the manifesto contained pledges to end austerity by increasing NHS spending, controversially revive grammar schools, cut immigration and on Brexit leave the single market and the customs union it was the proposal on social care that dominated the headlines. Plans to reform the funding of the creaking social care system had been kicked down the road by successive governments because reform was simply too difficult and controversial, not helped by political parties using it as a political football. Whereas the NHS was funded directly by taxes, social care was funded from local authorities plus individuals’ own money which included the proceeds from the sale of their homes in the case of residential care. This created the anomaly that a person with cancer could receive free medical care in hospital while someone with dementia and assets of more than £23,250 who went into residential care could lose their home to fund the fees. An earlier report, the 2011 Dilnot Commission, had proposed a cap on the maximum the person’s own assets could be used to pay fees but this too was shunted into the sidings by the government. As voters had little idea about how care was funded and even thought it was free, even just mentioning it opened up a Pandora’s Box, but May believed such a major area of policy should be addressed. The 2017 election manifesto now proposed a different approach by creating, not a cap on care costs, but raising the minimum to help those with modest to medium assets. It suggested raising this threshold above which a person

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would have to pay for their care from £23,250 to £100,000 but in a bold, even rash move also applying it to homecare as well as residential care costs, taking the fees retrospectively from the sale of the person’s home after their death. The trouble was this still meant an individual having to cover their care costs down to £100,000 and this time on domiciliary as well as residential care. The proposal provoked immediate alarm among the elderly and the middle aged who saw their inheritances threatened, hostile media coverage and fury among Tory MPs. Labour, which had been accused by the Conservatives of introducing a ‘death tax’ during the 2010 general election, now got its own back by accusing May of planning a ‘dementia tax.’ A poll reduced the Conservative lead to single figures. Forced to backpedal May now proposed a consultation on a care cost cap and when needled by journalists saying this U-turn was hardly evidence of being strong and stable, she insisted to derision that ‘nothing has changed!’ The election campaign was then briefly suspended twice after two horrific terrorist attacks, one on May 22 at the Manchester Arena stadium during a pop concert in which 22 people plus the bomber were killed, and a second on June 3 on London Bridge which killed eight people. Such events usually garner support for the Prime Minister but both attacks enabled Labour to claim that cuts in policing by May when she was Home Secretary imperilled law and order. Despite the setbacks, the Conservatives on the eve of election day still looked like winning a majority of 50–60. So there was complete shock when the exit polls at the end of election day on June 8 predicted the Conservatives actually making a net loss of seats. The final result was May’s worst nightmare, a hung Parliament with the Conservatives as the largest party but without an overall majority on 317, down 13, and Labour on 262, up 30. The ruling party needed at least 320 and ideally 326 seats to have an overall majority. The only glimmer of good news for May was that the SNP lost 21 seats thanks to a Conservative surge while UKIP failed to hold its only seat and its share of the vote dropped to 1.8%. Even the SNP result was a mixed message for May. The Scottish Conservatives under a charismatic, female leader, Ruth Davidson, won 13 seats becoming the second largest party in Scotland after the SNP but Davidson was also a fervent Remainer. Although Brexit had a relatively low profile during the election campaign it still dominated voters’ intentions and benefited the two main parties according to the British Election Study as Remainers and those

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favouring a soft Brexit flocked to Labour, irrespective of Corbyn’s vacillation, while Leavers and supporters of a hard Brexit or no deal, gravitated to the Conservatives. Both parties picked up 82% of the votes, up from 67% in 2015 while the Liberal Democrats, Coalition partners in 2010– 2015, added just four seats to make 12. In general Labour did well among young people and middle-class Remain supporters while Conservatives polled well among older voters, ex-UKIP supporters and in working-class pro-Leave areas. It was if the two parties were reversing into each other, the Conservatives becoming the party of the workers and Labour that of the middle classes. The real winner of the election was Jeremy Corbyn just as the real loser was Theresa May. He began the campaign behind May in terms of voter appeal and caught up with her as the weeks unfolded. As one commentator later wrote: ‘The Conservative strategy to pin so much on their “strong and stable” leader appears to have been a spectacular mistake which ultimately cost them an overall majority.’5 The Prime Minister’s election gamble, which at the beginning seemed no gamble at all, turned out to be a disaster thanks to a bungled Conservative campaign, its over-reliance on Theresa May and its underestimation of Corbyn’s skills as a campaigner. The election consolidated Corbyn’s position as party leader and he became an even greater subject of adulation among young supporters to the bafflement of the media which dubbed it Corbynmania. When he appeared at the famous annual rock concert in Glastonbury, Somerset on June 24 and in a rousing populist speech told the audience that the election showed ‘the commentariat got it wrong, the elites got it wrong’ he received an ovation normally reserved for Glastonbury’s rock stars. In contrast a miserable Theresa May, determined not to quit, now contemplated how she could get through the next fraught months without an overall majority and prevent Corbyn from getting his hands on the keys to Number 10, Downing Street. Technically she needed 326 seats out of the total 650, but in practice as Sinn Fein in Northern Ireland with seven seats always declined to take up their seats in the House of Commons she could get by with 320, and therefore needed the guaranteed backing of just one of the smaller parties. A deal with the SNP was out of the question for both parties while the Liberal Democrats, decimated by voters after their partnership with the Conservatives during the Coalition 2010–2015, were disinclined to repeat the experience and

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anyway were opposed to Brexit. That left the socially-conservative, proBrexit Democratic Unionist Party (DUP) in Northern Ireland with its ten MPs as the only option. After two weeks of negotiations the Conservatives and DUP agreed to a ‘confidence and supply’ agreement in which the DUP would support the government on confidence motions and key votes like the Budget, finance and money bills and of course Brexit legislation. In return Northern Ireland would receive an estimated £1bn of extra public spending. The agreement, though not a coalition, kept the Conservatives in government but was sharply criticised by opposition politicians across the political divide, by some Conservative backbenchers and notably by former Conservative Prime Minister John Major, who had worked hard on the peace process that eventually became the Good Friday Agreement in 1998 and ended the Troubles. One objection to the May agreement with the DUP was that it meant the British Government was allied to one political party in Northern Ireland when its aim ever since the Good Friday Agreement had been to keep neutral in the province’s local politics, another was that Northern Ireland had voted Remain while the DUP was pro-Leave and a third was that the DUP was adamantly opposed to any border appearing between Northern Ireland and mainland Britain such as could occur from Brexit. All of these issues, particularly the last, posed potential problems during future Brexit negotiations. Although the deal kept the Conservatives in power and Theresa May in Downing Street her position was still fragile, especially within her own party. Her apparent lack of empathy, highlighted during the election, was put under the spotlight again after a horrific fire in a 24-storey block of flats, Grenfell Tower, in West London on June 14 in which 72 people died. That the residents in the social housing flats were mainly low income in the richest part of London which included Kensington Palace only accentuated the inequalities that May had recognised. But unlike Corbyn who visited the residents and survivors, she took official advice and initially stayed away from them attracting fierce criticism among both colleagues and political opponents for her apparent lack of feeling which she later denied but which only added to her ‘Maybot’ image. Her handling of the disaster fuelled further scepticism within her party that she could survive the next few months, let alone lead it into the next election in 2020. There was a feverish summer of rumoured plots from both Remainers and Brexiteers within her party which came to nothing because there were no serious challengers and ministers rallied

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to her cause, terrified at the prospect of a Corbyn government. Her own party’s parliamentary majority gone, propped up by a party opposed to any compromise on a border between Northern Ireland and mainland Britain, despised by many in her own government and faced by a resurgent opposition, Theresa May now had to deliver Brexit in less than two years. Nonetheless ministerial hubris about the simplicity of delivering Brexit persisted. Creating a trade deal with the EU should, one Cabinet minister confidently asserted on BBC radio, be ‘the easiest in human history.’6 The government would soon discover the extent of its misjudgement and the folly of its lack of preparation.

Notes 1. Anthony Seldon, with Raymond Newell (2019). May at 10 (London, Biteback Publishing, p. 193). 2. BMG Research in The Independent (September 23, 2016). 3. Ipsos MORI (March and April 2017). Political monitor. 4. Prof Ed Fieldhouse and Dr Chris Prosser (August 1, 2017). BBC, British Election Study. General Election 2017. 5. Ibid. 6. Liam Fox, International Trade Secretary (July 20, 2017). BBC Today Programme.

CHAPTER 17

Brexit Unravels

During the election campaign and the summer of rumoured plots and doubts about whether Theresa May could survive in office Brexit negotiations had been sidelined. Valuable weeks were lost as the March 31, 2019 deadline for the UK leaving the EU inexorably moved closer. To further complicate negotiations Theresa May’s disastrous election gamble meant that without an overall majority and dependent on the support of Northern Ireland’s Democratic Unionist Party (DUP) she was now exposed both to the latter rejecting any deals they disliked and to backbench revolts from her own party. Remain ministers were now emboldened to stand their ground with the former arguing that Labour had done particular well in Remain supporting areas. May’s new Remainer chief of staff at Number 10 appointed after the election, Gavin Barwell, was even a former MP who had lost his London seat in a strongly Remain constituency. In turn the Brexiteers (as the Leavers were now dubbed) were also flexing their muscles. A flavour of the battles ahead came from Foreign Secretary Boris Johnson who gave a shot across the Prime Minister’s bows with a fiercely pro-hard Brexit article in the pro-Brexit Daily Telegraph newspaper in September stressing the need to leave the single market, the customs union and the jurisdiction of the European Court of Justice and adding in a jibe at Remainers: ‘When people say that they feel they have more in common with others in Europe than with people who voted Leave, I © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_17

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want to say: “But that is part of the reason why people voted Leave.”’1 If May believed bringing Johnson into the Cabinet would silence him she was soon regretting her reasoning. EU negotiators were now unsure whether even if May came to an agreement she could get it passed by her own government, let alone Parliament. They also knew that if they pushed too hard and she was toppled in a coup by Brexiteer ministers they would most likely be dealing with a hardened Leaver like Johnson for whom ‘no deal’ was on the cards. The uncertainty added yet another layer of complexity to an already fiendishly complex scenario. Negotiations were likely to be protracted, detailed and exhausting with just three rounds of talks completed by September. Lofty referendum slogans about ‘Taking control’ were now about trade rules, borders, customs agreements and literally the price of fish. Few voters outside Northern Ireland who put their cross against Leave in 2016 spared much thought to what would happen if a hard border reappeared for trade reasons between the Republic and Northern Ireland. The customs union had barely figured during the referendum campaign, many voters assuming it was the single market. Few Leavers considered whether there should be a transition in which the UK would adhere to EU rules but not be a member state and for how long. Few wondered if future options should be a so-called ‘EEA [European Economic Area]-minus,’ arrangement like Norway, which had never joined the EU but was in the single market and the EEA, in which the UK would remain close to single market rules, or ‘Canada-plus’ based on Canada’s trade deal with the EU in which the UK would be much more loosely aligned with the EU. Then there was settlement of the exit bill and citizens’ future rights, not just the EU’s in the UK but vice versa, and how the UK’s booming financial services sector could ensure minimal disruption and of course fishing rights. In one key area, the future relationship with the EU, the government gave away, agreeing to the EU’s demands that details of the exit Bill like the budget, citizens’ rights and the Irish border (phase 1 or the so-called ‘divorce’ agreement) must first be sorted before any discussions over future trading arrangements (phase 2): the UK had hoped to have both sets of talks conducted together. The unforeseen result of this compromise was that negotiations became bogged down in the detail of the exit arrangements, notably over Ireland. The Conservatives were not the only party grappling with the contradictions of Brexit. Labour had done better than expected in the election with the support of Remainers, particularly young Remainers, and as a

