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Tory donors face an unpalatable choice

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There is growing unrest among Tory donors (the fabled men in grey suits who decide who does and who does not get to govern).  After stumping up millions to fund the 2015 general election campaign, they had expected to spend the five years to 2020 quietly counting their money.  Instead, David Cameron more or less immediately badgered them into stumping up the cash to run the woefully inept EU referendum Remain campaign.  Then, following Cameron’s decision to flounce out after his defeat, they were obliged to fund Theresa May’s hapless attempt to deliver a knockout blow to an opposition who, according to the polls, was already on the ropes.

For all of the millions that the grey suits have spent on these campaigning efforts, they are stuck with a minority government reduced to bribing the unsavoury Ulster Unionists just to prevent the government from falling.  It is of little surprise, therefore, that one of the grey suits – Lord Harris of Peckham – has finally gone public to criticise both May and her divided party; apparently preferring the (now unlikely) prospect of a Blairite Labour government to the continuing in-fighting among the Tories.

Harris may be in a minority for now – although his public views no doubt represent the privately held views of other donors.  However, from the point of view of Tory donors, things can only deteriorate from here on.

In April, Theresa May stood in front of rows of Tory backbenchers who believed that the heady days of the Thatcher era were about to return.  In June, instead of the Tory ranks being expanded with an additional intake of MPs owing their seats (and thus their loyalty) to Mrs May, they were depleted; with around 50 of the remaining Tory MPs facing the prospect of losing their seats in the event of an early election. Given this outcome, May’s premiership should have been over there and then.  The trouble is that there is no palatable alternative as Tory leader.  The fact that people are seriously suggesting the one-man Tea Party that is Jacob Rees-Mogg as a possible prime minister serves only to show how unelectable the Tories are becoming.

As happened in the early 1990s, the Tory party has split over Europe.  For the moment the Europhobic Tory headbangers are in the ascendancy; with their champions – Fox, Davis and Johnson – leading what passes for negotiations with the EU27.  However, it is increasingly clear that warnings given by former Greek Finance Minister Yanis Varoufakis (who knows a thing or two about attempting to negotiate with the EU) should have been heeded:

“That Michel Barnier and his team have a mandate to wreck any mutually advantageous deal there is little doubt. The key term is ‘sequencing.’ The message to London is clear: you give us everything we are asking for, unconditionally. Then and only then will we hear what you want.”

The Brexiteers’ naïve belief that, in the end, the EU27 will give in because of the potential damage to Italian winemakers and German automobile companies simply misses the point.  It is the future of the EU institutions that is at stake, not industries within individual member states.  And the institutions have but one aim – to ensure that Britain is in a worse economic position after it leaves the EU than it would have been in had it stayed.  For all of the British bluster, it is the EU negotiators who understand that “no deal is better than a bad deal.”

This is already clear to moderate Tory politicians such as Kenneth Clarke and Anna Soubry, and is no doubt becoming clear to a wider number of Tory MPs and – especially – those Tory donors whose businesses face major losses as the British economy collapses.  Nor is the likely outcome of the EU negotiations lost on Labour’s leadership; which has effectively u-turned by embracing the idea of a transitional arrangement not dissimilar to EU membership – allowing Labour to maintain the letter of the referendum result while ditching the spirit.

For the men in grey suits, there is a lesson here.  The Tory division is going to turn into internecine warfare before the parliament is out.  As happened in the late 1990s, divisions over Europe could well leave the Tory party in the political wilderness for a generation.  On the other hand, Labour’s U-turn on Brexit suggests that the ability of the Corbyn wing of the party to have its way is moderated by the large number of centrists and Blairites in the parliamentary Labour party (PLP).  However, as the wider Labour party apparatus is taken over by Corbyn’s supporters, the moderating hand of the PLP will weaken; particularly if – as was the case in the 1980s – constituency parties are given the right to deselect MPs.

Most probably, an election in late 2017 or early 2018 will result in a Labour government with a small majority… small enough that Corbyn will not be able to ride roughshod over the opposition.  Such an election will also return enough of the current PLP to moderate the more extreme policies that a Corbyn government might be tempted to implement.  An election in 2022, after the economic fallout from Brexit is clear to everyone, might well produce the most left-wing Labour government since 1945; with little coherent opposition to stay its hand.

For the men in grey suits, neither outcome is appealing.  But I can’t help wondering if they might grudgingly stump up the cash to fund yet another early election.

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