Just days after the Budget, a new horror emerges. The trade union Unite threatens a fuel-tanker strike by its drivers over health and safety. Francis Maude has spent several months in the Cabinet Office looking at the possibility of a fuel strike and producing contingency plans. He considers himself the specialist figure. Number 10 are far from pleased when he walks out of the black front door, passing Craig Oliver in the hall, and gives an interview to the waiting television cameras. He tells Sky News ‘a bit of extra fuel in a jerry can in the garage is a sensible precaution to take’.16 His words are designed to calm nerves but instead cause panic-buying. Number 10 is hypersensitive about fuel strikes. The ease with which the country was brought low by fuel strikes in 2000 led to one of the very rare times in Blair’s period in power when Labour fell behind in the opinion polls. Cameron senses he must take control himself. He sets COBRA to work, and is frustrated to learn preparations for a strike are not more advanced. Yet again, he finds the machine only works flat out when he himself is driving it. He instructs ministers to talk to employers and then directly with the unions to help ward off the strike. The impetus is successful, but the damage has been done. The perception is given of a government not fully in control.
Osborne had been praying for good news when the GDP figures for the first quarter of 2012 are produced. But the data, published on 25 April, is bleak: the economy has shrunk again by 0.2%. He had feared the worst, and when it comes, it is a hard blow. Cameron and he instinctively feel that the data is not entirely accurate. Cameron spends time in the late spring and early summer touring the country: he regularly remarks how the economy always seems to be much better than the data suggests. Worries abound of a triple-dip recession. Osborne knows that he will never acquire the parliamentary votes for the Finance Bill, implementing measures from the Budget, in June and July unless he changes direction. On 19 July, the IMF produces a pessimistic assessment of the UK’s economy and warns the government to slow the pace of its austerity programme. Osborne’s image is under attack along with Cameron’s. Nadine Dorries, the outspoken Tory backbencher, had said in March that ‘The problem is that policy is being run by two public school boys who don’t know what it is like to go to the supermarket.’17 On 23 April she returned to her script, accusing Cameron and Osborne of being ‘two arrogant posh boys’ who show ‘no passion to want to understand the lives of others’.18 Having a Conservative MP attacking the party leaders further confirms an impression of a government seemingly out of touch and looking after the rich.
Osborne knows he must change tack. He sets about a programme which he calls ‘defusing the bomb’.19 On 28 May comes the first U-turn, on the pasty tax: only food cooling down rather than being kept hot is liable for VAT. He is not convinced of this U-turn but he thinks ‘we might as well chuck in the pasties, because otherwise it makes Cornwall quite difficult for us’. Next, the proposed VAT rise on static caravans, again seen as targeting the less well-off, is cut from 20% to 5%. This helps win back the MPs with caravan makers in their constituencies, many of them in East Yorkshire.20 Three days later, he announces the U-turn over the ‘charity tax’ proposals. ‘I never thought of this as a charities tax: it was supposed to be a tycoon tax. You can see how that went wrong,’ he tells colleagues. The Church of England too had to be bought off, because VAT had been put up on Church buildings. Osborne invites the Bishop of London to see him; together they find a compromise. In public, Osborne admits that he had ‘got it wrong’ on some Budget measures with political capital expended on ‘battles that don’t matter’.21
Number 10 has drifted into the heart of the ‘omnishambles’. The term itself was first used in 2009 by the fictional character Malcolm Tucker, Labour director of communications in the BBC television comedy The Thick of It. Oliver Dowden remembers it from the programme and starts using the term around the building. It leaks through the walls to the world outside: Craig Oliver always accused him of popularising the term.
The Budget, the bad economic news and the U-turns are all damaging the party. The Tories had been on 38% or 39% in the polls since the EU veto in December 2011, well ahead of Labour. But three weeks before the Budget, Cooper believes because of the damage to the reputation of the government over the NHS bill, the polls start turning against them. Focus groups begin to say the Tories are incompetent, produce half-baked measures, and that Cameron is merely buffeted by events, lacking principles and staying power. Cameron’s team feel they could live with unpopularity over the NHS bill because at least it was advancing Conservative policy; but they know in their hearts that unpopularity over the Budget is totally their own fault.