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party was strongly pro-EU. Its industrial heartlands however were proLeave. Corbyn’s own ambivalence about the EU had yet to become an issue among his supporters but his pro-Remain Shadow ministers were determined that Labour would not abandon its pro-EU roots. They called for a transition in which the UK would continue to be part of the single market and the customs union. Reaching out to Labour might have reduced May’s reliance on the Brexiteers in her government and the DUP but she continued to maintain her ‘Brexit means Brexit’ hard line suggesting any hint of compromise was a deviation from the Leave vote. There was little attempt by May to take a cross-party approach, to appeal to the 48% who had voted Remain or to manage expectations among Leavers that it was going to be a long and difficult road while her reliance on the DUP for her parliamentary majority only pulled her further towards the Brexiteers. In addition Tory MPs who supported a ‘hard Brexit’ or a no deal (leaving the European Economic Area and the customs union) joined a revamped parliamentary Eurosceptic body, the European Research Group (ERG), to keep up the pressure on the government and ensure no compromises. Two of its chairmen later became junior ministers. In turn Corbyn, at the height of his popularity, was more interested in toppling the government than helping May, believing one more heave would see himself in Number 10 Downing Street at the head of a left-wing administration. With three rounds of negotiations having become bogged down over the financial settlement Theresa May outlined her thoughts in a speech at Florence, Italy, in September, overlaid with warm words about Europe, and offering an olive branch to Brussels. The UK, she said, would leave the single market and the customs union but she rejected the idea of EEAminus or Canada-plus options for the longer-term relationship ‘as we can do so much better.’ She did however propose a transition, or implementation, period of two years after 2019 in which the UK would adhere to most EU rules, including freedom of movement with a registration system and paying into the EU budget. On the Irish border she was vague. Staying in the EU for five years after the referendum was not exactly what many Leavers had signed up to when they voted, believing ‘Leave means Leave now’ especially when Brexit politicians were promising them that trade negotiations would be easy. But compromise was inevitable, negotiations were in reality never going to be plain sailing and May’s election debacle made them a lot more difficult since she was now having to juggle the factions within her government and party with no majority.2

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The government had agreed to finalise the divorce agreement first (phase 1) before discussions on the future arrangements (phase 2). The three key pillars of phase 1 were the financial settlement, citizens’ rights and the future border between Northern Ireland and the Republic of Ireland. The first two were soon agreed, with reciprocal protection for UK and EU residents, while the UK accepted paying into the EU during the transition period: a figure of £35–39 bn was mooted, considerably less than the £100 bn rumoured. But it was the third pillar, the Irish border, which proved the most intractable challenge. Both sides were committed to upholding the 1998 Good Friday agreement and to preventing a return to any ‘hard’ border with physical customs controls between North and South. But once the UK left the EU, its single market and its customs union a border in theory would have to be reintroduced to monitor goods crossing between the Republic (in the EU) and Northern Ireland (out of the EU), a prospect unacceptable to both the UK and the EU. In effect there were only three solutions, each of them unpalatable—either a border between North and South, a border in the Irish Sea between Northern Ireland and Britain in the Irish Sea or the UK remaining within the EU customs area. The compromise solution was for Northern Ireland to remain in the single market and customs union but this would mean a border between it and the rest of the UK down the Irish Sea which for the DUP and hardline Brexiteers was anathema. The government and the EU therefore came up with the so-called backstop, a pledge that there would always be an open border whatever agreement was signed. If no deal could be agreed then the backstop, in which the UK would remain ‘aligned’ within an EU customs area, would kick in and continue until an agreement could be concluded. In theory therefore the UK could actually never entirely leave the EU if the latter was not prepared to come to a new arrangement. The backstop was outlined in paragraphs 49 and 50 of the joint report issued on December 8 2017. Para 49 said: ‘The United Kingdom remains committed to protecting North–South cooperation and to its guarantee of avoiding a hard border. Any future arrangements must be compatible with these overarching requirements. The United Kingdom’s intention is to achieve these objectives through the overall EU-UK relationship. Should this not be possible, the United Kingdom will propose specific solutions to address the unique circumstances of the island of Ireland. In the absence of agreed solutions, the United Kingdom will maintain full alignment with those rules of the Internal Market and the Customs Union

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which, now or in the future, support North–South cooperation, the allisland economy and the protection of the 1998 Agreement.’ Para 50 added: ‘In the absence of agreed solutions, as set out in the previous paragraph, the United Kingdom will ensure that no new regulatory barriers develop between Northern Ireland and the rest of the United Kingdom…In all circumstances, the United Kingdom will continue to ensure the same unfettered access for Northern Ireland’s businesses to the whole of the United Kingdom internal market.’3 The backstop was supposed to be a technical clause so both sides could move on to phase 2 and for the moment it worked. However once the penny dropped that the backstop implied the UK remaining within a customs arrangement the DUP and hardline Tory Brexiteers were unhappy from then on and it would lead eventually to May’s downfall. As her biographer commented: ‘The backstop brought down May’s Brexit deal and it brought down May.’4 In March 2018 following exhaustive discussions with her ministers May again set out her views on future relations with the EU in a conciliatory speech at London’s Mansion House which recognised the need for compromise. She emphasised that the referendum vote meant ‘a vote to take control of our borders, laws and money, a vote for wider change, so that no community in Britain would ever be left behind again.’ She said any agreement ‘must endure’ without a return to the negotiation table, must protect jobs and must ensure the continuation of the UK union of England, Scotland, Wales and Northern Ireland. Again, she rejected the Norway and Canada models as she had done in her Florence speech but she also accepted there might be areas like state aid and regulation where the UK would remain ‘in step with the EU.’5 The EU then proceeded to put a spanner in the works with its draft Withdrawal Agreement which included the legal version of the previous December’s joint report. This time it argued that to avoid a hard border between North and South in Ireland, Northern Ireland would have to remain within the customs union along with full regulatory alignment meaning checks between it and the rest of the UK which May could never accept. Another compromise was worked up though a less noticed paragraph said the backstop would apply ‘unless and until’ another solution was agreed. The text proposed ‘full alignment with those rules of the Union’s internal market and the customs union which, now or in the future, support North–South cooperation, the all-island economy and the protection of the 1998 Agreement, and that it applies unless and until

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an alternative arrangement implementing another scenario is agreed.’6 In effect if the EU did not like any ‘alternative arrangement’ then the UK could be stuck in the backstop and hence the customs union indefinitely. Although by March 2018 it looked like negotiations were on track to meet the deadline to leave in March 2019 with a transition period lasting until December 2020 the Irish backstop continued to be unresolved. Various fudges such as the New Customs Partnership and the technologydependent ‘maximum facilitation’ (max-fac) option were proposed but always came back to the same question: were Northern Ireland and the UK in a customs union or not? If they were in the customs union Brexiteers such as the European Research Group of backbench Tory MPs and some Cabinet ministers were up in arms arguing that meant the UK was still potentially stuck in the EU after Brexit. If they were out the customs union then the EU wanted an assurance of no hard border between North and South meaning a border down the Irish Sea between Northern Ireland and mainland Britain, unacceptable to the DUP. A compromise favoured by May was a level of regulatory alignment with the EU through a common rulebook, a free trade area for goods and different rules for services. The Brexiteers were unhappy arguing it meant the UK adhering to ‘a European rulebook,’ and after a day’s Cabinet brainstorming session at the Prime Minister’s country residence Chequers two of her Cabinet ministers quit, including David Davis, the Secretary of State for the Department for Exiting the European Union responsible for Brexit negotiations, and Foreign Secretary Boris Johnson. The rest of the Cabinet however endorsed the May proposals. Despite the rancour the White Paper, The Future Relationship between the UK and the EU , was published finally on July 12. In a foreword, which promised the UK would leave the single market, the customs union and the European Court of Justice, the Prime Minister forlornly insisted ‘pragmatism and compromise’ would still be needed from both sides. The paper backed a close relationship across a wide number of areas from the economy to science, data and technology. It proposed a free trade area for goods which ‘fully respects the integrity’ of the single market and customs union through a phased Facilitated Customs Arrangement, a watered down version of a customs union in which the UK and the EU would effectively be in a combined customs area. The UK would apply the EU’s tariffs and trade policy for goods intended for the EU while the UK would also apply its own tariffs and trade policy for goods intended for consumption in the UK and there would be a ‘common

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rulebook.’ As for Northern Ireland, instead of previously mooted convoluted trade arrangements the paper proposed a backstop, or protocol, in which should no permanent settlement be agreed at the end of the transition period to avoid hard borders there would be a ‘temporary customs arrangement’ tying the UK into the EU customs territory details of which were published in an earlier paper the previous month. The paper stressed that the temporary customs arrangement would only end once a permanent future customs agreement was agreed after the transition period but crucially gave no time limit. As the EU had to sign up to any future agreement this meant in theory negotiations could drag on for years with the UK still stuck in a temporary arrangement until such time as the EU agreed an alternative. Working on the principle that ‘nothing is agreed until everything is agreed’ the future Withdrawal Agreement could only be passed along with a framework for the future relationship between the EU and the UK.7 The next step was to get the Withdrawal Agreement through Parliament although Theresa May had the almost impossible task of satisfying her divided Cabinet, a divided party, Parliament, despite her lack of an overall majority, the EU in Brussels and 27 EU member states. Compromise was inevitable but any one of these groups could derail her plans and needless to say they did. Brussels was suspicious of any hint that the UK was ‘having its cake and eat it’ by leaving the EU but still benefiting from a customs union. But it was the ‘temporary’ Irish backstop which again caused the most controversy for Brexiteers feared the UK would be stuck permanently in a customs union without a specified time limit and unable to leave because the EU could never agree an alternative. More Cabinet resignations followed over the backstop, including Dominic Raab, the Brexit Secretary who had replaced David Davis. However the Withdrawal Agreement was finally passed by EU leaders at a special meeting of the European Council on November 25 in a 599-page document which was also accompanied by a brief political declaration setting out the future relationship between the UK and the EU.8 Getting the deal through the EU was a triumph but passing it through a fractious Parliament with many of her own MPs in open revolt over the backstop was another question altogether. Under the terms of a previous amendment to the EU (Withdrawal) Bill the previous year a final deal had to be passed by a majority of MPs in a ‘meaningful vote.’ Its successful passage was not helped by a legal opinion from Geoffrey Cox, the Attorney General, on November 13, eventually published at

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Labour’s instigation on December 5, which said the UK could indeed find itself trapped permanently in the backstop’s so-called temporary customs arrangement to the fury of Brexiteer Tory MPs.9 With Brexiteer MPs in uproar, Remainers girding for a fight and Theresa May fearful of losing the meaningful vote she decided on December 11 to postpone it altogether in the hope of winning concessions from Brussels with a time limit on the backstop. Her decision provoked an angry minority of Tory MPs under party rules to call for a vote of confidence in her which she won by 200–117, hardly a ringing endorsement, while the EU made it clear there would be no renegotiation of the Withdrawal Agreement its leaders had all just signed. Faced with the prospect of a no-deal Brexit if a deal could not be agreed, which many Brexiteer MPs anyway increasingly favoured, Remain MPs across both Conservative and Labour parties now pressed for a second referendum as a way out of the impasse which May opposed. When the delayed meaningful vote was then held in the Commons on January 15 it resulted in a catastrophic defeat for the government with 432 MPs, including 118 Tories as well as all the DUP MPs, rejecting the Withdrawal Agreement against 202 in favour. The margin was so huge it raised the question as to whether the government itself could survive so May then called for a confidence vote in her government to rally the troops which, inevitably, she won as no Brexit MPs nor the DUP wanted another general election. It kept her in office but it did not end the agony of endless parliamentary reversals. The clock was ticking down to the deadline of March 31 when the UK under Article 50 would leave the EU and begin its transition period and still there was no parliamentary agreement. In February the party system began to tear under the impact. Eight Remain MPs broke away from Labour to form their own independent group to be joined by three Remain Tory MPs. Some of their complaints were about the direction of their respective parties, too left in Labour’s case and too right-wing in the Conservatives’ but Brexit was the inspiration of their split. In early March after some minor revisions to the draft agreement the Attorney General Geoffrey Cox delivered another judgement to see whether legally the backstop could now be regarded as temporary and that the UK if it wished could leave it without the backing of the EU. If Sir Geoffrey ruled this was indeed the case it would mollify the European Research Group of Brexiteer Tory backbenchers and help ensure the Withdrawal Agreement could be passed in the Commons. Unfortunately he said little had changed since his previous judgement, telling the

