After

victory,
the deluge

As a result of the election,

boththe private and public
sectors can expect a markedly
different path from the previous
coalition government.

After victory, the deluge

Andrew MacDougall
Senior Executive Consultant

To succeed in his second term, Cameron must solve two

existential questions: Europe and Scotland
The passage of time has done little to dampen the shock
of the May 7 election result. Despite months of polling
predicting a hung Parliament and attendant political
andmarket instability, the people of the United Kingdom
instead returned Prime Minister David Cameron to
Number 10 Downing Street to helm the first majority
Conservative government in 18 years. As a result, both
the private and public sectors can expect a markedly
different path from the previous coalition government.
Ifthe stock markets reaction is any indication, the private
sector is indeed pleased with Camerons re-election.
Then again, the markets might instead be reflecting
relief at what is not to come. There will no return of the
50p band; there will be no mansion tax; non-dom
status will not be abolished; and the government will
not be injecting controls into the transport, housing,
orfinancial markets. These policies crashed out of the
realm of possibility the moment Labour was crushed
inthe exit poll.
Green
1
Conservatives
331

SNP
56

232
Labour

8
Lib Dem
1
UKIP
21
Others

03

After victory, the deluge

While Cameron is free to march on, the opposition

parties are in disarray, with Labour facing a bruising
leadership contest and the Liberal Democrats struggling
to pick up the pieces following their complete electoral
dismantling. One leader who appears to have escaped
the chop, however, is UKIPs Nigel Farage who, despite
following through on his pledge to resign following his
loss in South Thanet, has re-emerged as leader after
theparty rejected his resignation (albeit with Farage
lording over them in the room).
Armed with a majority, David Cameron now has the
luxury of ignoring his political opponents; if he keeps
his side united he will control the legislative agenda.
And thanks to the surprisingly strong result,
Camerons standing has never been as high within
hisown party. Indeed, Bill Cash, a long-serving MP
and notorious Cameron-sceptic led the cheers as
thecaucus re-convened after the election. To succeed
in his second term, however, David Cameron must
doa much better job of managing his troops now
thathe has lost the buffer coalition government.
He simply cant afford to get his caucus management
wrong. Indeed, Camerons success rides on the
support of a group of backbench MPs in whom he
tooklittle interest over the past five years. To succeed,
particularly on the vexing question of what to do about
Europe, Cameron must first tend to his own garden.
First on the list of gardening tasks: appoint gardeners
to tend to his crop of new policies.

04

After victory, the deluge

Appointing a team that unites the party

With his opposition turning inward, Prime Minister
Cameron is reaching out to cement his position both
within his party and the country. A quick start on his
agenda will put his opponents on the back foot while
building support from voters tired of political talk. To
with, the engine of government is already in gear: a new
cabinet has been appointed and a new Queens Speech
outlining the governments agenda is being drafted.
To please his backbench Cameron is sure to include
inthat speech new counter-terrorism proposals, tougher
online surveillance powers (the so-called Snoopers
Charter), provisions for jobs including plans to create
3million apprenticeships and plans to scrap the
EU-flavoured Human Rights Act so that it can be
replaced by a UK version. One area where Cameron
wont be able to quickly please his supporters is
immigration, a sore spot further irritated by this weeks
Bank of England figures which suggest that immigrants
are placing downward pressure on British wages.
Cameron has returned key figures to marquee posts
toimplement his agenda: George Osborne remains
Chancellor of the Exchequer; Theresa May remains
Home Secretary; Philip Hammond will again handle
foreign affairs; and Michael Fallon retains his post as
Defence Secretary. There is also continuity in other key
departments: Jeremy Hunt once again leads at health;
Iain Duncan Smith at the Department of Work and
Pensions; and Nicky Morgan returns to Education.

05

After victory, the deluge

Of course, with every Cabinet appointment made,

there are dozens of MPs who are angry to have
beenoverlooked.
To help mitigate some of this disappointment the
prime minister has also put old faces into new places
and brought fresh blood into his Cabinet. Leading
theformer category is Sajid Javid, the former banker
turned culture secretary, who now heads the Business,
Skills and Innovation department vacated by defeated
Liberal Democrat Vince Cable. Javids top priority
willbe to develop policies that will reverse Britains
woeful slide on productivity. His replacement at the
Department of Culture, Media, and Sport is veteran
MP John Whittingdale, a standard bearer for the
Thatcherite right and Vice Chairman of the allimportant 1922 Committee of backbench Conservative
MPs. This is an appointment that will be well received
by Camerons Conservative critics. Whittingdales top
task will be to address the long-term viability of the
much loved (or hated) British Broadcasting Corporation
(BBC). A new face in a new role with a big assignment
is Greg Clark, who as Secretary of State for
Communities and Local Government will have the
unenviable job of tackling Britains housing problems.