Each week brings new woes to Cameron and Osborne. They are sinking together. The mood in the parliamentary party is terrible. Many have lost their confidence in Osborne’s judgement. A large number of Conservative MPs, perhaps most now, think Cameron is incompetent and lacks grip and clarity. At times, he seems overwhelmed. Even his closest team in Number 10 begin to worry about him. Pressure mounts in some corners for a more activist economic policy. Rumours are rife of leadership plots. ‘I felt we were paddling furiously up a creek and couldn’t make any headway,’ says one insider. ‘There are only so many times you can pick up a newspaper and read yourself being picked apart before it gets to you: even my friends, few of whom are Tories, would say how sorry they felt for me,’ said another. In late April, Cooper sits down with Oliver. They agree, ‘this is hopeless: we have to achieve greater clarity and agreement about what we are trying to do’. Cameron’s party conference speech that autumn is one of the fruits of their deliberations.22
Number 10 is still adapting to the departure of Hilton. After the summer, Oliver Dowden is promoted to deputy chief of staff to help Llewellyn and Kate Fall. Together with head of strategic communications Ameet Gill and Craig Oliver, they work hard to bring more focus to their work, and more discipline to the message. Attempts are made to make the Policy Unit more political. Paul Kirby, the director, comes under pressure to help generate stories to show Number 10 has momentum. Cameron’s court debate bringing in a political heavyweight to run it: the idea is shelved, for a time, with the argument that ‘made-up policies on the fly smacks of the Brown regime’. Cameron’s team accept the problem lies ‘on the ground floor, not on the first floor’, i.e. it is failure of direction from the PM rather than failure of policy, which is the heart of the problem. Party co-chairman Sayeeda Warsi comes under a critical spotlight from Number 10, reflecting the unease about relations with the wider party.
The 2012 Budget gave the coalition a hammering. For one senior Treasury official, it ‘was a reminder that reforming taxes in the middle of the parliament is very difficult’. But the desperate position of both coalition partners in the polls, and the shared determination of Cameron and Clegg, keeps the coalition on the road. They will have to rethink the Quad, which had expanded to include other senior ministers and officials. It now consists of just the four principals and a private secretary taking notes, alongside Heywood and a senior Treasury official. It rarely leaks again. Twice a year the four principals have dinner together. Unencumbered by officials and formal agendas, the dinners become rare occasions when they can let off steam and talk about the world outside politics.23
Policy needs refreshing too. Osborne has been thinking deeply. Despite the ritual slagging match, whereby it suits Ed Balls to say that austerity is far too harsh, and for Osborne to reply that the pain is necessary, Osborne realises he is in fact only keeping to the plan laid out by Darling before the general election, with nothing radical or particularly Tory about his policy. He remains frustrated that the Treasury is not doing more to come up with fresh ideas. Though Plan A remains intact, ‘there was a resistance to any kind of Keynesian panacea; but, within that, there was incredible flexibility on the fiscal pathway,’ as one senior Treasury figure puts it. The Policy Unit therefore produces a slew of proposals for Osborne, including ‘shovel-ready’ infrastructure projects, radical ideas to increase house build
ing, and to privatise road building which is at an historic low. The last proposal appeals to Cameron himself: ‘in Europe people charge to use roads: why can’t we do the same here and use the money to invest in new road building?’ But idea after idea falls by the wayside as neither Cameron nor Osborne are prepared to expend the political capital or take the risk to drive the projects forward. Road pricing is thus deemed too risky and shelved for a future parliament. Home building, including entirely new towns, is considered likely to upset Conservative voters in the shires. They are not yet prepared to find the money for big infrastructure projects. ‘Funding for Lending’ is the most important initiative that comes out of this work. Osborne is adamant: ‘I will not tolerate a second quarter of negative growth.’ Wanted or not, that is exactly what he is about to have to tolerate.
EIGHTEEN
Olympian Summer, Olympian Difficulties
May–September 2012
‘The game was massively up if Boris didn’t win London in May 2012,’ recalls party chairman Andrew Feldman.1 The Olympic Games are raising the stakes. To have Ken Livingstone, the Labour challenger to Boris Johnson in the mayoral election, parading endlessly before the cameras would be a considerable blow. With Conservative confidence in Cameron’s leadership so fragile, defeat for Johnson might very well mark the beginning of the end for him. Number 10 know that they are in an existential fight, and they have to win.
