Cameron at 10 Page 30

  When the draft is finished, it is seen again by a very narrow group of Cameron, Gove and Hilton. Hilton is ‘wonderfully fussy’ and looks at every single word. Gove is ‘very good at the funny bits’, and adds humorous flashes. It is the best-written of his conference speeches as PM, with solid meat, if not new policy, on welfare, education and security. He tackles head on the ‘posh’ criticism: ‘I’m not here to defend privilege. I’m here to spread it.’ He had been persuaded to be personal about himself, to combat the charge he has no hinterland, and had thought hard about this point over the summer. What he says comes from deep inside him. His father was born ‘with no heels on his feet’, but showed the resolve to succeed in life: ‘the glass was always half full – usually with something alcoholic in it’. He wants to allude to the Olympics, and had a flash of inspiration in the summer, linking the Paralympics to his son Ivan, who died in 2009. So he talks about his hopes that the Paralympic Games will change society’s attitude to disability. ‘When I used to push my son Ivan around in his wheelchair, I always thought some people saw the wheelchair, not the boy. Today, more would see the boy – and that’s because of what happened here this summer.’ Andrew Feldman takes some credit for persuading him to open up. ‘I’m always telling him to bring out his inner Semite,’ he says, referring to Cameron’s Jewish ancestry (Cameron’s great-great-grandfather was the Jewish financier Emile Levita), which Feldman thinks explains Cameron’s inner warmth.13

  The speech comes together in the last few hours, the themes of global race and aspiration chime in the Birmingham Symphony Hall and outside. Cameron is far happier with the reception than he received the year before. As soon as he can get away, he goes up in the lift with Samantha and Liz Sugg to his room where drinks are laid out for his team. Cameron has succeeded in the first of Hancock’s two prerequisites. ‘Terrific performance. Bloody good speech’ is the verdict of Quentin Letts in the Daily Mail.14 After a difficult few months following the health bill, omnishambles Budget and Lords reform, there is relief among the party that a sense of direction has been restored at the top. Wounds are by no means healed, but the conference speech goes some way to restoring confidence in Cameron’s leadership. He now needs to get the Autumn Statement right.

  Before it, however, Plebgate returns for one final death throe. Mitchell was advised to keep away from the party conference, but he is not forgotten. Police federation members wearing t-shirts saying ‘PC pleb and proud’ outside the conference centre provide a stark reminder of the row. On Wednesday 17 October, at the first PMQs after the conference season, Miliband focuses on Mitchell. He cites Boris Johnson’s comments at the 2011 party conference, when he demanded that those who swear at the police should be arrested. Mitchell, sitting next to Lansley on the government front bench, says, ‘I didn’t swear.’ Miliband replies, ‘He says he didn’t. Maybe he’ll tell us what he did say. Did the chief whip use those words?’ Mitchell looks visibly uncomfortable, but Cameron intervenes, ‘The chief whip apologised. That apology has been accepted. What he did and said was wrong.’ Miliband senses he is on to a winner: ‘Just because the officer had better manners than the chief whip doesn’t mean he should keep his job. While it’s a night in the cells for the yobs, it’s a night in the Carlton Club for the chief whip.’ But Miliband then squanders his initiative when he broadens out the attack to the economy, which is blunted by better employment figures released that day, opening the way for Cameron to respond with the jibe: ‘He comes to this House. He’s written out his clever questions, he doesn’t really care what’s happening in our economy.’ Mitchell himself survives the session and that evening he meets the officers of the 1922 Committee.