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Commons on March 19 ‘the legal risk as I set it out in my letter of the 13th of November remain unchanged… and [the UK would have] no internationally lawful means of exiting the Protocol’s arrangements, save by agreement.’10 In other words, the UK could be stuck in the backstop for years to come until such time that the EU agreed a deal. This was not what the Brexiteers wanted to hear. When it came to a Commons ‘meaningful vote’ for the second time on the Withdrawal Agreement the government’s defeat was almost as disastrous as its first the previous January, by 391–242. All the DUP MPs voted against it as did most members of the European Research Group of Brexiteer Tories. There were now just 17 days before the UK was scheduled to leave the EU on March 29 and still there was no sign of any parliamentary agreement. Leaving without any deal was now a real possibility meaning crippling tariffs and trade chaos which Remain MPs and supporters of a soft Brexit were determined to avoid. Assailed from the Brexit right, May now found herself under attack from Cabinet ministers and MPs who were determined that the UK should not quit the EU without a deal. A Labour amendment ruling out no deal was passed by MPs with 13 government ministers defying their party whip to abstain instead of opposing it though the vote was not binding on the government. If the prospect of no deal was reputed to be a bargaining tool by the UK to force the EU into diluting the backstop which was highly debatable then its impact, now Parliament had ruled it unacceptable, was anyway muted. It was now highly unlikely the March 29 deadline to leave could be met: a Commons motion to ask the EU for a delay was passed overwhelmingly in a free vote in which Tory MPs were allowed to vote as they wished. The parliamentary drama now entered a new stage. Following the two defeats of her Withdrawal Agreement in ‘meaningful votes’ the Speaker of the House of Commons ruled that a third one could not take place unless the proposition put before the House was significantly changed. May went to Brussels on March 21 to ask for a three-month extension to June. Instead the EU leaders settled on May 22 assuming the Commons voted for a deal by March 31; if not then the exit date would be April 12. It was humiliating for the Prime Minister to beg for an extension and thus hand over control of the Brexit date to the EU, even though she herself had set the deadline by invoking Article 50 the previous year. Furthermore there was no guarantee the extra time would make any difference since there was still no sign of any Commons agreement. An added complication was that after April 12 the UK would have to participate in the 2019

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European elections set for June, a prospect which raised the prospect of a UKIP landslide as Leave voters registered their fury at the delays over Brexit. The view among some EU leaders was that May’s days were numbered and that even with an extension she could never deliver an agreement: the concern for them was that if the likely successor, Boris Johnson, took over as Prime Minister then their worst fear, no deal, was back on the table as a possible outcome. The options now for the Prime Minister were to revoke Article 50 which May would never do, leave without a deal or pass a deal in the Commons. Her lack of a majority meant she could never be sure MPs would back the agreement while it was now clear there was a fierce battle between Parliament and the Executive with the former determined to take control of the Brexit process. She was so weakened that MPs even staged a series of ‘indicative’ votes’ on alternatives to her deal but Parliament was so divided none of them received a majority, though the closest to win was a motion to remain in a customs union. Ministers now persuaded the Speaker that with some tinkering to the proposal a third ‘meaningful vote’ could be held so May decided to make a last-ditch gamble on the day the UK was supposed to leave the EU, March 29, and put her Withdrawal Agreement to the Commons again: she lost the vote for the third time with 34 of her backbenches and all the DUP MPs voting against. The Brexiteers argued she should just abandon any further attempts at parliamentary backing and opt for a no deal exit on April 12 which would have led to a flurry of Cabinet resignations not to mention impose huge damage to the UK economy. As it happened when she opted instead to request the EU for a further extension she still lost two middle ranking ministers bringing the total number of ministerial resignations over Brexit since June 2018 to nineteen. Belatedly she now decided to try and bring Labour on board despite having spent the last year tacking to the right to appease the Tory Brexiteers and the DUP. Critics argued she should have offered talks with Labour from the start in 2016 not now, with one senior Tory MP saying even as late as early 2019 Labour might have been prepared to cooperate.11 As expected, the talks got nowhere, Labour leader Jeremy Corbyn and his Shadow Brexit secretary Sir Keir Starmer suspecting she would soon be out of office anyway. Labour itself had Brexit troubles of its own, being almost as divided as the Conservatives. Although a majority of the party membership and parliamentary party were pro-Remain, many Labour voters especially in

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the Midlands and North were strongly pro-Leave. These were the socalled ‘left behind’ areas which Theresa May was attempting to woo but which Labour needed back in the fold if it was ever to win a general election again, particularly now that the SNP dominated Labour’s former heartland of Scotland. Labour leader Jeremy Corbyn, a long-standing Eurosceptic from a left-wing stance, was keen to win back the Labour Leave voters in spite of his pro-EU party. While backing a soft Brexit and rejecting no deal as an option he refused calls to hold a second in– out referendum despite support for one from many of his own Shadow Cabinet ministers. In protest seven Labour MPs resigned in February 2019 to form a breakaway Independent Group. Further pressure on the Labour leadership came from the growing mass movement for a second referendum led by campaign group People’s Vote. In October 2018 some half a million supporters joined a march in London addressed by Remain politicians across the political divide including the Labour Mayor of pro-Remain London, Sadiq Khan. A second rally was held in March 2019. Following May’s request EU leaders now agreed to a further extension of the deadline to October 31 without making any changes to the agreement. It was increasingly clear that May would no longer be Prime Minister by then with pressure mounting on her from party members, the parliamentary party and her Cabinet for her to quit over her failure to deliver Brexit. The extension also meant the UK having to participate in the European elections on May 23 which saw the Tories take a drubbing gaining just 9% of the vote while a new Brexit Party, set up by ex-UKIP leader Nigel Farage only weeks before in April, won an astonishing 30%. Out of the 73 UK seats in the European Parliament, the new Brexit Party came first with 29, the Liberal Democrats came second with 16 and the Conservatives came fifth with four seats. With a turnout of just 37% and the electorate knowing the UK would be out the EU within the year so the European election was a pointless poll, the result was more an expression of rage by Leave supporters who expected the UK to have left the EU. Remain supporters also abandoned Labour, many voting for the proRemain Liberal Democrats, finally forcing Corbyn to commit to a second referendum on any Brexit deal with an option to Remain. On May 24, just before the Euro-election results, delayed until all member states had completed their polls, were declared, May tearfully announced outside 10 Downing Street that she would resign as Conservative Party leader on June 7 and consequently as Prime Minister when

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her successor was chosen. In her brief speech she emphasised the importance of compromise, how her successor would have to find consensus in Parliament and that it could only be reached ‘if all sides of the debate are willing to compromise.’ She was referring as much to her own divided politicians as the EU. It was inevitable from the start in 2016 that the final deal would involve give and take on all sides and so it proved with the agreement on December 24, 2020 following the time-honoured EU fashion of marathon last-minute negotiations and brinkmanship. Theresa May’s problem was not the bilateral discussions with the EU but the deep divisions on her own side aggravated by her desperate parliamentary weakness, the consequence of her own decision to gamble on an election in 2017. She was assailed on all sides for her handling of the Brexit negotiations, often but not always, unfairly. A different Prime Minister might have taken a more consensual view from the start, regarding the small referendum majority for Brexit as an indication that while the country wanted to leave the EU it did not want a brutal sundering of relations through no deal or a hard Brexit. She could have attempted to heal the wounds of the referendum by emphasising that 16m voters did not want to leave and they should not be ignored. She might have slapped down Leave politicians who claimed leaving was easy and told the nation instead that on the contrary negotiations would be a long grind. With a more consensual approach she might have forged links with those Labour MPs who believed the referendum result must be honoured but not at the expense of their constituents in a hard Brexit or no deal. Instead May did none of these, repeated the meaningless mantra of ‘Brexit means Brexit,’ insulted Remainers by her reference to ‘citizens of nowhere,’ maintained that no deal would be better than a bad deal—whatever a bad deal was supposed to be—and generally focused on appeasing the hardline Brexiteers within her party as if the whole Brexit issue was just an internal Tory party problem. Her approach mystified many moderate Tories who initially saw her as neither ardent Remainer nor hardline Brexiteer and therefore well placed to steer a balance between the bitterly opposed sides. As one pro-Remain Tory MP told this author: ‘Towards the very end she told some of us privately that she would never leave without a deal. Had she trusted us with that earlier on, we might have trusted her on the need or otherwise for the meaningful vote. But too late by then.’

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Her strategy then proved a disaster when her decision to hold an election backfired, she lost her overall majority and her minority government became dependent on the support of hardline Brexiteers. Once she lost control of the House of Commons it made any agreement she produced with the EU meaningless unless her party Whips could make the voting arithmetic add up. She should have quit, most likely making way for a hardline Brexiteer who could as a result at least command a working majority. Instead she insisted on continuing in what became a long goodbye ending in failure. For the Brexiteers compromise was indeed a dirty word whether on the backstop or a customs union but the more she attempted to appease the Brexiteers in the European Research Group and the DUP the more she alienated her Remain MPs and the Labour opposition in a Parliament which was largely anti-Brexit. She had hoped that by bringing Brexiteers into her government she could keep them inside the tent. Instead when they feared she was giving away too much they simply resigned like Boris Johnson who then became the heir apparent. The EU was hardly an innocent bystander in this Greek tragedy. Terrified at the unlikely prospect of the UK becoming a ‘Singapore on the Thames’ undercutting European industries with light touch regulation and state aid Brussels negotiators tried to keep the UK within the EU’s gravitational orbit in return for free trade access to the single market. Negotiators accused the UK of wanting to have their cake and eat it or ‘cherry-picking’ by wanting to benefit from frictionless trade with the EU without following its rules. The Brexiteers argued that leaving the EU meant moving away completely from its rules and regulations, not still being tied through a customs arrangement or a backstop for otherwise what was the point of leaving. The UK needed to continue trading with its biggest partner but so did EU members; Brexiteers maintained that therefore the UK did not have to compromise its independence just to get a free trade deal and that May was giving away too much. To Brexiteers leaving without a deal was a genuine nuclear option if the EU played hardball. No deal might cripple the UK economy in the short term but it would also wreak havoc in the EU so it was also the worst outcome for EU negotiators. Theresa May used to say no deal was better than a bad deal but it was never a serious alternative, not least because her Remain Cabinet ministers would never support it, as EU negotiators knew. They called her bluff.

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Once May resigned however the political dynamics were set to completely change. The favoured successor was Brexiteer Boris Johnson and were he to be elected by the predominantly pro-Brexit Conservative Party membership he would pack his government with pro-hard Brexit ministers and go for a hard deal. If he could not get his way then no deal would be back on the table as a serious option. In that scenario the parliamentary challenge would reverse with Remainers now threatening to bring down the government instead of the Tory Brexiteer backbenchers. As if EU negotiators were not already baffled by the complexities of British politics negotiations were about to become even more challenging.

