The place to begin picking up the pieces, in the aftermath of a cheerless Conservative conference and a botched leadership plot, is with Theresa May herself. Over half of Party member respondents to our last monthy survey said that she should not lead the Tories into the next election. There is no reason to believe that Conservative MPs take a different view. Today’s Sunday Times claims that at least three Cabinet Ministers discussed ousting her last week. None the less, she appears to believe that she can still lead an election campaign from office in 2022 or before. This spells trouble, sooner or later.
However, she is in place. Grant Shapps has been seen off. And it looks as though the Prime Minister will seek to revive her Government and restore her standing by holding a Cabinet reshuffle soon. What should she do?
Obviously, she should remove Patrick McLoughlin from CCHQ, and appoint a Cabinet Minister to take charge of Brexit contingency. Our candidate for Chairman would be someone who has real hands-on managing experience, preferably in business, and is therefore capable of driving the Pickles Report reforms through. Jeremy Hunt is one of the few Cabinet Ministers so qualified and is media-savvy with it. Dominic Raab would be a suitable candidate to speed up preparations for No Deal, with Charlie Elphicke, who has been plugging away on this site about being Ready on Day One, in situ to help. Or Steve Baker could simply be shunted up.
There is otherwise a robust case for doing nothing much at all. Conservative poll ratings still hover at about 40 per cent. The Government’s reputation for economic competence has not collapsed. The Prime Minister’s disaster-jinxed conference speech got the commentariat in a flap, but there is no evidence that it has alarmed voters. And it is not as though a general election were due soon: there is the best part of five long years between now and a poll. Perhaps the best course that Downing Street can take is to keep calm and carry on.
To carry out a minimalist reshuffle and attempt quietly to regroup, however, would be to assume that two key problems will somehow resolve themselves.
The first is that small-scale measures on housing, such as the conference announcement on council homes, will be enough to win back younger voters – by which we mean not just students, but people under the age of 45. According to Lord Ashcroft’s poll of 14,000 people on election day, Labour scooped up a whacking 50 per cent of those aged between 35 and 44, and even larger slices of those who are younger. The housing crisis offers the most dramatic illustration of a political truth: you will not have capitalists without workers who have a stake in capital.
The second is more urgent (in political terms, at any rate). As Henry Newman argued on this site last week, the Cabinet is now more or less agreed on how Brexit should be carried out, but not on what it should look like – including during any implementation or transition period. As Henry originally put it: “there is a range of possibilities – from Norway’s EEA/EFTA relationship to Switzerland’s web of bilateral agreements and to a Canada-type Free Trade Agreement…do we go for a “high access, low control” or “low access, high control”? Each scenario has benefits as well as disadvantages.” May’s Florence speech fudged the choice.
These two problems meet in the Treasury. As holder of the Government’s purse-strings and guardian of financial discipline, the department is never likely to be popular with others, and it continues to serve as a bulwark against irresponsible spending – having opposed, for example, the vainglorious adventure that is HS2. Had it not been for the Treasury’s institutional resistance when Tony Blair was at the height of his powers, Britain would almost certainly have joined the Euro.
But for all its indispensability, the department goes through periods of intellectual exhaustion. One emerged during the early 1980s, when it was lashed to the Keynesian consensus: Geoffrey Howe had a lonely task in turning it round. Another came in the mid-1990s, after the department had bet the farm on ERM membership. Yet another came more recently. The Treasury was deeply implicated in George Osborne’s rubbish forecasts of an “immediate economic shock” and an increase in unemployment of “around 500,000” in the aftermath of a vote for Brexit. In essence, the department has no faith in leaving the EU – it pushed within government for a ten-year transition – and is wary of borrowing to build more houses.
If May, as this site would urge, is both to prepare properly for No Deal, and to resolve the Cabinet’s EU paralysis by plumping for a solution that is more at the Canadian end of the range, it follows that she will need a new Chancellor, since this is not a solution that Philip Hammond would favour. She would have two options in replacing him.
The first would be the safer course. It would be to install a former Remainer – Sajid Javid or Greg Clark or, more likely, Michael Fallon – with a clear mandate to get ready for contigency. He or she would also have to square the circle of finding more money for housing with maintaining fiscal discipline. This would be unlikely to upset her political apple cart.
The second would be riskier. It would be to promote the single Cabinet member with the required intellectual firepower and presentational skill to overhaul economic policy, find more resources for the Conservative manifesto’s council-homes-to-home-ownership plan, and drive through with Macmillan-style flair a push for more land – for example, by freeing up some to which other departments, such as the Ministry of Defence, still cling. This would imply not making cheeseparing savings elsewhere, but a rethinking of the role of the state post-Brexit. The Cabinet member in question is Michael Gove.
Yes, the move would be controversial. The DEFRA Secretary polls well in this site’s Cabinet League Table, but his standing has not yet recovered from his role in last year’s Conservative leadership election. Furthermore, his appointment would come close to making the Government a Vote Leave administration at the top – with Boris Johnson dug in at the Foreign Office. On reflection, however, that would not be a bad thing. Leavers and some Remainers would unite in arguing that those who brought about Brexit should own it. And a plus for May is that Gove himself is not a potential leadership candidate: that ship has sailed.
Most of the current talk about a reshuffle is precisely the wrong way round. It is about who should be promoted rather than what should be done. But it is the second that precedes the first – or should do. In our view, the latter is: making a decision on our post-Brexit economic model; reinvigorating the Conservatives in office with a coherent plan to reshape the state and make room for tax cuts, and winning the votes of the next generation. None of this can be achieved without change at the Treasury.