  After PMQs, Cameron asks to see John Randall, the deputy chief whip who has been threatening to resign if Mitchell does not go. Later, at the 1922 Committee, seven or eight speak in Mitchell’s favour, but five MPs speak out decisively against him, including Sarah Wollaston, the GP elected as a candidate in the 2010 election via an open primary. The following morning, Mitchell realises he is losing the support of most of the party. The mood in Number 10 is also turning against him, following a number of phone calls from those eyeing up promotion. Mitchell’s supporters feel that Number 10 is not standing behind the chief whip: ‘spineless, cynical, serpentine’ is how one described Downing Street’s response. That evening, with pressure from Number 10 mounting on him to resign, he decides that he must go. On Thursday evening, Mitchell arranges with Cameron’s office to meet the PM at Chequers at 4 p.m. on Friday 19 October as soon as Cameron returns from the EU Council, to hand in his resignation.15 He spends two hours at Chequers and at 6 p.m. a statement announcing his resignation is released. The collapse of confidence in Mitchell by the parliamentary party proved fatal. Cameron had come under great pressure for him to go, not least from Iain Duncan Smith, who never forgave Mitchell for plotting against him as party leader in 2003. A ComRes poll published that weekend suggests that Labour’s lead over the Tories has increased by four points since September, with Labour on 41% to the Conservatives 33%.16 Cameron swiftly appoints the reliable Sir George Young as Mitchell’s successor as chief whip. Cameron tells him that upcoming difficulties include gay marriage, renewable energy and Europe. With Osborne caught in a first-class train carriage with a standard-class ticket, prompting the allegation that he didn’t want to sit with the hoi polloi, it has not been a good week.17

  The Autumn Statement, to be delivered on 5 December, has become even more critical; Osborne is under tremendous pressure. Demands are rising that he stop being a strategist and regular attendee at Number 10 meetings, because it is distracting him from the job of being chancellor. In the months leading up to the Autumn Statement, pressure to abandon Plan A intensifies, the eurozone looks as if it may fall apart, while a recovery in the British economy remains elusive. Inflation peaks at 5.2%, and the continuing financial crisis, with its impact on credit, means there is insufficient growth to provide the expected tax yields. However, solid support from the IMF, as well as the OECD, offers Osborne some solace. José Ángel Gurría, Secretary General of the OECD, also provides encouragement at the Global Investment Conference in London on 26 July: ‘You are now sowing the seeds for what will be the elements for recovery.’ He urges Osborne to stick by his austerity programme.18

  Intense conversations take place in the Treasury during the summer. It is becoming increasingly evident that the government is falling behind meeting its financial targets outlined in 2010. Some officials are keen to move on to Plan B, with a greater emphasis on policies to stimulate growth, echoing the debate among leading economists in the country. Debate intensifies over the following weeks. Some Lib Dems become very jumpy. Letwin believes it is ‘the moment of greatest tension within the coalition over the whole five years’.19 Osborne’s team mobilise voices within the CBI and the Institute of Directors, who are staunchly supportive of his strategy, to speak up in public. The Quad remain solid behind Plan A, as do Nicholas Macpherson and Jeremy Heywood. ‘We were pretty sure even that September that we had got it right and would be vindicated,’ says an Osborne aide. Rupert Harrison predicts that in six months the economy will be doing well. Many in Number 10 are reassured by his confidence.

  But there is more bad news. On 16 October, a report from the Office of Budget Responsibility comes out which says that ‘along with many other forecasters, we seem to have significantly overestimated economic growth over the past two years … Fiscal consolidation may also have done more to slow growth than we assumed.’20 The report cranks up pressure in the Treasury even further to ease austerity. ‘We will have to chase the numbers if we are to retain credibility,’ Treasury officials are telling Danny Alexander.21 In the final few days before the statement, they decide that rather than cutting further, they will spread the cuts out over a longer period, making the critical calculation that doing so will retain credibility with the markets and keep interest rates low. Osborne duly announces on 5 December that the official target of having debt
falling as a percentage of GDP by 2015–16 will be delayed by one year. Osborne additionally cancels a planned rise in fuel duty, increases personal allowances further to help those on low incomes, and again cuts corporation tax to spur job growth.

