Public Sector Pay - Who Will Run The Tory Party?

The policy squabble over public sector pay within the Tory Cabinet might confuse some observers.

The Party 'Left' (associated with Cameron and Osborne) appears not to want to give front line services more cash. The Party 'Right' (which we might believe was co-terminous with Thatcherite orthodoxy) appears to want to do so. What is going on here? We think it can only be understood in terms of a political struggle directed ultimately at who is to be the next Party Leader and so, perhaps briefly, Prime Minister. It is essentially Philip Hammond versus just about everyone else.

Brexit is part of the story. On June 23rd, 2016, Britain may have given a majority for Brexit but the English outside London gave a much bigger one than the nation as a whole. Between then and the General Election on June 8th, Conservative strategists might have been forgiven for believing that they could once again be a popular national party in England, counteracting the Celtic and London effect. The decision to go the country was partly predicated on this calculation. As we know, this was a false calculation but it was a premature calculation rather than an intrinsically foolish one.

In the aftermath of the election, the social forces most discomfited by Brexit - services and specialised export businesses, the City of London and the liberal-minded conservative middle classes within travelling distance of London - saw an opportunity to recover ground for at least the Single Market or, at worst, for transitional agreements that would soften the blow. This community was represented in the Cabinet by Hammond, Chancellor of the Exchequer. He was undoubtedly pushed vigorously by the Financial Times and the City Remainers into making some sort of stand.

Within a short period of time, May having been endorsed by the backbenchers, a reaction set in. The details will be unknown to us. We will have to wait for the history books but one tactic of the soft Brexiters (really Remainers in defeat), which was to inveigle Labour into standing up for the Single Market, collapsed on the intransigence of the newly confident Jeremy Corbyn. The Labour revolt on the Single Market was actually rather derisory. There was no revolt at all from within a vulnerable Tory Party. The reason for Labour's position is self-evident - the 'Hammondites' were tied to austerity.

The premature 'national Tory' model (which had received a boost with the turnaround in Scotland) was not dead by any means. Tory canvassers, closer to the heart of electioneering than the circle around Hammond, came back with tales of the doorstep. A mood change had taken place since 2015. The public was tiring of unfairness and austerity, Corbyn had exploited this and public sector emergency and health workers were seen to deserve more pay and respect. This was a stick with which to beat the Hammondites and the hegemony of the well-heeled metropolitan middle class.

Cabinet members broke ranks to create the expectation that the Chancellor must do something about low pay in the public sector this Autumn. There are only two ways to get the funds necessary - either to pull a rabbit out of the hat or to increase taxes on Hammond's own core support at about the time the Party is deciding its next Leader. In deciding on its Leader, the Party now has an interesting problem - protect its metropolitan elite but possibly crash and burn in the polls or open out to become the Party of the real middling sort in the country and give itself a fighting chance.