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Theresa May’s mission is to resolve Thatcher’s contradictory legacy

The new Prime Minister recognises how economic liberalism undermines conservative values.

In January 1956, as Anthony Eden’s premiership succumbed to drift and decline, the cry went up for the “smack of firm government”. Among Conservative MPs, Theresa May has satisfied a similar desire. Even some of her victims profess admiration for the ruthlessness with which she assembled her frontbench. The number of sacked ministers exceeded her parliamentary majority of 12. “She’s taken control,” Tory MPs say approvingly.

May’s decisiveness was one of the defining characteristics of her opening week. The other was her ambition. For some, the task of unravelling the UK’s 43-year EU membership would be work enough. Yet May has simultaneously vowed to reshape the economy so that it serves “everyone”, not “a privileged few”. For the new Prime Minister, the two missions are complementary. An ally spoke of May’s “acute awareness” that the Leave vote was not merely a rejection of the EU but “a roar against the dispossession of globalisation”.

In the first and only speech of her brief leadership campaign, she proposed a battery of measures to redress this: worker representation on company boards, binding shareholder votes on executive pay and stricter controls over foreign takeovers. With this programme, it is not David Cameron’s or New Labour’s legacy that May is confronting, but that of Margaret Thatcher.

The economic forces that the former prime minister unleashed – through privatisation, deregulation and tax cuts – had ambiguous and unintended consequences. While dealing a hammer blow from which the socialist left and the trade unions never recovered, they also undermined the ordered society that she revered. The speculative frenzies of the market, the decoupling of contribution and reward and the surge in private debt contradicted her values of responsibility, fidelity and thrift.

As a senior Conservative told me: “That­cher couldn’t conceive of a world in which people who had more money and success wouldn’t want to put back something back. She wouldn’t have dreamed of thinking that she had to legislate for it.” As the second female prime minister, it was inevitable that May would be compared to the first. But the similarities extend far beyond gender. Both were shaped by their Christian fathers (May’s an Anglican vicar, Thatcher’s a Methodist lay preacher) and both adopted a rigorous moral code.

May’s mission is to construct the society that her predecessor envisaged but did not achieve. An ally described her as “politically seared” by the 1980s and the failure of many to “behave with necessary responsibility, generosity and public spiritedness”. Her ambition is to forge a model of growth that is not dependent on high immigration, excessive financialisation and industrial short-termism. This aspiration sets her apart from Cameron and New Labour, who reformed the superstructure of Thatcherism but never challenged its economic base. In her campaign speech, May spoke of “cutting out all the political platitudes about ‘stakeholder societies’ [a favoured Blairite motif] – and doing something radical.”

Her target is not Margaret Thatcher but her more doctrinaire followers. One of the most notable demotions was that of the libertarian Sajid Javid, replaced as business secretary by the more interventionist Greg Clark. In a ConservativeHome article in March, Nick Timothy, May’s influential joint chief of staff, rebuked those “who make it a mark of their ideological machismo that they quote Ayn Rand” (Javid’s intellectual hero). Although the new cabinet was labelled the most right-wing in recent history, the appointment of the veteran Tory wet Damian Green as Work and Pensions Secretary similarly showed a more complex balance.

Through the negotiation of Brexit, May is wrangling with another Thatcherite bequest. It was Thatcher who signed the Single European Act in 1986, extending the free movement of goods, services, capital and people. As the EU expanded, the liberal imperative of growth clashed with the conservative imperative of order. Net migration from Europe now stands at 184,000, a level regarded by May as unsustainable. Unlike some of her former cabinet colleagues, she was a sincere believer in reducing the net migration total (currently 333,000) towards “tens of thousands” a year. May’s challenge is to reconcile this ambition with the defence of the City of London’s pre-eminence. The Canadian-style “tariff-free access” proposed by Brexit negotiator David Davis would exempt the UK from free movement but would deny financial services the right to unhindered trade.

Governments are frequently better judged by their actions than by their words. Tories cite the planned £24.3bn takeover of ARM Holdings, the UK’s largest technology company, by SoftBank of Japan as proof that May will pursue a more liberal path than some of her rhetoric suggests. Downing Street replies that this is merely indicative of the Prime Minister’s case-by-case approach. But the vow to keep the UK “open for business and open to foreign investment”, as the Chancellor, Philip Hammond, put it, risks colliding with May’s more protectionist leanings. The extent to which the government follows George Osborne’s proposal to reduce corporation tax from 20 per cent to 15 per cent will be telling.

Every prime minister since Thatcher has dwelt in her ideological shadow. The Brexit vote, one of the ruptures to which the UK is given roughly every 35 years (1906, 1945, 1979, 2016), constitutes a natural punctuation mark. Thatcher’s unintentionally liberal settlement could be supplanted by May’s harder-edged conservatism. Far more than Cameron, who sought the middle way of “the big society”, she heralds the role of the state in promoting national greatness, maintaining social order and widening equality of opportunity.

The fallout from Brexit could yet overwhelm May’s government. Yet her programme shows that she is not resigned to this fate. Having been underestimated outside office, she must now defy those who doubt her inside it. The resolution of Thatcher’s paradoxical legacy is a worthy test.

George Eaton is political editor of the New Statesman.

This article first appeared in the 21 July 2016 issue of the New Statesman, The English Revolt

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Can parliament force a government U-turn on the UK’s customs union membership?

Downing Street is trying to bully Conservative Remainers with the threat of letting in a Jeremy Corbyn government.

Nice precarious hold on power you’ve got there, Prime Minister. Shame if something happened to it.

Downing Street is insisting that there will not be U-turn on the United Kingdom’s membership of any kind of customs union with the European Union after we leave, as they face a series of defeats in the Lords and a possible defeat in a non-binding vote in the Commons on the issue.

As I explained on the Westminster Hour last night, while the defeats this week won't change government policy, they are a canary in the coal mine for the ones that can.

The nightmare for Theresa May is that, thanks to the general election, she faces a situation in which a majority of the governing party favours one approach to Brexit but a majority of the House of Commons favours another. 

The question is: what happens then? Downing Street is also pushing the line that the vote on the customs union will be a “confidence issue”, ie they are trying to bully Conservative Remainers with the threat of letting in a Jeremy Corbyn government. But, of course, thanks to the Fixed Term Parliaments Act, there is no such thing as a “confidence issue” outside a very specific motion of no confidence. Or, at least, there is no such thing as a “confidence issue” – which can bring about a new parliament.

May can make the issue one of confidence in her own leadership and resign if she is defeated, but, under the Fixed Term Parliaments Act, that wouldn’t trigger a new election: merely an invitation by the Queen to another politician to form a government. And frankly, as far as the Commons arithmetic goes, “another politician” is far more likely to be Michael Gove than Jeremy Corbyn. The process whereby you get even the glimmer of a risk of a Labour government by voting to keep the United Kingdom in a customs union is altogether more complicated and lengthier than Downing Street would like to pretend.

But the problem for Conservatives in particular, and Brexiteers in general, is while they can change the Prime Minister, they can't change the parliamentary arithmetic. Whether the majority of Conservative MPs want it or not, a U-turn on the customs union may well be inevitable.

Stephen Bush is special correspondent at the New Statesman and the PSA's Journalist of the Year. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.