Whatever Happened to ‘the Left Behind?’ During her resignation speech May claimed she had addressed some of the wider reasons for the referendum vote by ‘bringing an end to austerity’ and creating long-term new jobs through the so-called Industrial Strategy, maintaining her government was delivering the pledges she made after becoming Prime Minister in July 2016. In reality very little of substance was achieved during her three years, so engrossed was she in Brexit with neither time nor a parliamentary majority for implementing wider policy programmes. Her great regret from her premature departure from office was being unable to make a mark especially in social policy, and help those left behind by global change, an ambition she never had the chance to achieve. The Northern Powerhouse, a brainchild of former Chancellor Gordon Osborne to deliver investment to the North of England, slipped down the political agenda. The 256-page Industrial Strategy White Paper published in November 2017, a wish list for British business and industry after Brexit, was long on aspiration but short on application. In its foreword May outlined her one-nation approach, writing that ‘it epitomises my belief in a strong and strategic state that intervenes decisively wherever it can make a difference.’12 A later analysis of the effectiveness of the strategy in February 2020, over two years after it was produced, by the panel of business leaders called the Industrial Strategy Council set up to advise the government, still found that ‘at present, awareness and understanding of the Industrial Strategy among companies appears to be patchy.’13 The council was itself abolished in March 2021. There were also various reviews and initiatives into employment, gender equality at work, the environment, mental health and gay rights but, as her biographer noted, ‘the larger story was one of incompletion.’14

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The so-called ‘left behind’ were unlikely to feel much benefit economically either from the Leave vote in the three years since the referendum. Uncertainty over the final deal meant reduced private sector business investment, a weaker pound and lower growth. Although ‘project fear’ warnings from Remainers of a meltdown following a Leave vote proved to be wide of the mark GDP growth was still below average at 1.7% in 2016, 1.7% in 2017, 1.3% in 2018 and 1.3% in 2019. The Institute for Fiscal Studies (IFS) estimated in October 2019 that GDP was 2.5–3% below what it would have been without a Leave vote, equivalent to a loss of £55–£60 bn to the economy, while business investment was at its lowest ever outside a recession, flatlining in the 12 quarters since the referendum. The IFS added that ‘Brexit-related uncertainty has played an especially damaging role.’15 There was also little relief for those of working age on welfare with the fourth year of a benefit squeeze going ahead and 10m families having lost £420 a year as a result. In-work poverty was increasing along with the cost of subsidising private tenants through housing benefit. These recipients of welfare, especially those who were in work but on low wages, were the classic ‘left behind’ whom May had promised to help.16 However the picture was not all negative. Employment and earnings growth remained strong, confounding those who said Brexit would cause job losses, though of course the UK was still in the EU. Part of the reason for the buoyant jobs market was that firms, reluctant to invest in expensive technology because of uncertainty over the future, hired cheaper staff instead whom they could always make redundant if necessary, thereby also exacerbating the UK’s already poor productivity record.17 As a result of higher tax revenues and lower interest costs the public finances were improving and May was accurate in her resignation speech to say austerity, one of the causes of the Leave vote, was coming to an end. The annual deficit, the amount the government borrows each year to cover any shortfall, which in the depths of the recession had hit 10%, was down to 1.8% by the financial year ending March 2019, the lowest since 2002.18 The Office for Budget Responsibility in its March 2019 report on the Spring Statement noted: ‘The Government has once again decided to loosen discretionary fiscal policy – albeit modestly. This is the sixth time in the six Budgets, Autumn and Spring Statements since the EU referendum that the Chancellor has loosened the purse strings. Taken together, these discretionary moves have significantly eased the squeeze on public spending that he inherited from his predecessor.’19

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The OBR however warned that uncertainty over Brexit was casting a cloud over the economy. Delivering a deal was now vital economically and politically but there was no reason why the current parliamentary stalemate should not continue and another Brexit deadline be missed. The next Prime Minister faced a monumental set of challenges but the prize was the political sweet spot, to negotiate a deal, win a general election with the support of Labour Leave voters and deliver Brexit by 2021. Such an outcome was almost absurdly ambitious, requiring the traits of charisma, populism, cunning and brinkmanship: it did not need much insider knowledge to know which candidate to be the next Prime Minister combined all four.

Notes 1. Daily Telegraph (September 15, 2017). 2. Prime Minister’s Florence speech (September 22, 2017). www.gov.uk/ government/speeches/pms-florence-speech-a-new-era-of-cooperationand-partnership-between-the-uk-and-the-eu. 3. Joint UK/EU report (December 8, 2017). 4. Anthony Seldon, with Raymond Newell (2019). May at 10 (London, Biteback Publishing, p. 356). 5. Prime Minister’s speech on the future economic partnership with the European Union (March 2, 2018). www.gov.uk/government/ speeches/pm-speech-on-our-future-economic-partnership-with-the-eur opean-union. 6. European Commission. Draft Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community (March 19, 2018, p. 108). 7. HM Government. Technical Note. Temporary Customs Arrangement (June 7, 2018). The future relationship between the United Kingdom and the European Union (July 2018). 8. Agreement on the withdrawal of the United Kingdom of Great Britain and Northern Ireland from the European Union and the European Atomic Energy Community, as endorsed by leaders at a special meeting of the European Council on 25 November 2018/Political declaration setting out the framework for the future relationship between the European Union and the United Kingdom (DExEU). 9. Attorney General’s legal advice to Cabinet on the Withdrawal Agreement and the Protocol on Ireland/Northern Ireland (December 5, 2018). www.gov.uk/government/publications/exiting-the-eu-public ation-of-legal-advice.

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10. www.parliament.uk/business/news/2019/march/attorney-generals-sta tementon-joint-instrument-and-unilateral-declaration/. 11. Anthony Seldon, with Raymond Newell (2019). May at 10 (London, Biteback Publishing, p. 609). 12. Department of Business, Energy and Industrial Strategy (November 27, 2017). Building a Britain for the future. 13. Industrial Strategy Council (February 2020). Annual report. 14. Anthony Seldon, with Raymond Newell (2019). May at 10 (London, Biteback Publishing, p. 538). 15. Institute for Fiscal Studies (October 8, 2019). Recent trends to the UK economy. 16. https://www.ifs.org.uk/spring-statement-2019. 17. Institute for Fiscal Studies (October 8, 2019). Recent trends to the UK economy. 18. Office for National Statistics (September 2019). UK Government debt and deficit. 19. Office for Budget Responsibility (March 2019). Economic and fiscal outlook.

CHAPTER 18

Boris and the Brexiteers

The campaign to succeed Theresa May as leader of the Conservative Party and Prime Minister began on June 7, 2019, her official resignation, with 13 MPs putting their names forward, the party’s largest ever number of candidates for a leadership contest. Most of them had no hope of winning. To add urgency to the race a by-election result came out the same day in which the Conservative candidate in the pro-Leave Labour constituency of Peterborough in Cambridgeshire was pushed into third place. The Brexit Party, just two months old but with the wind in its sails after a thumping victory in the European elections the previous month, nearly won at Peterborough, coming second and taking votes off both Conservatives, down 25% on the 2017 general election, and Labour, down 17%, though Labour hung onto the seat. For both parties it was clear Brexit was shattering traditional party allegiances and that the quicker it was settled the better for both. The list of 13 candidates to succeed Theresa May was soon whittled down by a series of Conservative parliamentary party votes to two, Boris Johnson and Foreign Secretary Jeremy Hunt, whose names were then put forward to the party’s 180,000 members, although the actual number who voted was 139,000. Johnson, a former Mayor of London and favourite of the party membership for whom he was simply ‘Boris,’ had been a prominent pro-Leave campaigner in the referendum, was made Foreign Secretary under Theresa May to keep him onside, then © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_18

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quit in protest at her compromise Brexit plan in 2018 (see Chapter 17). Hunt replaced him as Foreign Secretary. Previously a long-standing health secretary under both Cameron and May, Hunt had backed Remain in the referendum but later recanted and backed Brexit. The outcome of the poll was rarely in doubt. Johnson won 66.4% of the vote to Hunt’s 33.6%. It was an overwhelming and, considering the pro-Brexit party membership and his own popularity among the grassroots, unsurprising endorsement for Boris Johnson. On July 24 he entered Number 10 as Prime Minister. The winning candidate came with considerable advantages in negotiations with the EU. He was a known Brexiteer ready to genuinely consider the nuclear option of no deal if a suitable agreement could not be found, despite any potential damage to the UK economy as well as the EU’s, which put pressure on the EU negotiators not to be too inflexible. A fervent Brexiteer who had quit as a Cabinet minister in protest at what he regarded as May’s compromises, he retained the support of backbench Brexiteer Tory MPs who had voted against May’s proposals and who also knew he was their last hope of a hard Brexit. He had the overwhelming backing of party members as evidenced in the leadership poll. He also drew cross-party support from pro-Brexit Labour voters. Finally he had an empathy with the public which his predecessor lacked and as a former journalist a natural way of expressing complex issues in soundbites that voters could understand. In short he was likely to win a general election should he hit a wall with Parliament. For EU leaders Boris Johnson, like him or not and many of them did not, was therefore the UK Prime Minister with whom they could realistically expect to be signing the final Brexit deal. Johnson soon set about stamping the Brexit imprint across his new Cabinet, sacking 11 senior ministers while another six resigned rather than serving under him and bringing Brexiteers and right-wingers into key Cabinet posts. The new Leader of the House, Jacob Rees-Mogg, was chairman of the European Research Group of hardline Brexiteers who had helped destroy Theresa May’s government. One shock decision by Johnson was hiring the maverick architect of the successful Vote Leave referendum campaign and author of its mesmerising ‘Take Back Control’ slogan, Dominic Cummings, as his senior adviser at No 10. Johnson insisted he would stick to the October 31 deadline for a Brexit deal while also ramping up no deal preparations. He then announced

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increases in public spending which suggested to some commentators that he was preparing for a general election even though under the Fixed Term Parliaments Act the next one could not be held until 2022.

