Nigel Farage shows a mug that was presented to him before signing a book of condolence for Margaret Thatcher. Photograph: Getty Images.
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Farage tries to shed his Thatcherite skin

Ukip leader says "For half the country it benefited them, for the other half it didn't."

After Margaret Thatcher's death last year, Nigel Farage declared that he was the only politician "keeping the flame of Thatcherism alive". But as Ukip has achieved increasing success in working class Labour areas (where Thatcher is regarded as a villain), Farage has recognised the need to shift his rhetoric - and his policies. Asked on The Andrew Marr Show this morning if he was the leader of a "new Thatcherite party", he replied:

No, because that was of its time. Thatcherism was of its time, 40 years ago, to deal with a specific set of problems. For half the country it benefited them, for the other half it didn't.

He went on to confirm that Ukip had abandoned its previous policy of a flat tax of 31 per cent, which would have entailed a huge giveaway to the richest, and pledged to take anyone earning the minimum wage out of income tax.

We're going to rethink the tax thing [flat tax], I think that was badly explained, because people thought we were going to put tax up for the low-paid, no, the idea was to abolish National Insurance. What I can tell you for certain is that our biggest tax objective in the next manifesto will be no tax on the minimum wage. You've got to incentivise people to get off benefits and get back to work. That will obviously cost money.

Asked if the cost of tax cuts for the low-paid meant there would be no reductions for higher-earners, he said: "I think a top rate of tax, in this country, of around about 40 per cent is the one that will bring the most revenue into the Exchequer, I think through the 80s and 90s we saw that...Anything over 40 and you start to see people going overseas."

That of course would be a reduction from the current rate of 45 per cent, allowing Labour to attack Farage for promising a "millionaire's tax cut", but it still represents a shift left from Ukip's previous stance. Farage also wisely withdrew his previous suggestion that he would remove the ring-fence on NHS spending.

These stances will antagonise the party's libertarian wing but they are politically astute. Far from craving a laissez-faire approach, most of Ukip's supporters favour an expanded state and higher public spending. Polling by YouGov shows that 78 per cent support the nationalisation of the energy companies and 73 per cent back the renationalisation of the railways. Rather than a "code of conduct" for employers (as promised by Farage), 57 per cent simply want zero-hours contracts to be banned. Rather than a 40p top tax rate, the same number support the reintroduction of the 50p rate. 

Given Ukip's success in attracting working class supporters, it makes no sense for the party to alienate them by adopting a programme of turbo-Thatcherism. In this era of insecurity, there is a large market for a party that combines hostility towards the EU and immigration with a critical stance towards big business. As Farage and his allies know, it is this approach that has enabled the Front National to achieve such success in France.  

Wary of attacking Ukip over its stances on Europe and immigration, Labour has recently focused on campaigning against its free market policies (branding Farage "more Thatcherite than Thatcher"). But if the party's drift to the left continues, it will become much harder to do so. 

George Eaton is political editor of the New Statesman.

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How the mantra of centrism gave populism its big break

A Labour insider reflects on the forces behind the march of populism. 

For just under a quarter of a century, British politics has been dominated by what might be called, paradoxically, a “theology of centrism” - the belief that most people were more concerned with what works than ideology, and that politics should principally be the art of improving the delivery of public goods. It was a theology that, for all their policy differences, united Tony Blair and David Cameron. Anyone who thought electoral success could be won anywhere but from the centre was either naïve or fanatical, or both... but definitely wrong.

Now, populism is on the march across the West. In Britain, as elsewhere, the political class is unnerved and baffled.

So what happened? Partly, as with all revolutions in politics, the answer is: “events”. Unsuccessful wars, economic crashes and political scandals all played their part. But that isn’t enough of an explanation. In fact, the rise of populist politics has also been a direct result of the era of centrism. Here is what has taken place:

1. A hollow left and right

First, the theology of centrism was the culmination of a decades-long hollowing out of mainstream politics on the left and right.

In the mid-20th century, Conservatism was a rich tapestry of values – tradition, localism, social conservatism, paternalism and fiscal modesty, to name but a few. By 1979, this tapestry had been replaced by a single overriding principle - faith in free-market liberalism. One of Margaret Thatcher's great achievements was to turn a fundamentalist faith in free markets into the hallmark of moderate centrism for the next generation of leaders.

It is a similar story on the left. In the mid-20th century, the left was committed to the transformation of workplace relations, the collectivisation of economic power, strong civic life in communities, internationalism, and protection of family life. By the turn of the 21st century, the left’s offer had narrowed significantly – accepting economic liberalism and using the proceeds of growth to support public investment and redistribution. It was an approach committed to managing the existing economy, not transforming the structure of it or of society.