Boris Johnson was first elected London mayor in 2008. At the time, he was far from certain whether it was the right platform for him. But Cameron wanted a big hitter as the Conservative challenger, and there weren’t many alternatives. Sebastian Coe was a possibility, but he made it clear he wasn’t interested. Steven Norris, former vice chairman of the party, was another option, but lacked widespread appeal. Cameron and George Osborne liked and trusted Nick Boles and regarded him as a serious candidate; but while Boles was making up his mind, he developed Hodgkin’s lymphoma. So it was Boris Johnson, who had charisma and an ability to appeal to a cross-section of the electorate, essential if the Conservatives were going to win in London. Ultimately, Boris defeated Ken Livingstone by a margin of 53.2% to 46.8%. It is too close for comfort.
The job of mayor proves to be his métier, to the surprise of many, himself included. Relations with Number 10 are better than expected from 2008–12. ‘Of course Boris, being Boris, couldn’t but help criticising and jabbing periodically,’ says one insider. ‘Equally, he could claim he was standing up for London, which meant he would disagree periodically in public with what we were doing.’ A new London airport on ‘Boris Island’, as the media dubbed it, in the Thames Estuary is a big point of difference. Cameron and Osborne have never regarded it as remotely feasible financially.
Johnson is rare as a person about whom Cameron and Osborne differ. To the latter, he is, according to one former Number 10 aide, just ‘plain annoying’. ‘There was a sense in this building that the PM and the chancellor were getting on taking the difficult decisions while Boris, with his crass bumbling, was lapping it all up and loving twisting the knife,’ says another. Cameron, however, often finds Boris entertaining and funny. But when he gets under his skin, the gloves rapidly come off. After Johnson lists in print all the Old Etonians who have gone on to become prime minister, Cameron sends him a text: ‘The next PM will be Miliband if you don’t fucking shut up.’ There are other tense moments with Boris in Cameron’s first two years as PM. According to one former Number 10 aide, ‘there is a big feeling that Boris is difficult, that we cannot depend on him, that he is a fair-weather friend who strikes poses and can’t be trusted.’
Number 10, for all the ambivalence, know they have to ‘hug Boris’. Party conferences require particular stage management. Before the 2010 and 2011 conferences, Number 10 hold discussions about what will satisfy him. He is allocated a big morning slot with his media circus, giving him a place in the sun, and his exposure is very carefully managed. In 2011, he receives much more applause than Cameron on his arrival at conference, and Number 10 are relieved that he only makes one jibe at the PM, on police numbers.2 However much they resent him for being a ‘box office matinée idol’, they know spurning him would be churlish as well as dangerous.
So despite the ambivalence, backing him again for re-election in 2012 is almost inevitable. Osborne approaches the Australian political strategist Lynton Crosby to campaign again for Boris as he had in 2008. Throughout April and early May, the political side of Number 10 is reoriented to try to ensure Boris will win. The whole CCHQ machine too is thrown behind making sure he is re-elected, even at the expense of shifting resources away from supporting councillors across the country. It will be a tight election: London is not naturally a Conservative city, and with the economy still in trouble, and the polls nationally at such a low ebb, it will be an uphill struggle. The result on 3 May is very close – much closer than 2008. Johnson scrapes home with 51.5% of the vote to Livingstone’s 48.5%.
Relations between Boris’s camp and Number 10 plummet in the months following the election, with jealousy and resentment at Boris’s high profile and his effortless playing to the gallery. Cameron and Osborne, in contrast, are under great pressure and their positions precarious. Johnson’s re-election will at least bind him up in London for another four years, reducing the biggest leadership threat to Cameron. Predictably, the Conservatives do badly in the May local elections across the country, although they avoid the midterm collapses seen under both Thatcher and Major. Some 405 councillors lose their seats in May, and the Conservatives lose control of twelve councils, including their only two in Wales.