The ‘Left Behind’ Becomes the ‘Levelling Up’ As Mayor of London for eight years until 2016 Boris Johnson had earned a reputation as a socially liberal one-nation Conservative comfortable with the multiracial, cosmopolitan pro-EU capital. When he declared his backing to leave the EU in the referendum he shocked his liberal admirers but their dismay turned to anger when Johnson then actively campaigned for Vote Leave. From then on he was a divisive figure in politics, backed by Brexiteers and associated with the right-wing of his parliamentary party and particularly its pro-Brexit membership from which he drew his core support. Yet commentators speculated as to whether tacking to the right was just a manoeuvre by Johnson to win the backing of Conservative Party members after which he would then revert to his more liberal, one-nation sympathies. In fact, irrespective of his personal views, there were sound political reasons for appealing to disillusioned Labour voters who had helped secure the Leave result and could potentially be the key to winning a general election. Any leader in his position would have recognised the electoral prize waiting to be grasped. Theresa May, too, had appreciated that Labour voters in the former industrial areas, feeling abandoned by globalism and squeezed by the long tail of the Great Recession and austerity, had expressed their rage in the Leave vote and must be helped. She referred to them as ‘the left behind’ and the ‘just about managing’ but her tenure in office was so dominated by Brexit there was little time left to develop a practical strategy that could address their grievances. It was now left to Johnson to hit the political sweet spot of using Brexit to win over Labour’s core working-class support. But tactics alone could not persuade often lifelong Labour votes to turn to the Tories. There needed to be practical advantages other than just Brexit and a political philosophy to which they could relate. In general these targeted Labour voters in the Midlands, Wales and the North were patriotic, small c-conservatives, pro-public spending, antiimmigration and pro-Brexit. Some working-class Tory MPs saw no reason why these voters should not therefore switch to the Conservatives and in 2012 had created a pressure group called Blue Collar Conservatism

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which was relaunched in 2019. One of its founders, Clark Vasey, a former 2017 parliamentary candidate for Labour-held Workington in Cumbria, referred to Labour leader Jeremy Corbyn’s ‘posh metropolitan socialism’ coupled with Brexit as reasons why working-class Labour voters were deserting the party.1 A right of centre think-tank even created the term ‘Workington Man’ to describe a typical ex-Labour swing voter in the Labour-voting former industrial town of Workington, which voted 60% Leave, as the key to a Conservative election win. The solid band of Labour seats in Wales, the Midlands and the North was dubbed ‘the Red Wall’ and it was the aim of the Conservative to demolish it. In September the new Chancellor, Sajid Javid, laying out his spending plans for the next year, signalled the new administration’s rejection of austerity, one of the major causes of the Leave vote, with a firm eye on Leave supporters. Javid announced that ‘We are turning the page on austerity and beginning a new decade of renewal… every single government department has had its budget for day-to-day spending increased at least in line with inflation. That’s what I mean by the end of austerity’ and he followed it up with an increase in spending for the next year of £13.8bn. Javid said the government was ‘levelling up across the regions and nations.’2 At the Conservative Party conference in early October Johnson said: ‘It is only by delivering Brexit that we can address that feeling in so many parts of the country that they were being left behind, ignored and that their towns were not only suffering from a lack of love and investment but their views had somehow become unfashionable or unmentionable.’ Johnson referred to ‘this one nation Conservative government’ and the need to rebalance prosperity across the country. The aim, he added, was to create ‘a country where we level up and unify the entire United Kingdom through better education, better infrastructure and technology.’3 The phrase ‘levelling up’ was now to become the Johnson equivalent of May’s helping the ‘left behind.’

Last Throw of the Dice on Brexit Johnson’s key aim was to reopen negotiations over the Withdrawal Agreement and in particular the Irish backstop which had been rejected three times by the Commons thanks to revolts by backbench Brexiteer Tory MPs, some of whom were now in his government. The backstop was an insurance policy in which should the UK and the EU be unable to

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conclude a trade agreement which would avoid a hard border between the Republic of Ireland and Northern Ireland by the end of the transition period in December 2022 then Britain would enter a ‘customs territory’ with the EU. There would be no tariffs on goods between the UK and the EU although some separate rules for Northern Ireland. The controversial clause was that the backstop could only end with the agreement of both the EU and the UK meaning the latter could be stuck in a customs arrangement for years if the EU decided not to approve a replacement more amenable to the UK. In a letter on August 19 to EU Council President Donald Tusk the new Prime Minister said the Northern Ireland backstop was ‘simply unviable’ and ‘anti-democratic’ as it would lock the UK into a customs union and aligned to its rules without any means of an exit with the only alternative being a customs border between Northern Ireland and Britain. Instead he proposed scrapping the backstop and replacing it with unspecified ‘alternative arrangements.’ The EU did not regard this proposal as a serious option.4 The nub of the Johnson argument with the EU was over sovereignty. To the Brexiteers, who objected to the supremacy of EU law over UK law, the whole point of leaving was to exit the legal and regulatory orbit of the single market and the customs union so that the UK could then be free to strike its own trade deals with other nations. At the same time because the EU was also the UK’s largest trading partner importing £294bn of UK goods and 43% of its exports in 2019 it was not unreasonable for the EU to insist that the UK adhered to some of its regulations to avoid unfair competition. The EU was nervous that it could find the world’s sixth largest economic power undercutting its own industries by competing on a different playing field, with lower regulatory standards and even state aid support for weaker sectors. For the EU some agreement by the UK on adhering to rules and regulations was essential. For the Brexiteers being trapped in a customs agreement potentially forever was the opposite of taking back control. A compromise was inevitable but the Brexiteers argued that so far the compromises outlined in May’s Withdrawal Agreement, still stuck in parliamentary limbo, were more on the UK side and it was up to the EU to bend. They had a major trump card to play: the EU represented 52% of all the UK’s imports worth £374bn and the UK actually had a trade deficit with the EU. If no deal were ever to occur the damage to the EU as well as the UK would be incalculable.5

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Johnson continued to dangle no deal as an option and insisting come what may the UK would leave the EU on October 31 with or without a deal. In his first speech as Prime Minister he said: ‘It is of course vital that we prepare for the remote possibility that Brussels refuses any further to negotiate and we are forced to come out with no deal.’6 His brinkmanship was aimed at the EU but rattled Parliament where the obstacles to unlocking the stalled agreement were no longer the Brexiteers who were now in government but opponents of no deal. The defection of Conservative MP Philip Lee to the pro-Remain Liberal Democrats on September 3 deprived the government of its working majority even counting the DUP which had propped it up since Theresa May’s disastrous election result in 2017. Later that day the government lost its bid to defeat a motion allowing MPs to take over the Commons timetable and block no deal. Among the 21 Tory MPs who backed the opposition motion were two ex-Chancellors, eight former Cabinet ministers and the grandson of Sir Winston Churchill. In response the government suspended them from the party, although ten of them were the next month allowed back. In protest Cabinet minister Amber Rudd quit along with Boris Johnson’s own brother, also a minister. The embattled Prime Minister now extended the fight with his own side to Parliament itself in a bid to neutralise opposition. In moves more akin to the 17th monarch Charles 1 feuding with his Parliament Johnson launched an audacious but constitutionally dubious bid to bypass the Commons altogether. He asked the Queen to prorogue Parliament from September 10 to October 14 to reduce the amount of time available for MPs to debate deal or no deal. Critics pointed out the irony of the leading Brexiteer who wanted to repatriate powers from Brussels back to the UK Parliament now trying to neutralise it. A flurry of legal challenges ensued until on September 24 the Supreme Court ruled the suspension of Parliament unlawful. Blocked by MPs and the courts Johnson now argued the only way out the deadlock was a general election. Meanwhile negotiations were underway with the EU over a revised Withdrawal Agreement taking into account Boris Johnson’s insistence that the backstop be replaced. Inevitably a tortuous compromise was reached and agreed by the EU Council on October 17. It involved changing around 5% of the original agreement but crucially there was a shift by the EU on the backstop which was now removed and replaced by a new protocol effective from the end of the transition period in December 2020 for four years. The UK, including Northern Ireland,

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would legally leave the EU customs union and Northern Ireland could be part of any future UK trade deals with other countries. Northern Ireland would also adopt EU single market rules on goods. Legally Northern Ireland would no longer be part of the EU customs union but in practice there would be an invisible border in the Irish Sea since Northern Ireland would also be seen as entry point to the EU for goods. Commentators said the plan bore resemblance to May’s original Chequers deal of a wider customs partnership which was rejected by hardline Brexiteers including Johnson, as well as the EU. The Financial Times commented that ‘a heavy layer of fudge has also been added.’7 Most importantly there was now an exit route with the Northern Ireland Assembly being able to vote every four years on whether to continue with this arrangement, rather than it being left without a time limit. If the Assembly rejected it the UK and EU would have two years to negotiate a new deal. MPs gave the revised agreement a better reception than May’s versions and the Withdrawal Agreement Bill passed its Second Reading. However the Commons baulked at Johnson’s plan to fast track the revised 110page Bill through the Commons in three days to meet the October 31 deadline saying they needed more time and in a vote rejected his truncated timetable. Reluctantly he had to ask the EU for another extension to Brexit which Brussels agreed rather than facing no deal, setting a new date of January 31, 2020. Johnson consistently argued that the only way out of the impasse was a general election but he needed the support of two-thirds of MPs to hold it under the 2011 Fixed Term Parliaments Act which stipulated a general election could only be held every five years unless the Commons ruled otherwise. Three times he tried and failed to persuade MPs to back an election. On the fourth attempt on October 29 he succeeded by an overwhelming majority. The first December election since 1923 was scheduled for December 11. The smaller pro-Remain parties like the SNP and the Liberal Democrats, the latter who pledged to scrap Article 50 and stay in the EU in the unlikely event of their winning a majority, were now in favour of going to the country but it was Labour’s decision to finally back an election that swung the vote. One question is why, after previously arguing that a deal should be passed before an election, did Labour’s leadership, 100 of whose MPs abstained and 11 voted against the motion for an election, then change its mind? Ostensibly it was because no deal was off the table thanks

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to the earlier vote to back the agreement and because the EU had agreed another delay until January 31, 2020. Yet the timing for Labour was abysmal. Opinion polls since Johnson’s election consistently put the Tories in the lead. Labour’s Brexit strategy was in disarray as it attempted to placate both its Remain and Leave voters, pleasing neither. At the September party conference its leader Jeremy Corbyn saw off an attempt by members to campaign on a firmly Remain stance in a general election, Corbyn arguing that a decision should only be taken afterwards with a referendum on a renegotiated deal which could include the option of remaining in the EU. However the party as yet could not agree its position and Corbyn later stated he would be neutral.8 It meant the party entering an election campaign without a clear view on the most important issue of the day. Since the summer of 2017 when Corbyn had been feted with almost religious fervour by the audience at the Glastonbury pop festival the grinding realities of leadership had worn off the glitter from the long-standing left-wing Eurosceptic. The disillusion among the party’s membership was fuelled by his prevarication over backing Remain and a second referendum, which members wanted, and a long-standing row over a failure to adequately address allegations of anti-semitism in the party. Corbyn was still admired by younger party activists but paradoxically, considering his Euroscepticism, was much less popular in the small-c conservative, working-class Labour and pro-Brexit strongholds of the Midlands, the North and Wales, the constituencies Labour needed to hold to win a majority in an election.

The General Election 2019 Borrowing the idea of the successful soundbite of the Vote Leave campaign, ‘Take Back Control,’ developed by the Cummings team now based inside Number 10, the Conservative election strategy was based on an equally simple premise: ‘Get Brexit Done.’ If the Conservatives were re-elected with a majority they would enact the revised Withdrawal Agreement in time for the new January 31, 2020 deadline. This slogan appealed obviously to Leave voters but after more than three years of stalemate it also resonated with Remainers who wanted a deal completed and the uncertainty ended so the country could move on. The ‘Get Brexit Done’ mantra also neutralised the Brexit Party, which had taken over from UKIP as a serious threat on the right to the Tories, since getting Brexit done

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was its only policy. The Brexit Party then announced it would not stand against the 317 seats held by Tories since 2017 in order not to split the vote. As for its manifesto the Conservative strategy was not to repeat the disasters of 2017 by rolling out controversial policies but stick to Brexit and target the Labour-voting ‘red wall’ seats. Think-tank the Institute for Government called the Conservative manifesto ‘strikingly cautious other than in the domain of their biggest theme, Brexit.’9 Labour’s manifesto in contrast was light on Brexit but heavy on radical spending commitments funded by £78bn of tax rises. Its pledge to ‘rip up’ the new Brexit agreement, renegotiate it and hold another referendum on any deal including the option to remain in the EU merely seemed to prolong the paralysis even assuming voters knew whether the party was in favour of Brexit or not. Its radical manifesto said little about what type of Brexit deal it favoured but much about its huge programme of public spending. The Institute for Government said Labour’s Brexit timetable of agreeing a new deal and holding another referendum within six months was ‘implausibly tight.’10 At the other extreme the Liberal Democrats, hoping initially to capitalise on their burgeoning support as the Remain party then went too far and campaigned to scrap Article 50 altogether and stay in the EU, which even ardent Remain voters felt was undemocratic, and then had to backtrack, damaging their cause. The Scottish National Party campaigned for another referendum and backed Remain in a country which had overwhelmingly voted Remain in 2016. The Democratic Unionist Party in Northern Ireland, which had propped up May’s government but opposed her agreements, continued to reject Johnson’s revised version. The result was a landslide for the Conservatives who won 365 seats, 48 more than in 2017, giving them an overall majority of 80. It was a crushing defeat for Labour which lost 59 seats, the second largest number lost by an opposition for a century. The party won 202 seats and 32.1% of the vote, down from 262 seats and 40.0% of the vote in 2017, the worst result since 1935. The election was also a disaster for the Liberal Democrats who had hoped to win the Remain vote from both main parties: they won only 11 seats, one fewer than in 2017, and 11.5% of the vote, up from 7.4%, while their new leader lost her seat. In Scotland the Scottish National Party further cemented its lead winning 48 seats, up 13 on 2017. The Brexit Party failed to win any seats, gaining 2% of the vote as did UKIP, whose threat to the Conservatives had anyway vanished.

