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How the Thatcherites lost their Brexit dream and their party

To borrow Oscar Wilde’s quip about the death of Little Nell, it would take a heart of stone not to hear the wails of free-market Brexiters without laughing. Recent weeks have seen a flurry of laments, fury and blame-shifting by leading Leavers, from Nigel Farage to Lord Frost. But perhaps the most striking was an article by Daniel Hannan, a central figure in the Brexit movement, which appeared under the headline, “The liberal Brexit dream is dying” — though naturally he blamed the “Europhile establishment”.

Hannan, a thoughtful Brexiter, exemplifies a strain of Tory Leavers, the economic liberals who believed in the sovereignty arguments but primarily saw exiting the EU as the vehicle for a low tax, lower regulation and less statist UK.

Instead, they now survey a landscape of higher taxes, with businesses complaining about increased regulation, more state intervention and even discussion about voluntary price caps in supermarkets.

This, then, was a lament not merely for the lost Brexit dream but also for a lost Conservative party. In reality, their promised land was always a fantasy, but in allying with Tory nationalists and Gaullists against those seeking a softer Brexit, the Leave liberals also surrendered the economic argument. A more active state was the price of getting Brexit. They won the war but lost the peace.

This helps explain another puzzle of British politics. Why are Conservatives so angry when they’ve won in so many ways? For a party supposedly beset by obstruction, they have achieved a lot of their aims. Through Brexit, they have changed British foreign and trade policy and taken control of immigration. They have redirected investment towards left-behind regions and pivoted the UK away from its pro-China stance. One can object to all this; much has not worked out as they would wish. But it is not the record of an insignificant government and the next election will be fought on their terrain.

The rage is the fury of those Thatcherite Tories. Brexit did deliver for them, repatriating power to British politicians and through them, British voters. Their mistake was to think it would change the priorities of the electorate, miraculously transforming the median voter into Friedrich Hayek.

Key to the miscalculation was Brexit’s impact on their party. Since Thatcher, there have been three legs to the Tory stool — the free-marketers, the traditionalist social conservatives and the metropolitan Tories — exemplified by the leadership of David Cameron and George Osborne.

Though this last group was more culturally liberal, economically they were still Thatcherites. They believed in free trade, globalisation, lower taxes to encourage investment and reduced public spending. Before the referendum, the social and economic liberals were broadly aligned.

Brexit smashed this coalition. But Leave liberals were slow to recognise that Brexit was also a revolt against their ideology, delivered by the populist arguments of those who were hardline on immigration, suspicious of big business, keen on culture wars and comfortable with a more interventionist state and better-funded public services. The famous Brexit pledge was, after all, more money for the NHS.

During the referendum itself, the alliance made sense. But once it was over, instead of allying with the globalists and Remainers turned soft-Brexiters, many free-market Leavers made common cause with populists who never shared their economic vision. They believed that maximising “Brexit freedoms” would secure the smaller state.

Key UK service industries — and prosperous southern voters — were sacrificed to a bad trade deal as they built a new Tory electoral coalition. This delivered victory but handed their party to populists and weakened those who shared their economic values. The clues were always there, not least in the openly interventionist Boris Johnson’s “fuck business” outburst. The pandemic destroyed their room for manoeuvre by wrecking the public finances but the pass had already been sold.

Their desperate attempt to regain the initiative was to abandon a core belief in fiscal prudence for the chaos of the Liz Truss government: it shredded the Tory reputation for economic competence and the free-market cause.

But even when Truss used her only party conference speech as leader to rail against the “anti-growth coalition”, she failed to notice it was sitting in front of her, in the rows of Nimbys, immigration hawks and urbanite-hating culture warriors. The party is locked into a low growth economic model and a belief in spending cuts which struggles to be specific.

In fairness, the world has also changed. Free trade, globalisation and co-operation have given way to competing power blocs. The pivot to Asia coincided with the retreat from its largest market while climate change and energy security demand more state intervention.

The upshot is that the party’s centre of gravity and electoral calculations have shifted to meet a new target voter who is socially conservative and economically left-leaning. The populists have the upper hand. The neoliberal argument will have to be won all over again.

So, yes, the free market Tories lost their Brexit dream, their economic model and maybe their party too. But it was not stolen by the Europhile establishment. They traded it away in just another bad Brexit deal.

robert.shrimsley@ft.com

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