Bloomberg News

Cameron Leadership Damaged as Murdoch Inquiry Weakens Faith

May 16, 2012

Prime Minister David Cameron is looking to shift attention away from his worst electoral setback since taking office two years ago. Photographer: Scott Eells/Bloomberg

Prime Minister David Cameron is looking to shift attention away from his worst electoral setback since taking office two years ago. Photographer: Scott Eells/Bloomberg

Tim Bullivant, a retired chartered accountant from Grafham, England, votes Conservative. He says he’s worried that missteps are trashing Prime MinisterDavid Cameron’s reputation as a competent leader.

With Britain in recession, perceptions that Cameron’s party favors the rich have hurt his standing in opinion polls since the government’s March budget cut taxes for Britain’s highest earners. Cameron also has been politically damaged by e-mails suggesting ministers sought News Corp.’s guidance on reacting to phone-hacking allegations weeks before the scandal forced Rupert Murdoch to close the company’s best-selling tabloid.

Cameron says he forged a coalition government with a mandate to repair Britain’s battered public finances by imposing the biggest austerity program in a generation. His handling of a fuel strike that never happened, delays for passengers entering the U.K. at London’s Heathrow airport, and a levy on Cornish pasties have all taken the sheen off his premiership.

“I am not so much disillusioned as slightly concerned,” Bullivant, 75, said in a telephone interview. “My feeling is that six weeks ago there wasn’t really a problem, but there are now possible signs of incompetence in the way things are presented.”

Rebekah Brooks, who led Murdoch’s U.K. publishing unit before her arrest in July, told a media-ethics inquiry last week that she discussed the company’s phone-hacking cases and its bid for British Sky Broadcasting Group Plc (BSY) with Cameron.

Brooks Charged

An e-mail uncovered by the inquiry from News Corp.’s U.K. lobbyist, Fred Michel, said he was asked to advise both Cameron and his Culture Secretary Jeremy Hunt, who was responsible for reviewing the television company takeover. Brooks, 43, was charged yesterday by prosecutors for trying to cover up the tabloid phone-hacking scandal. She denied any wrongdoing.

The prime minister attempted today to make light of Brooks’s testimony to the media inquiry about their friendship, including her statement that Cameron signed off regular text messages with “LOL, for lots of love.”

“I have to admit that perhaps I’ve been overusing my mobile phone,” Cameron told lawmakers at his weekly question- and-answer session.

Conservative lawmaker David Davies wrote in his local newspaper, the South Wales Argus, about “incompetence” at “the highest levels of government.” Cameron should “change his tack, otherwise he’s not going to be in the position for very long,” he said.

‘Huge Gamble’

Former Labour Chancellor of the Exchequer Alistair Darling said in September that Cameron was taking “a huge gamble with growth and jobs.” Two months later, he said austerity programs being pursued in Europe would “strangle growth” and lead to “higher borrowing, higher debt, and that’s why people are so lacking in confidence.”

The economy shrank by 0.2 percent in the first quarter, after a 0.3 percent contraction in the final three months of 2011. The Bank of England said today U.K. growth is likely to remain “subdued” in the near term.

Labour leader Ed Miliband branded government policy an “omnishambles budget” in Parliament last month, citing a freeze on tax allowances for the elderly, the “pastygate” plans to put sales tax on more hot food, and restrictions on tax reliefs, including those for large donations to charity.

The moves will help pay for a reduction in the top income- tax rate to 45 percent beginning next year. Chancellor of the Exchequer George Osborne said the cut was necessary as the 50 percent levy generated “next to nothing” and deterred wealth generation.

Support Drops

Bullivant says the government’s presentation of its March 21 budget was flawed, and polls show Cameron and Osborne have lost public support since the budget announcement. Labour led the Tories by 45 percent to 31 percent in a YouGov Plc (YOU) poll published May 14. A survey by YouGov had the gap at 5 percentage points on March 21.

Cameron, 45, is due to be questioned within weeks by the Leveson Inquiry into media ethics about his relationship with the 81-year-old Murdoch and his 2007 decision to hire Andy Coulson, who resigned from Murdoch’s News of the World tabloid over phone hacking, as his press chief.

“The Murdoch episode shows what happens when a government is in a crisis that it can’t shrug off,” said Andrew Russell, a professor of politics at Manchester University. “The 50 pence tax, the pasty tax and the granny tax are traps into which the government fell that they should have avoided. They now look very unsure of themselves.”

Police Probe

Coulson, Cameron’s former director of communications, is being investigated by the police. He told Leveson that he held 40,000 pounds ($64,284) of shares in News Corp. (NWSA:US) while working at Downing Street, Cameron’s office and official residence.

After more than a week of calls for culture secretary Hunt to resign, Conservative lawmakers declined on May 1 to back a parliamentary report that said Murdoch is “not a fit person” to run News Corp. Conservative Louise Mensch attacked five Labour members, including Tom Watson, and one Liberal Democrat in Parliament for going beyond their mandate.

“Labour and the LibDems created a trap for the Conservatives, who now look like they’re going in to bat for Murdoch,” said Tim Bale, professor of politics at Sussex University and author of “The Conservative Party: From Thatcher to Cameron.”

Election Losses

While Conservative Boris Johnson won a second term as mayor of London this month by defeating Labour’s Ken Livingstone, the May 3 local elections saw Labour add 823 seats and gain control of Birmingham, Britain’s second-largest city, Cardiff, the Welsh capital, and 30 other councils. It also won a majority in Glasgow, Scotland’s biggest city.

Extrapolated nationally, the results gave Labour a lead over the Tories of 38 percent to 31 percent, according to a tally by the British Broadcasting Corp.

The damage done by the Murdoch saga threatens to undermine Cameron’s broader political program, including the legitimacy of his deficit-reduction plan, according to Bill Jones, professor of politics at Liverpool Hope University.

“It looks like the Tories are looking after their own and that has further eroded the contention that we are all in this together,” Jones said. “They are being made to look like posh, arrogant public schoolboys who don’t know how ordinary people live.”

Mark Wickham Jones, professor of politics at the University of Bristol, said Osborne’s March budget and the Murdoch affair created a “sea change” against the government’s rallying narrative.

“There has been a series of negative headlines that now raise serious concerns about the Tory capacity to govern,” Wickham-Jones said. “This has been their worst month since coming to office.”

Bloomberg LP, the parent of Bloomberg News, competes with News Corp. units in providing financial news and information.

To contact the reporter on this story: Gonzalo Vina in London at gvina@bloomberg.net

To contact the editor responsible for this story: James Hertling at jhertling@bloomberg.net


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