The Conservatives’ overwhelming 2019 General Election victory clearly belongs to one man; Boris Johnson. The Prime Minister has succeeded in capturing swathes of voters in seats that have not voted Conservative in living memory. But what does his victory mean? Here are five thoughts on the election results and its consequences:
1. The Brexit debate is now about the future not the referendum result
This result finally closes off the increasingly narrow path that could have led to a second EU referendum in the near-term. The EU will now move ahead decisively without us taking decisions on tax alignment, institutional change and security that would have been inconceivable with the UK on board. This means the EU that any future pro-EU campaign wants to join will be far less UK-friendly than the arrangement we narrowly voted to leave in 2016. So the key task ahead is to define the future trading relationship - of vital importance to the UK’s financial and professional services sector. Although we will leave at a point of full alignment to the EU’s rules, it would be naïve (as I argued last year) to pretend that the next 30 years of EU rule-setting will be devised in a way that is compatible with the UK’s interests as a world-leading financial services powerhouse. No Free Trade Agreement in the world (other than the EU’s single market) contains financial services so the Government’s negotiation with the EU on what FS deal would accompany any Canada-style goods FTA on goods will be critical.
2. The Union is under pressure.
Boris Johnson has achieved the same feat as Margaret Thatcher and Tony Blair before him, capturing large numbers of previously off-limit seats that have delivered a thumping majority. But whereas the resounding victories of Thatcher and Blair were based on wide-based Scottish, English and Welsh support, Boris Johnson’s majority is built overwhelmingly on seats won in England and North Wales. With Northern Ireland having a majority of Nationalist seats for the first time and Scotland yet again returning the SNP as the third party in Westminster, Boris Johnson will have his work cut out to deliver a future relationship with the EU that ‘gets Brexit done’ for his new base of support without further widening the gap with the two parts of the UK that voted to ‘Remain.’ In Scotland, he will face the same dilemma as David Cameron did; whether denying the SNP the independence vote they crave will build support for separation or starve the cause of oxygen.
3. Labour faces a crisis of identity and purpose
Labour has now lost four elections in a row and has arguably had the worst result in its history given that its previous low in 1935 was against a multi-party National Government. But the road back looks harder than at any comparable point, whether 1935, 1983 or 1992. In 1992, when it had also lost four consecutive elections, it was building support and winning some of the key Conservative-Labour margins it needed to govern. This time, it has not only lost swathes of heartland seats (including both Tony Blair and Gordon Brown’s old seats) but seen its majorities in safe seats reduced significantly. This means it will be fighting the next election in 2023/4 with its resources very thinly spread across the UK.
Before it gets to that point, a point of resolution will have to be reached within the party. Those members who have been Jeremy Corbyn’s strongest supporters will continue to believe that only a very left-wing agenda is morally acceptable for Labour to stand on. The centrists who have been in the minority will need to regroup quickly and find allies in the unions if they are to reframe the party’s appeal. This is a battle that is only just beginning.
4. Back to Majority Government
After four years of governments with fragile or non-existent majorities, we are back to a Parliament where the ruling party has the majority to govern as it wishes. We have grown used to independent voices in Westminster carrying sway but all the MPs who left their original party in the 2017-19 session were defeated last night and the Parliament that will be sworn in next week will be one where the Government’s business managers are back in control.
For our sector, this provides opportunities to tackle much-needed areas of reform, whether pension tax relief and our retirement system, social care, post-Grenfell fire changes or flood investment to name but a few. It also increases the risks the Government seeks to impose policies that will damage our customers so we need to build relationships with ministers and MPs to help ensure sensible policies and legislation that helps us play our part in the social and economic environment ahead.
5. The PM’s future agenda?
Boris Johnson has achieved a stunning electoral victory by placing his own larger than life personal brand ahead of the Conservatives in areas that historically were culturally hostile to voting Tory. The campaign he fought was also idiosyncratic; refusing media expectations about set-piece campaign requirements, avoiding detailed policy commitments and determinedly keeping his personal life story away from the campaign narrative. How he will lead a majority government that commands Whitehall and the Westminster voting lobbies still partly remains a mystery. Many of his supporters in the centre of the Conservative party have argued privately that he needed a significant majority to be able to govern as the ‘One Nation’ social liberal he has always been, free from the veto of the European Research Group. But he has only got to this point by making his own a Brexit cause that he had shown little interest or support for before early 2016. Boris Johnson has won a mandate to govern for five years with many of his closest supporters unclear how he will use this power. The unpredictability of a Hung Parliament may be replaced by a new permanent guessing game around which way the PM will swing on the key decisions that await him over the next five years.