Capital’s New Best Friend

Rishi Sunak's appointment was trumpeted as a break with Thatcherism - but his record of supporting tax cuts for the rich and corporations suggests he's straight out of the Tory mould.

The shock resignation of Sajid Javid was the biggest upset of Boris Johnson’s cabinet reshuffle last week. Javid resigned citing the overbearing influence of Johnson and his top advisor Dominic Cummings, who has become something of a pantomime villain among the commentariat.

Javid has been replaced by the more pliable Rishi Sunak – until recently a junior minister. Sunak was schooled at Eton, read PPE at Oxford, joined Goldman Sachs and then went on to become a partner at a hedge fund. 

Since the election, it has been widely assumed that Cummings is running the show on Johnson’s behalf. Something of a Banon-esque figure, he appears to want to revolutionise the Conservative Party by shaking off the ideological baggage of Thatcherism. Combining an authoritarian approach to migration, crime and other ‘cultural issues’ with a more moderate economic agenda will, he believes, turn the Conservatives into the hegemonic force in British politics.

Javid – an arch-Thatcherite and austerity proponent – disagreed. The wing of the party Javid represents is hoping to use the Brexit process to free the UK from the strictures of EU regulation and negotiate trade deals with more dynamic parts of the global economy. They do not want to see the UK dragged back to what some see as a post-war interventionist state.

The battle between these two sections of the Conservative Party – one represented by Cummings and the other by Javid – will be a defining feature of this government. A superficial analysis would suggest that Cummings is winning, and the British media, which specialises in superficial analysis, is peddling exactly this line. 

But the Conservative establishment is far more powerful than appearances suggest. The party’s supporters and grandees are used to wielding power behind the scenes, away from the not-so-prying eyes of the British press. Cummings’ more outward-facing approach demonstrates that he lacks a significant internal power base. He is forced to rely on op-eds from terrified British journalists to portray the fiction that he is in ultimate control of political developments.

In reality, British capital – centred in the City of London – retains significant influence over the Tory Party and the British state itself. As the recent splits over Brexit show, capital does not always lobby as one, but it does have a common interest in ensuring management of the economy remains ‘above’ politics.

Any plan to significantly invest in the British economy or rebalance it in favour of the North would undermine the depoliticisation of economic policy. Some in the City even fear that such an approach – which runs against the grain decades of finance-led growth around London – would weaken the power of capital over the state itself.

Sunak’s appointment must be viewed in light of these tensions. Sunak was close to Javid and, in truth, comes from a similar ideological perspective. As Miriam Brett, Director of Research at Common Wealth, points out, he voted to “reduce capital gains tax, for more restrictions on trade union activity, against higher taxes on banks, for reducing the rate of corporation tax, and against implementing proposals to reduce tax avoidance and evasion.” His CV and voting history will undoubtedly endear him to the British ruling class. 

Cummings’ main priority, however, was to secure a Chancellor who would not stand in the way of his policy activism. Since the decline of the Department for Trade and Industry, the Treasury has dominated other government departments and has demonstrated a consistent bias towards fiscal rectitude. He wanted a Chancellor who wouldn’t stand in the way of taking them on.

Given Sunak’s relatively weak position within the party, the approach he adopts is likely to be determined by the dynamics of the larger war underway between Thatcherites and so-called ‘national conservatives.’ If Cummings manages to sever the party’s centuries-long links with the City of London, Sunak may well shed his Thatcherite credentials and adopt a more interventionist approach.

But that is an extraordinarily difficult challenge. On the other hand, if the latter succeeds in removing Cummings – in much the same way as conservative Republicans managed to make Steve Bannon’s position untenable – then Sunak is likely to simply maintain the status quo ante.  

The most likely scenario is that he will be forced to tread carefully between these two extremes. Public investment – particularly on infrastructure – is likely to rise over the course of this parliament. How much remains to be seen, but what is spent will likely go to the Conservatives’ new Northern strongholds, which have been starved of investment for decades.

Sunak is also likely to adopt a more moderate approach to public ownership. Rail nationalisation is clearly a very popular policy and would do little to interfere with the accumulation strategies of highly internationalised British capital. It is a policy which could gesture towards the turn Cummings wants to make without wounding the City and other powerful interests.

But beyond this, expect more of the same. Cuts to the public services that do not directly serve the Conservatives’ older, homeowning electoral coalition (the NHS, local government and pensions) are likely to continue. Brexit will undoubtedly be used as an opportunity to slash regulation, deepen links between the City and its network of secrecy jurisdictions, and negotiate regressive trade and investment treaties.  

This presents Labour with an obvious problem: ongoing attacks on Tory austerity are likely to ring hollow in the face of a government that spends more to protect the interests of its electoral coalition. The opposition will have to move from attacking the Tories on their spending plans, to attacking them for consistently promoting the interests of capital at the expense of the British people. It remains to be seen whether any of Labour’s crop of leadership candidates is capable of making such an argument.