06

After victory, the deluge

To round out the team the prime minister has

appointed a slew of newer MPs into junior roles along
with resurrecting some members who had earlier
resigned or been demoted: Mark Harper returns to
Cabinet as Chief Whip; Alistair Burt is now a junior
minister at Health; and, most importantly, Michael
Gove is back on the front bench at Justice, where he
will oversee the replacement of the Human Rights Act
(a long-standing Tory pet peeve).
To round out the list of key players, Mr. Cameron has
even found a place in his political cabinet for putative
leadership rival Boris Johnson, the current mayor of
London and now Member of Parliament for Uxbridge
and South Ruislip. While not bound by Cabinet
solidarity, bringing Johnson close gives the prime
minister a modicum of control over a proven wildcard.
Now that he has his team, Cameron must now get on
with business. Having ruled out a third run for prime
minister, he must deliver key manifesto policies before
succession talk overtakes his final term.
Here, the sequence of implementation will be as
important as the speed; the government knows that
the elephantine shapes of Scotland and Europe could
soon be squashing whatever long-term legislative
agenda it has planned. Of the two, it is the latter which
looms larger, and the prime minister will need some
quick wins to buck up his backbench ahead of a
bruising battle over Europe. And one of those early
wins could involve Scotland.

07

After victory, the deluge

A thistle in the governments side

David Cameron was quick too quick to turn
lastyears Scottish referendum and the debate about
devolution into a plan to offer English votes for English
laws. While immensely popular with his party, it
appeared to put party before country. Now there is
asecond chance to get it right. Despite Scotland
sending 56 SNP MPs to Westminster, the Caledonian
contingent will exert little to no influence on the formal
parliamentary agenda. The SNP will get what the
government proposes on devolution, and no more.
There is even an opportunity for the Conservative
government to give Nicola Sturgeon more than what
shes asking for. The plunge in oil prices has punched
a hypothetical hole in an independent Scotlands
finances and transferring taxation responsibilities
tothe Scottish government (i.e. full fiscal autonomy)
would put them on the hook for the tax hikes needed
to fund their social programs. The SNP would
undoubtedly protest this sudden responsibility, giving
Prime Minister Cameron the opportunity to put the
wily SNP on the back foot. David Mundell, the new
Secretary of State for Scotland, has poured cold water
on that suggestion for now, but it remains a more
radical option available for deployment in the future.

08

After victory, the deluge

In the meantime, passing the proposals in Lord Smith

of Kelvins commission report should apply some
balmover the rough patches in the fabric of the
UnitedKingdom.
No matter the tactics, it is clear Britain will need to
havean adult conversation about finding a new, more
equitable constitutional arrangement. In post-election
remarks Cameron has said his plans are to create the
strongest devolved government anywhere. Hell have
along way to go to match jurisdictions like Canada,
however, where the provinces have control over taxation,
health, education, and the implementation of justice.
And just how a four-country federation could work with
85% of the population living in England is only one
ofthe tough questions to be answered in the debate.
Cameron wont, however, want to get bogged down
inextended constitutional wrangling at home; hes
gottreaty change with Europe on his agenda and the
result here will frame his legacy as prime minister.
David Cameron doesnt want to be the leader who
sleepwalked Britain out of Europe.

09

After victory, the deluge

First Grexit, then Brexit?

Thanks to the rise of UKIP, the prime minister must
attempt to lance the Eurosceptic boil that sits on the
body politic of the United Kingdom. Cameron hopes
that, by offering and winning a referendum, he can
remove the European question from the British
political agenda for years to come.
Prime Minister Cameron is but the latest in a long line
of British leaders to grapple with the European question:
John Majors (slim) majority government began its
unravelling over the Maastricht Treaty; Tony Blairs
government struggled over whether to join the Euro;
Gordon Browns premiership unfolded as the Eurozone
went into freefall during the global economic recession;
and now David Cameron has been forced into offering
an in-out referendum by his restive backbench.
The war will unfold over two battles: the referendum
itself; and the preceding negotiation to secure
abetterdeal from Europe.
Here, the unexpected election result has greatly
strengthened Camerons hand. Even with a slim
majority he holds a stronger position than he would
with a coalition partner at this side. Every single Tory
ran on a manifesto pledge to offer the British people
achoice on Europe. As a result, every single European
leader knows that a reckoning is coming and that it is
in their interest to sweeten Camerons pot to some
degree ahead of a vote.

010

After victory, the deluge

It wont be easy. There are a lot of European diplomats

who are fed up with British demands for special
treatment. But the alternative seeing Britain leave
would be worse. And with Greece teetering on the
southern edge of the Eurozone, the last thing European
policy makers will want is another front opened up to
the North.
While the so-called four freedoms the free
movement of persons, goods, services, and capital
wont be up for negotiation, there is room for movement
on other fronts. Cameron knows he wont be able to
placate the hard-line group of 60 or so of his MPs that
want out of Europe no matter what; his task will be
toput something substantive on the table for the
remaining 270 in order to try and claim victory.
To deliver victory the prime minister has appointed the
good cop/bad cop team of George Osborne and Philip
Hammond. While Osborne shares Camerons view
that Britain is better off within the EU, Hammond has
a more jaundiced view of Europe. If they are to get
what they want, they will have to ensure this is a fight
between Britain and Brussels bureaucrats, and not
between Britain and the countries of the European
Union. There are indications of goodwill; European
Commission President Jean Claude Juncker has made
some positive noises following Camerons re-election,
but will need some positive noises back from his
British counterparts if any real progress is to be made.