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Johnson’s focus on ‘getting Brexit done’ and keeping the party’s election manifesto light on other detail had paid off while Labour’s contorted attempts to avoid any commitment one way or the other on Brexit coupled with hugely expensive public spending pledges proved to be a vote loser. A later Labour report estimated that 2 m voters who had not participated in the 2017 election did in 2019 and half had voted Leave and were assumed to back the Conservatives.11 Most striking of all about the result was that the Conservative slogan ‘Get Brexit Done’ drove a bulldozer through Labour’s pro-Leave ‘red wall’ in the Midlands and the North ending decades of Labour control with 24 constituencies voting Conservative for the first time. Conservative wins included the Cumbrian former mining town of Workington, whose ‘Workington Man’ epitomised the target voter for Blue Collar Conservatism, Sedgefield in Durham, the former seat of ex-Labour Prime Minister Tony Blair in the North East, Bolsover in Derbyshire which had been Labour since 1950, Leigh in Manchester, also Labour since 1922, the Don Valley in South Yorkshire whose Labour MP had been a Leave supporter and Redcar in the North East which had never previously voted in a Tory MP. All of these areas had voted Leave in 2016. The Conservatives won Labourheld Peterborough in Cambridgeshire, where a by-election had been held the day before the Tory leadership elections in July (see above) though Labour held pro-Leave Stoke on Trent which the Tories nearly won in a by-election in February 2017. In total the Conservatives made a net gain of 48 seats in England while Labour lost 47. In England Labour lost seats in every region except the South East where it had few seats anyway and in strongly pro-Remain London, where Jeremy Corbyn was an MP, Labour lost one seat but gained another. The largest number of its seats lost was in the North West, West Midlands and Yorkshire & Humberside while in Scotland Labour lost six of its seven seats. A later internal analysis by Labour MPs into their party’s defeat concluded that Labour lost more of its support among lower paid, skilled and semi-skilled manual workers, pensioners and those on welfare (in advertising parlance, C2 and DE socio-economic groups), those most likely to have voted Leave. Many of these lost seats were in small towns with below average living standards and stable, ethnically homogenous communities. According to pollster Yougov Labour was ahead of the Conservatives among graduates but 17% behind among voters with medium level qualifications and 33% behind among voters with no qualifications. Labour retained its support among professional and managerial

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staff (AB and C1 social groups) and those under 35. The report however said that Labour’s traditional alliance between middle class and younger metropolitan liberals and the industrial working class had been fracturing for some years, with the Remain vote among the former and the Leave majority among the latter only highlighting the division.12 Separate analysis from a low pay think-tank, the Resolution Foundation, found a similar pattern when it examined the socio-economic profile of the 50 ‘red wall’ seats won by the Conservatives in England’s North East, North West, Yorkshire & Humber, East and West Midlands and Wales. Its study showed that the population in these seats had below average living standards with deprivation increasing over the previous decade, slower employment increases, real weekly pay down by 2.1% since 2010, sluggish house price rises, below average skill levels and static populations with little international migration. The ‘red wall’ seats were especially sensitive to cuts in working-age benefits. Overall the report concluded that in the red wall constituencies captured by the Conservatives ‘far from an ongoing story of economic decline, our analysis points to 2010 as something of a turning point. Since then, the performance of employment, pay, the sectoral mix and house prices has been relatively weaker than in other areas.’13 The Conservative campaign managed to perfectly align its ‘Get Brexit Done’ strategy with Labour’s disenchanted heartlands creating a rainbow alliance of Brexit support that crossed traditional party lines. Jeremy Corbyn was also a great asset for the Conservatives and not just because of his lack of appeal in Labour’s pro-Leave working-class Labour seats. His left-wing manifesto scared Remain Conservatives who might have voted for the Liberal Democrats in Conservative seats where the Liberal Democrats were second: instead, fearing a Corbyn government would be elected by default either with a majority or as the largest party if the Liberal Democrats took seats from the Conservatives, the wavering Conservative Remain voters held their noses and voted for Boris. As a result the Liberal Democrats were the other big losers in the general election. To borrow the title of a famous book about the pre-1914 Liberal Government a century before, the lost decade of 2010–2020 saw the strange death of Liberal England.14 In 2010 the Liberal Democrats had 57 MPs and were then partners in government for five years. In the 2019 general election they won just 11 MPs. Although the leading proRemain party calling for a second referendum the Liberal Democrats were unable to build a voter base among Remain voters and were squeezed

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between the two main parties. For a while their success in the June 2019 European elections when they came second seemed to promise a comeback, especially when they elected a bright, young female leader and former minister, Jo Swinson, but their hopes turned to dust in December 2019 and even she lost her seat. They ran a lacklustre campaign not helped by an unwise initial pledge to scrap Brexit altogether while many Remainers were worried that a vote for the Liberal Democrats could put Corbyn into Downing Street, a view expressed by its later leader Ed Davey who said ‘there’s no doubt that the toxicity of Jeremy Corbyn to people who might have voted for us was greater than might have been expected.’15 Furthermore after over four years of parliamentary paralysis even many Remainers just wanted to ‘get Brexit done’ so the uncertainty could end. Having vanquished the centre left Boris Johnson also emasculated the threat from the far right. The anti-EU United Kingdom Independence Party (UKIP) which for years had been a serious threat to the Conservative Party, drawing away its Eurosceptic voter base and even taking credit for persuading David Cameron to hold the EU referendum, was now a shadow of its former entity. Split by infighting the party gained just 0.1% of the vote and no MPs. Its charismatic former leader Nigel Farage had left to form the Brexit Party which came first in the European elections but although it fielded 275 candidates won just 2% of the total vote in the general election and no MPs. Both single issue parties were trounced by Johnson’s ‘Get Brexit Done’ electioneering strategy which removed their raison d’etre. Of the other parties, the Democratic Unionist Party in Northern Ireland which had propped up Theresa May’s government, lost two seats, while the SNP in Scotland increased its tally of MPs to 48. The SNP was Johnson’s biggest longer-term headache. It was the third largest party at Westminster even though it only covered Scotland and was strongly Remain like Scotland itself which had voted 62% to 38% to stay in the EU. The SNP’s successful election result coupled with Scotland’s rejection of Leave meant renewed calls by the SNP for another referendum on independence even though this had been rejected by voters in 2014 by 55.5% to 44.5%. Nonetheless Prime Minister Boris Johnson was master of all he surveyed, the political threats from left and right vanquished, overwhelming backing from his own party members and a huge parliamentary majority to support him at Westminster. All he needed now was to deliver Brexit.

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Then on New Year’s Eve 2019 the Municipal Health Commission of the city of Wuham, China recorded several cases of a new type of pneumonia. On February 1, by which time outside China there were 393 cases in 24 countries and one death, the World Health Organisation gave it a name: COVID-19.16

Notes 1. ConservativeHome (July 10, 2019). 2. www.gov.uk/government/speeches/spending-round-2019-sajid-javidsspeech. 4/9/2019. 3. PoliticsHome (October 2, 2019). 4. www.gov.uk/government/publications/pm-letter-to-donald-tusk-19-aug ust-2019. 5. House of Commons Library (November 20, 2020). Statistics on UK-EU Trade. 6. www.gov.uk/government/speeches/boris-johnsons-first-speech-as-primeminister-24-july-2019 7. Financial Times (October 11, 2019). 8. BBC News (November 23 2019).Corbyn defends ‘neutral’ Brexit stance. 9. Bronwen Maddox, Institute for Government (November 25, 2019). Verdict on the manifestos. 10. Ibid. 11. The Labour Together Election Review (June 2020). A Mountain to Climb. 12. Ibid. 13. Charlie McCurdy, Laura Gardiner, Maja Gustafsson & Karl Handscomb. Resolution Foundation. (February 2020). Painting the towns blue. Demography, economy and living standards in the political geographies emerging from the 2019 General Election. 14. George Dangerfield (1935). The Strange Death of Liberal England 1910– 1914. 15. www.theguardian.com/politics/2020/jan/19/lib-dem-election-failurewas-corbyns-fault-says-acting-leader. 16. WHO Director General’s remarks at the media briefing on 2019-ncov (February 11, 2020).

CHAPTER 19

Aftermath

After the general election of December 2019 Conservative Party leader and Prime Minister Boris Johnson was the political master of all he surveyed. The former London Mayor, so often written off as a maverick, commanded a parliamentary majority of eighty, more than enough to withstand multiple Commons rebellions for the next five years and beyond. It was a result that his predecessor Theresa May had dreamed of when she made her own decision to gamble on an election in 2017 and failed miserably, losing her majority. Johnson had learned the lessons from May’s debacle. He kept the election manifesto brief, avoiding such controversial topics as social care funding. He also distilled his campaign down to one core message ‘Get Brexit Done’ which appealed to blue collar pro-Brexit voters in the industrial heartlands of Midlands and North of England and Wales who had hitherto always voted Labour, the so-called ‘red wall’ parliamentary seats. Johnson’s third asset was not one of his own making. His huge majority was enabled by facing a weak Labour leader, Jeremy Corbyn, whose vacillation on Brexit alienated both the ‘red wall’ Labour Brexiteers and the largely pro-Remain party members. On Brexit, Labour’s policy was to offer yet more uncertainty by renegotiating Johnson’s Withdrawal Agreement and holding another referendum while Corbyn himself, on the most important issue of the election, said he would remain neutral. Labour set out a detailed manifesto with substantial public spending © The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0_19

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pledges and taxes, whereas the election campaign was around Brexit. The prospect of Corbyn getting the keys to Number 10 also terrified pro-Remain Conservative voters who might otherwise have voted for the Liberal Democrats in protest. Faced with the possibility of Labour winning a majority or forming a coalition with the Scottish Nationalists, the wavering Conservatives returned to the fold. Johnson however was well aware that his majority had been achieved with the support of the pro-Brexit former ‘red wall’ constituencies. He would firstly have to deliver Brexit but then address the reasons that the ‘red wall’ backed Brexit in the first place by providing well-paid jobs and ‘levelling up’ their economies to those of the prosperous London and the South East. If he could not keep them onside then the ‘red wall’ voters would revert back to Labour by the time of the next election, especially once Corbyn was replaced. Despite backing Brexit the former Labourvoting areas were by no means signed up to traditional Conservative economic policies of low tax and low public spending, being supporters of well-funded public services and state intervention.