Johnson thinks seriously about taking on Cameron, but knows that his re-election in London makes it impossible. Boris aside, Cameron has no obvious challengers around the Cabinet table: Osborne, Hague and Gove will never stand against him. Liam Fox has resigned and is discredited, while no one serious is thinking that David Davis merits another stab at the leadership. Osborne remarks that it is ‘not a bad position for a prime minister to be in, if the most credible challenger is an Old Etonian who isn’t even in the House of Commons’. Number 10 nevertheless continue to watch Johnson carefully, and are never quite certain what he is up to. After the local elections, when Conservative losses are exacerbated by UKIP gains, Graham Brady, chairman of the 1922 Committee, makes threatening noises that MPs are willing to put their signatures to a challenge against Cameron. Tory grandee Michael Spicer, himself a former chairman of the 1922 Committee, is encouraged to see Brady: ‘You should never look isolated – always flank yourself with named supporters. The first job of the chairman of the 1922 Committee is to represent the parliamentary party to the leadership as objectively as you can’, Spicer tells him. It is debatable whether Brady has been put back in his box. Number 10 studies intently the names of all those voting against the government. ‘We had weekly meetings convened in the utmost secrecy,’ says one. ‘We always thought he would get at least 50% in the event of a challenge, but the truth is that the party never liked him. They accepted him as long as he was a winner, but since the omnishambles he looked like a loser and that could have been fatal to him.’ They do not take suggestions of a plot by Conservative MP Adam Afriyie seriously, regarding him as something of ‘a fantasist’. The board at CCHQ, carefully watched over by Feldman, remain loyal to Cameron. Apart from the period leading up to the 2007 party conference, when Gordon Brown was on the brink of calling a snap election, his support in the parliamentary party has never been so precarious.
Relations between Number 10 and Johnson do however improve from 2013. Lynton Crosby’s arrival from January is ‘key in bringing Boris round’, says one insider. He and Johnson have a very close bond, far closer than he enjoys with Cameron and Osborne. The Australian rapidly becomes the go-to person to smooth over any difficulties that arise between Downing Street and City Hall. Jo Johnson, Boris’s brother, joins Number 10 that April as head of the Policy Unit. He is not seen to be as close to his brother as Crosby is, he hates any notion that
he is an intermediary, and according to one Number 10 aide, describes his brother as a ‘colourful, local government leader’. Kate Fall puts into Cameron’s diary regular, if infrequent, dates for Cameron and Boris to have lunches at Chequers or drinks at Number 10. Cameron begins to relax more with him, seeing him ultimately not as his problem, but one for whoever wants to succeed him when he stands down, i.e. Osborne or May. When Johnson announces his intention in August 2014 to stand in the 2015 general election, Cameron tweets from holiday in Portugal: ‘I’ve always said I want my star players on the pitch.’3 He may not have totally believed his words at the time, but ‘he has increasingly come to believe it’, says one. Osborne cuts Treasury deals for Johnson – such as the extension of the Northern Line, announced in the Autumn Statement on 29 November – which keep him in his place.
Cameron has a private dinner with Boris in autumn 2013, which proves to be a turning point. Boris’s name features much less afterwards at the 8.30 a.m. and 4 p.m. daily meetings in Cameron’s room. Cameron’s aides are relaxed about his appearance at the 2013 party conference, and still more so in 2014. In November 2014, Boris is pleased when Number 10 organises a dinner for him to meet Jeb Bush, and he is flattered by the notion that the putative future US president is meeting the potential future British prime minister. But despite all this, some tensions still remain: on 25 February 2015, the headline in The Times is ‘Tories call for Boris to rescue their campaign’.4
A few days of light relief, if not sunshine, come on 2–5 June 2012 with the Queen’s Diamond Jubilee. Cameron loves the monarchy. Whilst still at Eton, he stayed up all night on The Mall in 1981 for the wedding of Charles and Diana. He makes it clear there will be no repetition of the tensions with the Palace that occurred under Blair, notably after the death of Diana. He is assiduous in ensuring that Number 10 keep Buckingham Palace very closely informed about matters of state, so no possible misunderstandings can occur. He is thrilled that the Queen accepts his invitation to come to Chequers (her first visit since 1996): unlike some predecessors, he loves his annual visits to Balmoral in September. He treats the royal family with utmost respect in public and in private, looks forward to his weekly audiences with the Queen, and studies the racing results before going to see her.
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