011

After victory, the deluge

The shape of the ensuing deal is widely presumed

tobe immediate concessions on issues like migrant
benefits, with eventual, albeit ill-defined, treaty change
at some unspecified future moment. Tone, as well as
form, will matter, and Britains refusal to help settle
migrants attempting the Mediterranean crossing
willhave done nothing to improve the mood in the
diplomatic salons of Europe.
The main challenge in this pas de deux will be to
keepthe entire negotiation from looking like a stitch
up. The rebellious Conservative backbench knows it
wont get significant European treaty change, but it will
needto feel that its interests are being pursued with
maximum sincerity and vigour by the government.
Send in the private sector troops
If Cameron has his way he will secure his deal with
Europe as soon as possible. The longer the process
drags out, the more his hold over his caucus weakens,
and the more impact it has on his overall program.
Hehas promised a referendum by the end of 2017 but
would greatly prefer to hold it in 2016. So, it turns out,
would Bank of England Governor Mark Carney, whose
job of calibrating monetary policy is made infinitely
harder thanks to the political instability caused by
haggling over Europe.
Once he is able to present his European deal to
thepeople of Britain, Cameron will look to mobilise
support for the yes side. Here, he will look to British
industry, both large and small, to help make the case
for Britain in Europe.

012

After victory, the deluge

The leading Eurosceptics in the caucus including

heavyweights like Boris Johnson, Owen Paterson,
theformer Environment secretary, and former Minister
David Davis are convinced Britains business would
thrive outside of the European project. If they are to be
convinced otherwise, it must be done by business
leaders and their workers.
Cameron will be looking for all the help he can get
andthere will be ample opportunity for the private
sector to partner with the government to present
thecase for Europe.
The big question for the yes camp will be how
muchto highlight the dangers of leaving, the benefits
of staying, or to what degree to mix the message.
Therecent Scottish independence referendum dwelt
more on fear than hope; experience suggests a better
effort will need to be made to highlight the benefits
of Britains relationship with Europe.
Here, Cameron will have multi-partisan help.
While he might end up fighting a significant portion
ofhis own party, Prime Minister Cameron will be able
to count on the support of a majority of Labour, SNP,
and Liberal Democrat MPs as he stumps for Europe.
David Cameron and Nicola Sturgeon might not agree
on much, but they are both of the opinion that Britain
belongs in Europe.
With close cooperation between government and
industry, Cameron should be able to carry the day.

013

After victory, the deluge

A long road ahead

Nothing derails a political agenda like an existential
crisis. The prime minister faces two Europe and
Scotland in this, his second term. They will be the
fight of David Camerons political life and will define
his legacy. But they will hardly be his only battles.
Britains finances remain in a parlous state. A lack
ofproductivity threatens the long-term recovery of the
economy. The armed forces are threadbare. Syria is
inflames and ISIS terror is spreading ever wider.
Vladimir Putins revanchism shows no signs of
abating. Greece could yet send the European Union
down the drain. And then there are the usual nagging
scandals of government: misspending, inept
performance by ministers, and tin pot rebellions.
David Camerons leadership will be tested to a degree
with which he is unfamiliar. He must approach Europe
and Scotland with strategy, and not his usual bag of
tactics. If he displays leadership and marshals his
allies he can win both fights.
In so doing, he would cement his place in history
andleave the Conservatives as the dominant party
ina United Kingdom.
To discuss this paper and what the election results
mean for businesses in Britain, send an email to
andrew.macdougall@mslgroup.com or tweet
@AGMacDougall.
Click here and here to read the first two instalments
inthis series on the United Kingdom election.

014

About
MSLGROUP
We are MSLGROUP in the UK.
Were a communications agency with digital, insight and creativity
at its heart. We help some of the worlds leading employers to build
and protect their reputations and relationships inside and outside
their organisations. Our clients include Associated British Foods,
BG Group, BMW, BP, EY, Canon and GSK.
We help organisations around the world to deliver their business
and people strategies by understanding, attracting, recruiting,
engaging and retaining top talent. Our works spans the entire
Employee Lifecycle from EVP development to attraction and
engagement. Our teams combine expertise in consultancy,
insight and strategy development to activation including
creative, writing, digital and technical development.
As part of the global MSLGROUP network we have more than
3,500 colleagues worldwide. MSLGROUP is Publicis Groupes
strategic communications and engagement business, advising
clients on all aspects of their multi-stakeholder communications.
Find out more at mslgroup.co.uk or by contacting Victoria Sugg
victoria.sugg@mslgroup.com

015

Be interested.
Be interesting.
Be influential.

Victoria Sugg
Business Development Director

victoria.sugg@mslgroup.com
+44 (0)7950 821 272
mslgroup.co.uk