Getting Brexit Done Boris Johnson’s immediate task was to implement the Conservative manifesto to ‘Get Brexit Done’ and complete the unfinished job of parliamentary approval for the Withdrawal Agreement which had passed its Second Reading the previous October. With his new, immense majority this was no longer a challenge. On January 23, 2020 the European Union (Withdrawal Agreement) Act 2020 was passed by the British Parliament and ratified by the EU Council on January 30. Johnson had finally succeeded where his predecessor, who introduced the original bill, could not. The following day at midnight the UK left the EU, albeit symbolically for a transition period until a final trade deal was completed by December 31, 2020. Celebrations and mourning on this momentous day, January 31, 2020, took place across the UK, Boris Johnson calling it ‘not an end but a beginning.’ In Scotland, which voted to remain in the EU, thousands attended a rally under the slogan ‘Missing EU already.’ As there was a transition period until the end of 2020 most people barely noted any change. The UK continued to follow EU rules and pay its share of the budget and freedom of movement and trade operated as before. Some 3 m EU nationals resident in the UK could continue to live, work or study as could UK nationals living in the EU. Any changes

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were more to do with governance such as all the UK MEPs elected to the European Parliament the previous June now losing their seats—most of the UK MEPs were from the Brexit Party anyway—and as the UK could no longer join EU Council meetings it lost any influence on EU policy. In particular the Northern Ireland protocol which replaced the ‘backstop’ (see Chapter 18) requiring checks on goods entering the province from Britain meant Northern Ireland (NI) adhering to some EU rules to avoid a hard border between it and the Republic of Ireland though there was little detail about how this might be implemented. Under the rules the UK came out of the EU customs territory with Northern Ireland also part of any future international trade deals but NI adhering to EU single market rules on goods and remaining an ‘entry’ into, but not legally a part of, the EU customs union, effective for four years. It was now down to the hard grind of negotiating the small print of Brexit in time for the complete break on December 31, 2020. Then came the pandemic. The story of how the government, with its huge majority, then found itself at times overwhelmed by the task of combating COVID-19 is not the subject of this book. For many voters with a grim sense of humour the only beneficial spin-off from the virus was that it finally banished the subject of Brexit from the front pages after three years of exhaustive media coverage. As the pandemic’s death toll mounted and daily life froze under lockdowns the small print of the Withdrawal Agreement seemed an irrelevancy compared to the start realities of survival. Boris Johnson however refused to request any extension to negotiations, allowed under the agreement, insisting the deadline of December 31 would be met, deal or no deal. Negotiations over the final Brexit deal continued in the background throughout the year, starting on March 2, 2020, occasionally making headlines, though the nation’s focus was entirely on the pandemic and the lockdowns. Most of the discussions concerned the forthcoming trade deal for without one the UK could find itself facing crippling tariff walls. Especially delicate was how to manage trade between Britain, Northern Ireland and the rest of the EU without breaking the 1998 Good Friday Agreement outlined in the so-called protocol, part of the Withdrawal Agreement. In September 2020 a row erupted over the government’s internal market bill concerning trade within the UK some of whose clauses critics said had the effect of overriding the Withdrawal Agreement’s protocol and thereby breaking international law. The EU and UK

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eventually came to an agreement and the offending clauses were removed from the legislation. On December 24, 2020 after the usual last minute, cliff-edge negotiations, notably over fishing rights which in 2019 represented just 0.1% of GDP, the 1200-page Trade and Cooperation Agreement was signed, just before the transition period ended, and the UK fully left the EU. There was still more detail to be worked out and the future of the UK’s profitable services sector’s trade with the EU remained unclear while goods exporters now faced new customs paperwork for the first time. The agreement had three main pillars, a free trade agreement including the management of fish stocks, a framework for security cooperation and an agreement on governance. After four and a half years of political turmoil since the day voters had backed Leave by a small majority the UK was now finally out of the EU, its single market and its customs union, as of January 1, 2021. Out of the single market meant there was no more freedom of goods, services, people and capital and the UK and EU now formed two separate regulatory and legal markets. The Northern Ireland Protocol in the Withdrawal Agreement also applied from that date, allowing an open border between North and South but a regulatory border between Northern Ireland and Britain. This included checks on goods such as foodstuffs for Northern Ireland which continued to be aligned with EU regulations although in the UK customs territory. Article 16 of the Protocol allowed either side to suspend any part of the agreement that caused ‘economic, societal or environmental difficulties’ while the Northern Ireland Assembly could vote every four years on whether to continue with the arrangements. The historic occasion was met with indifference on the streets. There were no massed demonstrations, either of support or sorrow. The nation was too immersed in battling the pandemic and living under a third lockdown to devote any further passion to Brexit.

Did Brexit Achieve Its Goals? It will take years to evaluate the full impact of Brexit and in particular to whether it meets the aspirations of those who voted for it in the referendum. It will also be difficult separating socio-economic changes caused by Brexit to those caused by dealing with COVID-19 which surfaced just weeks after the UK’s departure from the EU in January 2020. Early signs of Brexit’s impact were mixed. The disastrous impact of the pandemic

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lockdowns in 2020/21 in which the UK suffered its largest economic shock in 300 years far outstripped even the most pessimistic predictions of so-called ‘project fear’ promoted by Remainer economists during the referendum campaign making any evaluation almost impossible in the short term. However the uncertainty caused by the referendum vote did see a drop in investment in the UK. The independent Office for Budget Responsibility (OBR) assumed a 4% drop in productivity over 15 years, of which 20% of this had already taken place before the end of 2019 due to the fall in investment. The OBR’s early March 2021 analysis of the final UK/EU Trade and Cooperation Agreement continued to stick by its forecast 4% drop in productivity partly because of uncertainty over the future of the vital services sector.1 A survey of 900 company directors by the Institute of Directors in March 2021 found that 20% of those trading with the EU had halted doing so in January 2021 of which half expected this to be permanent: 62% of the survey saw no opportunities from Brexit.2 The Office for National Statistics reported a 40.7% fall in exports of goods to the EU in January 2021, far greater than the fall of 28% in imports from the EU. However these figures also reflected the impact of lockdowns on household consumption and the stockpiling of goods prior to Brexit.3 Of greater concern were the future trading arrangements for the services sector, notably financial services representing 6.9% of GDP, which was left uncertain in the trade agreement. London’s Mayor Sadiq Khan said the agreement was in effect ‘a no deal Brexit for finance.’ The UK financial services sector was the ninth largest in the major OECD economies in 2019 as a share of GDP and created a trade surplus of £41bn. It had been in surplus every year for the previous two decades, with half of its output produced in London. Financial services generated 11% of the UK’s entire tax revenue in 2017/18 worth £75.5bn and the UK public finances could not afford to see the sector lose business by being outside the EU.4 Well-paid bankers however, unlike fishermen, did not have much political clout or much respect among the Brexit-backing voters who had helped give Boris Johnson his electoral majority. Boris Johnson won his December 2019 election with the support of former ‘red wall’ Labour-voting constituencies in the Midlands and North of England who overwhelmingly backed Brexit. If he was to hold onto these voters’ support at the next election, due by December 2004 at the latest, he had to deliver not just Brexit but also the better standard of living that had eluded these voters and which had driven them to vote

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Leave in 2016. Theresa May referred to them as ‘the left behind’ while Johnson’s mantra was to ‘level up’ the economically under-performing regions of England’s Midlands and the North to that of prosperous London and the South East through promises of more public spending, especially on infrastructure. The pandemic and its lockdowns during 2020 only made these regional inequalities even more apparent. Infection rates were often higher in industrialised areas because a greater proportion of blue collar workers in manufacturing jobs were unable to operate from home compared to white collar office staff. Poorer areas suffered from higher than average levels of ill health like diabetes and obesity making them more prone to being hospitalised from COVID-19. Attempts to impose lockdowns regionally provoked rows between ministers and local Northern politicians who complained their residents were being unfairly targeted. The latter were supported by the powerful coterie of new Conservative MPs from the ‘red wall’ constituencies. To ensure Johnson did not forget their voters the Conservative MPs representing them formed a new parliamentary pressure body, the Northern Research Group (NRG) led by a former Northern Powerhouse minister, Jake Berry. In October 2020 before the general election 40 of these MPs wrote to Boris Johnson warning him that the government must not downgrade its ‘levelling up’ agenda because of the pandemic. Their letter said ‘the virus has exposed in sharp relief the deep structural and systemic disadvantage faced by our communities and it threatens to continue to increase the disparity between the North and South still further…we do however share concerns that the cost of Covid could be paid for by the downgrading of the levelling-up agenda.’5 In two areas, immigration and austerity spending cuts, there was movement. The one change arising from the referendum which met Leavers’ concerns was the rate of immigration from the EU which headed downwards soon after 2016. This had nothing to do with ‘taking back control’ since the UK only left the single market and hence freedom of movement regulations in December 2020. The referendum vote made the UK much less attractive for ambitious East Europeans looking to build a future for their families, both from the negative message it sent to them and the new rules likely to take place after Brexit, though the final deal protected the rights of EU citizens already in the UK and Britons in EU states. Employment opportunities after the Leave vote, as the economy slowed, were also less attractive. Office for National Statistics figures in November

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2018 showed that net migration of EU nationals to the UK was 74,000 in the year ending June 2018, the lowest since the year ending 2012 and was 60% lower than in the year ending June 2016. The main driver of falling net migration from the EU was a decline in the number of EU nationals whose main reason for coming to the UK was ‘looking for work.’ The fall was largest among the EU8 Central and East European states which joined the EU in 2004. In turn UK citizens could no longer live and work freely in the EU without a work permit though the almost 1 m already residing in EU countries could apply for residency. EU citizens working already in the UK were also protected.6 The message from the Leave vote about the negative impact of austerity on poorer areas also registered with Conservative ministers and the word soon disappeared from the government’s lexicon. In his 2018 Budget then Chancellor Philip Hammond referred to ‘the era of austerity finally coming to an end’ while in September 2019 announcing £13.8bn extra in public spending for the next year, a real terms increase of 4.1%, his successor Sajid Javid claimed ‘that’s what I mean by the end of austerity.’ Although the spending in no way made up for the cuts imposed since 2010 it did signify a loosening of restraints. By spring 2020 however the pandemic rendered all forecasts redundant as the new Chancellor, Rishi Sunak, poured over £320bn of public money into the economy to counter the impact of lockdowns. By the end of the 2019/20 financial year the deficit was down to 2.7% of GDP; by the end of the next year it was around 17%, the highest outside the Second World War. In the worst year of the Great Recession in 2009/10 the deficit had been 10.2%. The government’s challenge now was to rebalance the public finances through tax rises and spending cuts without strangling recovery in the private sector. Will this herald another lost decade? That is another story.

Countdown to Brexit June 23, 2016: Referendum vote backs Leave. March 29, 2017: Article 50 triggered by Theresa May. Brexit due on March 29, 2019. November 14, 2018: Withdrawal Agreement published. November 25, 2018: Withdrawal Agreement endorsed by the 27 EU leaders. January 2019: Withdrawal Agreement rejected by UK Parliament.

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March 2019: Withdrawal Agreement rejected again twice by UK Parliament. March 2019: EU Council agrees extension of Brexit date to April 12 if Withdrawal Agreement is still not passed by next week or May 22 if it is. April 2019: EU agrees extension of Brexit date to October 31. May 23, 2019: European Parliament elections. May 24, 2019: Theresa May announces she will resign on June 7. May 26, 2019: European Parliament elections results announced. July 23, 2019: Boris Johnson wins leadership race. July 24, 2019: Boris Johnson becomes Prime Minister. October 22, 2019: Amended Withdrawal Agreement clears Second Reading in Parliament but motion setting out timetable is defeated. October 28, 2019: EU agrees further extension of Brexit to January 31, 2020. October 30, 2019: Commons agrees to general election. December 12, 2019: General election sees Conservatives returned with bigger majority. January 23, 2020: EU (Withdrawal Agreement) Bill becomes an Act and is ratified by the EU on January 30. January 31, 2020: UK leaves the EU under transition period until December 31, 2020. December 24, 2020: The EU UK Trade and Cooperation Agreement agreed. December 31, 2020: UK leaves the EU single market and customs union. For full timeline see House of Commons Library. Briefing Paper No 7960, 6 January 2021. Brexit timeline: events leading to the UK’s exit from the European Union.