  The 2012 Autumn Statement is a high-wire act. Using the windfall benefits from the 4G mobile auction, as well as £5 billion that he hopes to repatriate from Switzerland through an agreement on tax avoidance, he produces the money to finance a fuel duty freeze, the personal allowance change and the corporation tax cut. Osborne also cunningly manages to set some elephant traps for Labour. Somehow, with deft political skill and a dollop of luck, Osborne emerges stronger from the Autumn Statement than he had been the day before. ‘In years to come politics professors might hold seminars on this resilient character … who managed to persuade the public that he was doing a reasonably good job’, says the Guardian.22 Ed Balls too comes to his rescue. The shadow chancellor rises to his feet full of adrenaline to pummel Osborne. He will outline ‘the true scale of this government’s economic failure’. The beginning is promising: ‘Our economy is contracting. The chancellor has confirmed that government borrowing has revised up this year, next year and every year.’ But then he makes a terrible slip: ‘The national deficit is not rising …’ before correcting himself ‘… err, is rising, not falling.’ The correction comes too late and Balls fails to recover his momentum. He is drowned out by gleeful jeers from the Conservative side of the House. Osborne has a lucky escape – for the time being. Missing the debt target is probably going to consign Britain’s AAA rating to history within a few months. By softening the edges of Plan A, the chancellor has bought some respite, but both he and Cameron know they are still very far from in the clear.

  TWENTY-ONE

  Cameron Pledges a Referendum

  April 2012–February 2013

  On 23 January 2013, David Cameron delivers a speech on the European Union at the Bloomberg offices in London. His Private Office reckon it is the most significant foreign policy speech of his five years in power. Janan Ganesh of the Financial Times later calls it ‘the most important speech by a British prime minister since Tony Blair’s case for war in Iraq’.1

  It is not a speech Cameron had wanted to make. He had entered 2012 on the back of his EU veto, still hoping Europe would be no more than a marginal distraction in his premiership. But pressure has piled up on him from all sides to make some kind of defining statement of his thinking. Cabinet ministers have become impatient with the EU once they grapple with the reality of its impact on their departments, and the Conservative Party has become more Eurosceptic by the month. Even Cameron feels angry that the advice he received before the election – that there would be no major treaty change in the next five years – has turned out to be wrong. Spurred on by the eurozone crisis, the EU has an ever greater appetite for stronger powers at the centre. The Lisbon Treaty, over which Cameron declined to hold a ‘promised’ referendum, turns out to have been more federalist than he had feared. The result, as Matthew d’Ancona puts it, is that ‘it has become increasingly clear to many ministers that if Britain is to remain a member of the EU, significant powers must be repatriated’.2

  Within Number 10, Cameron’s aides have been on a long journey since he came to power in May 2010. As Major’s team found in the 1990s, the EU arouses deep feelings among Tory MPs that cannot be contained. Both Cameron and Osborne are profoundly irritated by their Eurosceptic MPs, but Osborne is even more pragmatic than Cameron. ‘George worried whether it was sensible politics to talk about disengaging from major international institutions in the twenty-first century,’ says one close to them. ‘He was worried not only about the effect on the party but also the reaction of the business community leading up to any referendum.’ Osborne’s eye is on a further horizon than Cameron’s: his own leadership succession. Business opinion weighs heavily on him, and he ‘is loath to make the Conservative Party appear the riskier proposition to business than Labour’. Cameron, however, is more willing to engage with the Eurosceptics and see if he can accommodate them. He relies particularly on Ed Llewellyn over Europe. His chief of staff is at his most influential on this topic. Llewellyn has deep contacts in the Foreign Office, on the EU ambassador network, and with Foreign Secretary William Hague, who is himself at the pragmatic end of Eurosceptic opinion. Llewellyn is bringing Cameron round to realise that a reformed EU, with Britain playing its part within it, is a serious possibility. Cameron must always heed Nick Clegg, who is not keen on a referendum. The ‘referendum lock’ policy in the Coalition Agreement is crystal clear, as Clegg reminds Cameron regularly: a referendum would only be triggered if new powers are to be transferred to Brussels.3 It would be strategically disastrous for Cameron to agree to a pre-emptive referendum, as it would force him into a position where he was either in the ‘yes’ or ‘no’ camp.

