http://www.businessweek.com/articles/2012-11-08/the-loneliness-of-david-cameron

Global Economics

The Loneliness of David Cameron


The Loneliness of David Cameron

Photograph by Isopix/Rex/Rex USA

Inside his 10 Downing Street office, David Cameron has surrounded himself with friends of two decades or more—contemporaries from his time at Eton and Oxford and his early days as a political researcher. Once he steps outside his front door, the 46-year-old prime minister’s life is lonelier. In Parliament lawmakers from his Conservative Party are rebelling in unprecedented numbers and with increasing frequency. Conservative newspapers, which once feted him, have turned hostile. If there were an election tomorrow, voters say they’d back the Labour Party, which enjoys a 10-point advantage in the polls.

Cameron’s signature policy—an austerity plan meant to wipe out the structural budget deficit by the 2015 election—has caused pain among voters and is certain to cause more. The government will have implemented £37 billion ($59.11 billion), less than a third of the £126 billion of cuts planned, by the end of the fiscal year. Welfare payments for housing have been capped, forcing some poor people to move out of expensive areas such as London. Pay has been frozen for police, teachers, nurses, doctors, and other public-sector workers.

The success of the austerity plan depended on the economy returning to a growth rate of 2.3 percent in 2011 and 2.8 percent in 2012. It didn’t; the economy is only now emerging from a double-dip recession. The National Institute of Economic and Social Research forecast on Nov. 2 that the economy in 2013 will be 5.3 percent smaller than forecast in 2010. The deficit-elimination target has been pushed back to the fiscal year ending April 2017. That means the government will go into the 2015 election promising further spending cuts and tax hikes.

On Oct. 31, Cameron suffered his first House of Commons defeat at the hands of his own party’s lawmakers on a vote over contributing to the European Union budget. In a vote designed to embarrass Cameron, Tory MPs wanted him to call for a cut in the budget. Cameron argued that calling for a budget freeze was more realistic. It was eight years before former Tony Blair lost a vote; it’s taken Cameron two. “On the specific issue of Europe, Conservatives in this Parliament are the most rebellious since dinosaurs ruled the earth,” says Philip Cowley, professor of politics at the University of Nottingham. “But it’s not just Europe. He’s retreated on a series of issues where he would have been defeated.”

The setback with the greatest impact may be Cameron’s abandonment of plans to introduce elections to the House of Lords. Although a popularly elected upper house has long been a cherished policy goal of his coalition allies, the Liberal Democrats, Cameron dropped the effort in the face of opposition from Tory traditionalists. In retaliation, the Liberal Democrats said they’d block a redrawing of electoral boundaries, which at the moment favor Labour. Evening up the sizes of districts would have helped the Conservatives win more seats, but Cameron will have to campaign in the next election with the same handicap that helped cost him a majority in 2010.

Cameron’s aloofness hurts his cause. Speaking of Parliament and its members, Cowley asks, “How often is he in the tea rooms? Does he talk to them in the corridors? The answer is no.”

According to Tim Bale, author of The Conservatives Since 1945, Cameron’s loyalty to his friends and his meteoric rise through his party to become leader at the age of 39 contribute to his alienation from other Tory lawmakers. “It’s admirable that he doesn’t let people go and move on, but that means other people think there’s no room for them in his circle,” Bale says. “If he’d spent 10 years in the lower reaches of the party, he might have had time to meet more people from different parts of the country and different backgrounds.”

Andy Coulson was one of the few who managed to get into the inner circle without having known the young Cameron. The working-class former editor of the News of the World, hired as Cameron’s press chief in 2007, quickly acquired trusted status. Coulson resigned from Downing Street at the beginning of 2011 as the hacking scandal at his former paper deepened. On the day his former aide was arrested, in July of that year, Cameron told reporters that Coulson “became a friend and is a friend.”

Cameron’s response to that scandal—to set up a media ethics inquiry—has angered Conservative-supporting papers. News Corp.’s (NWS) Sun newspaper supported the Conservatives in the 2010 election. Since the arrest of at least 10 of its journalists for alleged bribery, it has been hostile to Cameron, and in October it helped force the resignation of a member of Cameron’s cabinet, Andrew Mitchell, after he swore at a policeman guarding Downing Street.

A Populus survey in September found voters frequently describing Cameron as “out of touch” and “arrogant.” On the positive side, they were less likely to describe him as “out of his depth” than they were the leaders of Britain’s other two main parties. Nonetheless, the prime minister is holding fewer of the “Cameron Direct” town hall events that he did almost weekly when the Conservatives were in opposition and regularly in the early days of his premiership.

For all his problems, Cameron has one faithful friend: the bond market. Helped by the Bank of England’s debt purchase program, the yield on Britain’s 10-year bond is around 1.75 percent, a third that of Spanish debt. He also has two and a half years until the next election, and if the economy recovers his fortunes will improve.

Cameron’s options for now remain limited. The government can’t afford tax cuts. His Liberal Democrat coalition allies block anything he might do that would appeal to his party’s lawmakers and traditional supporters, such as tougher immigration laws. Conservative Party lawmakers have put Cameron on notice that they have the numbers and will to defy him if he softens his position on hot-button issues such as further integration with Europe. The prime minister needs a new strategy if he’s to widen his circle of friends.

The bottom line: Cameron still has to cut £89 million from the budget to eliminate the deficit. Voters and party members are getting restless.

Hutton is a reporter for Bloomberg News in London.

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