Notes 1. Office for Budget Responsibility (March 2021). Economic and Fiscal Outlook. 2. Institute of Directors (March 2021). Press release. IoD calls for EU/Brexit cooperation after nearly 20% of members halt trade with the EU. 3. Office for National Statistics (March 2021). UK Trade January 2021. 4. House of Commons Library Briefing Paper Number 6193 (1 February 2021). Financial services: contribution to the UK economy.

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5. Letter to Prime Minister from Jake Berry MP and other MPs October 26 2020. 6. House of Commons Library (November 29, 2018). How has EU migration changed since the referendum?

Index

A Arab Spring, 107, 109, 115 Article 50, 193, 194, 196, 197, 201, 216–218, 233, 235 Austerity, 80, 82–88, 90, 91, 99, 102, 105, 127, 130–132, 136, 137, 140–143, 148, 166, 174, 192, 202, 204, 222, 223, 229, 230, 246, 247 and Brexit, 11, 82, 88

B Bankers, 6, 12, 97, 136, 155, 166, 245 Black Wednesday, 21, 68, 72, 73 Blair, Tony, 4, 9, 22, 23, 25, 29, 69, 70, 72, 74, 75, 94, 107, 121, 135, 136 Blue Collar Conservatism, 229, 236 Boris Johnson Foreign Secretary, 191 Brexit Party, 219, 227, 234, 235, 238, 243

Brown, Gordon, 3, 4, 9–11, 25, 74, 75, 79, 80, 94, 135, 147, 149, 154 Budgets, 10, 81, 82, 223 C Cameron, David attitude to EU, 65 negotiates pre-referendum agreement with EU states, 73, 75, 94 resignation, 72 speech at Bloomberg, 102, 104 Centre for Cities, 90, 92, 131, 133 Centre for Social Justice, 179, 180, 183–185 Clarke, Ken, 22, 61, 67, 68, 70, 72, 75, 76, 104, 106 Clegg, Nick, 104, 141 Coalition government (2010–15), 86, 125, 126 College of Europe, 20, 63 Conservative Party, 11, 17, 20, 21, 57, 58, 63–66, 69–71, 73, 96,

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2022 M. Burton, From Broke To Brexit, https://doi.org/10.1007/978-3-030-81889-0

251

252

INDEX

97, 101, 126, 166, 188, 191, 194, 195, 204, 219, 222, 227, 229, 230, 238, 241 Copeland by-election (2017), 198, 202 Corbyn, Jeremy election as Labour leader, 155, 168, 218, 219, 230 general election campaign 2017, 153, 234, 241 survives rebellion, 73, 101 COVID-19, 239, 243, 244, 246 Cox, Geoffrey, 215, 216 Cox, Jo, 172 Cummings, Dominic, 175, 228, 234

D Darling, Alistair, 5, 10, 13, 148 Davidson, Ruth, 205 De Gaulle, Charles, 18 Delors, Jacques, 20, 21, 61–64 Democratic Unionist Party, 207, 209, 235, 238 Department for Exiting the European Union, 191, 214 Department for International Trade, 191 Draghi, Mario, 86, 125, 127 Duncan Smith, Iain, 71, 180

E Electoral Commission, 156, 166, 172, 184 euro eurozone, 83–87, 90, 93, 98, 100–103, 107, 108, 112, 113, 126, 127, 154, 158, 159, 161, 167, 175 Europe history of UK relationship with, 16

European Central Bank, 21, 62, 64, 86, 87, 98, 99, 125, 127 European Exchange Rate Mechanism Nigel Lawson on, 21 Sir Geoffrey Howe on, 21 European Parliament elections to, 15, 27, 94, 243 European People’s Party, 74 European Research Group, 211, 214, 216, 217, 221, 228 European Union British public’s attitude to EU, 15 economic and monetary union, 20, 62, 64, 69, 98 European Coal and Steel Community, 17 European Community, 145 European Council, 64, 74, 158, 159, 215 European Economic Community, 17, 57 European Monetary System, 20 European Parliament, 5, 15, 27, 61, 64, 74, 94, 96, 104, 113, 137, 158, 159, 219, 243 ‘Ever closer union’, 57, 62, 67, 75, 100, 158, 160, 162

F Facebook, 5, 116, 120 Farage, Nigel, 73, 96, 97, 100, 104, 113, 142, 171, 174, 219, 238 Fixed Term Parliament Act, 201, 203

G GDP (Gross Domestic Product), 4, 5, 9–11, 22, 37, 43–45, 52, 80, 81, 83–88, 90, 98, 99, 126–128, 135, 136, 138, 140, 223, 244, 245, 247

INDEX

General elections, 2010, 2015, 2019, 11, 40, 45, 84, 86, 87, 94–97, 103, 105, 113, 121, 135, 137, 140, 147, 148, 155, 169, 173, 205, 234, 237 Globalism, 32, 43, 91, 96, 97, 143, 154, 166, 174, 183, 229 Good Friday Agreement, 22, 196, 207, 212, 243 Gove, Michael, 167, 168, 188 Great Recession, 3, 9, 45, 79, 88, 91, 126, 128, 129, 154, 166, 175, 229, 247 fiscal crash, 9 Great Repeal Bill, 196 Greece, 20, 58, 61, 83, 85, 87, 98–101, 108, 110, 111, 125, 130, 160, 167 Grenfell Tower fire, 207 H Hague, William, 70 Hammond, Philip, 155, 202, 247 Heywood, Jeremy, 193 Home Office, 23, 33, 35, 71, 111, 188 Migration Advisory Committee, 29, 34, 41, 42 House of Lords, 31, 34, 36, 37, 196, 197 Howard, Michael, 71, 72 Hunt, Jeremy, 227, 228 I Immigration freedom of movement, 8, 24, 32, 40, 160, 169 immigration from EU states, 8, 24, 37, 137, 246 Schengen Agreement, 20, 73, 111, 159, 161

253

Industrial Revolution, 46, 116 Inequality, 6, 7, 43, 44, 46–51, 53, 190 Institute for Fiscal Studies, 11, 13, 51, 56, 80, 81, 83, 84, 87, 89–92, 126, 128, 132, 133, 140, 144, 223, 225 Institute for Government, 82, 91, 199, 235, 239 Institute for Public Policy Research, 50, 130 International Monetary Fund Christine Lagarde, 87 Irish backstop Northern Ireland Protocol, 243, 244 Isis, 108–110 J Javid, Sajid, 230, 247 Johnson, Alan, 169 Johnson, Boris as Mayor of London, 229 completes Brexit 2020, 233 elected party leader and hence Prime Minister 2019, 228 holds general election, 2019, 45, 132, 241 joins leave campaign, 171, 189 joins May government, 191 negotiates Brexit deal, 243 resigns from May government, 214 Joseph Rowntree Foundation (JRT), 133, 179, 181–185 K Khan, Sadiq, 172, 219, 245 L Labour Party, 18, 60, 69, 113, 142, 146, 155, 165

254

INDEX

Lamont, Norman, 72, 73 ‘The left behind’, 43, 45, 132, 222, 229, 246 ‘Levelling up’, 229, 230, 242, 246 Leveson inquiry, 118 Liberal Democrats, 5, 80, 88, 93–95, 113, 137, 141, 142, 145, 147, 153, 179, 206, 219, 233, 235, 237, 238, 242 London, 3, 5–8, 24, 32, 33, 39, 44–48, 50, 51, 75, 76, 87, 104, 105, 113, 117, 125, 126, 131, 132, 137, 138, 142, 156, 168, 170–172, 174, 176–179, 182, 189, 207, 209, 219, 242, 245, 246 City of London, 5, 9, 46, 102, 178 M Maastricht Treaty, 21, 58, 66–68, 98, 155 Macmillan, Harold, 13, 17, 18, 47, 58 Major, John, 4, 8, 21, 25, 64–66, 68–73, 76, 93, 207 Manchester Arena terrorist attack, 205 Marr, Andrew, 3, 13 May, Theresa becomes Prime Minister, 115, 119, 188, 201 decision to hold general election, 202, 203 negotiates Brexit, 232 resignation, 222, 223 The 2017 election campaign, 204, 241 McFadden, Pat, 158 Merkel, Angela, 110 Middle East, 16, 93, 107–109, 111, 146, 160 Midlands (England), 6, 46, 49, 104, 137, 190, 241, 245, 246

Miliband, David, 135 Miliband, Ed, 37, 41, 97, 104, 136, 137, 144 MPs’ expenses scandal, 27, 93, 96 N North Africa, 108, 109, 111, 160 Northern Powerhouse, 131, 222, 246 North (of England), 48, 113, 222, 241, 245 O Office for Budget Responsibility (OBR), 37, 81, 83, 84, 127, 129, 223–225, 245, 248 Office for National Statistics, 7, 13, 54, 56, 168, 170, 183, 198, 225, 245, 246, 248 Olympics (2012), 138, 148 Organisation for Economic Cooperation and Development (OECD), 44, 85 Osborne, George, 11, 79–81, 85, 88, 104, 127, 131, 133, 137, 140, 166, 167, 187, 189, 191, 222 R Red wall, 46, 230, 235–237, 241, 242, 246 Referendum (2016) campaign, 18, 235 Referendum Bill, 155 results, 19, 90 Referendums changes to voting (2011), 94, 173 Greater London Authority (1999), 22 Membership of EEC (1975), 19, 60, 94 Scotland and Wales (1979, 1997), 137

INDEX

Scottish independence (2014), 146, 154 Refugee crisis, 108, 154, 160, 161 Resolution Foundation (RF), 45, 52, 53, 55, 56, 92, 128–130, 132, 133, 180, 182, 184, 185, 237, 239

S Salmond, Alex, 137, 147, 148 Scottish National Party (SNP), 28, 88, 137, 138, 141–143, 146–148, 150, 155, 156, 169, 205, 206, 219, 233, 235, 238 Single European Currency, 15, 57, 61 Single European market Single European Act, 59, 61 South East (of England), 5 Syria, 107, 109, 110, 160

T Thatcher, Margaret, 8, 16, 18, 20, 21, 29, 33, 59–65, 67, 70–73, 75, 76, 93, 94, 146, 188 Trade and Cooperation Agreement 2020, 248 Treaty of Lisbon (2007), 74, 75 Treaty of Nice (2003), 74 Treaty of Rome (1957), 17, 20, 58, 61

255

Trump, Donald, 144 Tunisia, 160 Tusk, Donald, 158, 159, 162, 197, 231 Twitter, 5, 116, 119, 120, 167 U United Kingdom Independence Party (UKIP), 5, 27, 28, 73, 91, 94–97, 100, 102–105, 112, 113, 137–139, 142, 143, 149, 150, 154–156, 161, 171, 179, 198, 205, 206, 218, 219, 234, 235, 238 Urban Development Corporations, 48 V Varoufakis, Yanis, 85 W Wilson, Harold, 18, 19, 59, 60, 146, 166 Withdrawal agreement, 213, 215–218, 230–232, 234, 241–244, 247, 248 Workington, 230, 236 Y Youtube, 116