And it was an approach that relied on good economic times to work. So when those good times disappeared after the financial crash, the centrism of both parties was left high and dry. The political economic model of New Labour disappeared in the first days of October 2008. And when a return to Tory austerity merely compounded the problem of stagnant living standards, public faith in the economic liberalism of the centre-ground was mortally wounded.

2. Fatalism about globalisation

Second, Labour and Tory politics-as-usual contained a fatalism about globalisation. The right, obsessed with economic liberalism, welcomed globalisation readily. The left under Bill Clinton in the US and Blair in the UK made their parties’ peace with it. But globalisation was not a force to be managed or mitigated. It was to be accepted wholesale. In fact, in his 2005 Conference speech, PM Tony Blair chastised those who even wanted to discuss it. “I hear people say we have to stop and debate globalisation," he said. “You might as well debate whether autumn should follow summer. They're not debating it in China and India.” (I bet they were, and still are.) The signal to voters was that it was not legitimate to fret about the pace and consequences of change. No wonder, when the fretting began, people turned away from these same politicians.

3. A narrowing policy gap

Third, the modernising projects of Blair and Cameron ended up producing a politics that was, to use Peter Mair’s term, “cartelised”. The backgrounds, worldviews and character of party elites began to converge significantly. Both parties’ leaderships accepted the same external conditions under which British politics operated – globalisation, economic liberalism, sceptical acceptance of the EU, enthusiasm for closeness to the US on security issues. The policy space between both main parties narrowed like never before. As a result, economic and class divisions in the country were less and less reflected in political divisions in Westminster.

The impression arose, with good reason, of an intellectual, cultural and financial affinity between politicians across the main divide, and between the political class and big business. This affinity in turn gave rise to a perception of “groupthink” across the elite, on issues from expenses to Europe, and one that came with a tin ear to the concerns of struggling families. It may be misleading it is to depict all politicians as snug and smug members of a remote Establishment. Nevertheless, social and economic convergence inside Westminster party politics gave populists an opportunity to present themselves as the antidote not just to Labour or the Tories, but to conventional politics as a whole.

4. New political divides

Lastly, the populist moment was created by the way in which new electoral cleavages opened up, but were ignored by the main political parties. The last decade has seen a global financial crash that has restored economic insecurity to frontline politics. But at the same time, we are witnessing a terminal decline of normal party politics based fundamentally on the division between a centre-left and centre-right offering competing economic policies. 

Of course economics and class still matter to voting. But a new cleavage has emerged that rivals and threatens to eclipse it - globalism vs nationalism. Globalists are economically liberal, positive about trade, culturally cosmopolitan, socially progressive, with a benign view of globalisation and faith in international law and cooperation. Nationalists are hostile to both social and economic liberalism, want more regulation and protection, are sceptical of trade, see immigration as an economic and cultural threat, and have little time for the liberal international order.

The factors that drive this new electoral divide are not just about voters’ economic situation. Age, geography and education levels matter – a lot. Initially both main parties were tectonically slow to respond to this new world. But populism – whether Ukip, the SNP or Theresa May's Tories – has thrived on the erosion of the traditional class divide, and sown seeds of panic into the Labour party as it faces the prospect of sections of its traditional core vote peeling away.

Centrists thought their politics was moderate, pragmatic, not ideological. But signing up to free market liberalism, globalisation and an economistic view of politics turned out to be seen as a curious kind of fundamentalism, one which was derailed by the 2008 crisis. The exhaustion of the theology of centrism did not create populism – but it did allow it a chance to appeal and succeed.

Those on the left and right watching the march of populism with trepidation need to understand this if they are to respond to it successfully. The answer to the rise of populist politics is not to mimic it, but to challenge it with a politics that wears its values proudly, and develops a vision of Britain’s future (not just its economy) on the foundation of those values. Populists need to be challenged for having the wrong values, as well as for having anger instead of solutions.

But calling for a return to centrism simply won’t work. It plays precisely to what has become an unfair but embedded caricature of New Labour and Notting Hill conservatism – power-hungry, valueless, a professional political class. It suggests a faith in moderate managerialism at a time when that has been rejected by events and the public. And it tells voters to reconcile themselves to globalisation, when they want politicians to wrestle a better deal out of it.

Stewart Wood, Lord Wood of Anfield, was a special adviser to No. 10 Downing Street from 2007 to 2010 and an adviser to former Labour leader Ed Miliband.