  By spring 2012, the pressure for Cameron to commit to a referendum is becoming virtually unstoppable. Hague was the first to argue for it: even in Opposition he’d said that it was inevitable that one would have to be held before long. Initially reluctant, Osborne is coming round to see the case. The longer Cameron delays an announcement, the more it will appear that he is being bounced into one, and he will lose all advantage. There are particular fears about the 2014 European elections, with the likelihood growing that the party will poll less than UKIP (as indeed proves to be the case). The time has come for a decision. The improbable location of a pizza restaurant at Chicago’s O’Hare airport is the location. It is 21 May and on their return from a NATO summit, Cameron sits down with Hague and Llewellyn to talk. Before going to the country Cameron and his senior ministers must first reform relations with EU partners. They agree to offer a referendum in the middle of the next parliament, i.e. before the end of 2017. They discuss a later date, but 2017 is already five years distant; any longer might not seem credible. Their deliberations remain top secret.

  On 29 June at the EU Council, Cameron blocks moves to extend the eurozone banking union across the EU, successfully resisting plans to allow a single supervisor to oversee banks.4 He secures a further agreement that the single market will not be undermined by any new governance arrangements for the eurozone. Number 10 brands the Council ‘one of the PM’s greatest negotiating triumphs’.5 At the press conference, Cameron places himself on a collision course with his Eurosceptic MPs when he rejects out of hand an immediate in/out referendum and mounts a passionate defence of Britain’s membership of the EU. The outcry is so great that he is bounced into writing an article in the Sunday Telegraph on 1 July, in which he drops a heavy hint that a referendum might be needed one day.6 The article – headed ‘We need to be clear about the best way for getting what is best for Britain’ – is, in truth, anything but clear. Number 10 has an agonised weekend, besieged by messages from those on both sides of the debate.

  A large section of the parliamentary party has lost whatever trust it might once have had in Cameron over Europe. Only their pressure, they believe, will push him into action. On 27 June, backbencher John Baron delivers a letter to Number 10 signed by a hundred MPs calling for legislation to ensure that a referendum on the future of Britain’s membership of the EU will be held during the next parliament. It states brazenly that only ‘a commitment on the statute book to hold such a referendum would address the very real lack of public trust when people hear politicians making promises’.7 Cameron’s team smart when they read it, knowing that the letter is attacking the PM for abandoning his ‘cast-iron guarantee’ on Lisbon. Cameron agrees to see Baron on 9 July. He listens to him as politely as he can, before concluding he wants to give himself time before making a response. On 18 September, he writes to Baron to say that ‘the EU is currently undergoing radical and fundamental change’, he wants ‘less Europe not more Europe’, but that it would be quite wrong to hold a referendum before exploring fully what concessions and reforms might be negotiated from the EU. Any question of gaining ‘fresh consent of the British people’ through
a referendum should thus be delayed until clarity is reached on new arrangements between Britain and the EU.8

  Just before the summer recess, a critical meeting had taken place with Cameron, Osborne, Hague and Llewellyn in the PM’s office. Osborne still has reservations over holding a referendum. They are now joined in September by Letwin. He and Osborne are at opposite ends of the spectrum, but it is clear that a speech announcing a referendum will have to be made before the end of the year. Cameron’s position is desperately weak. He cannot hold out much longer.

  Meanwhile, backbenchers are not remotely reassured by Cameron’s reply to Baron. Angered by the brush-off, they resolve to bide their time until they can make their feelings known and damage Cameron. They humiliate him in a parliamentary vote on the EU budget at the end of October. Fifty-three Conservative MPs, including the usual suspects – Douglas Carswell, Bill Cash, Bernard Jenkin, Mark Reckless and David Davis – join with Labour to pass an amendment calling for Cameron to impose a real-terms cut in the EU budget between 2014 and 2020.9 The BBC reports that it is ‘the most [significant] defeat since the coalition came to power’, and a ‘blow to David Cameron’s authority’.10 Number 10 had mounted a massive whipping operation to prevent MPs from voting against the government. Cameron spent an hour with Graham Brady, trying to persuade him to bring his troops into line. Brady himself abstained, but believes the fact that Cameron goes on to secure a budget reduction shows how influential the rebels and critics are. Number 10 is incandescent at the result, finding it ‘staggering that the defeat becomes yet another story about the Conservative Party at war with itself’. The lesson they draw is to be very careful about ever bringing another European issue to a vote in Parliament. The seemingly unstoppable rise of UKIP also remains a major concern for Conservative MPs. By the autumn of 2012, UKIP is consistently polling around 10% in opinion polls.