May Day: How will Theresa May steer the UK from post-Brexit uncertainty?

Andrew Smith shines a spotlight on ‘Team Theresa’ and asks what it means for business

Today is the first day of post-Brexit politics. Yesterday’s departure of David Cameron from Downing Street, Theresa May’s arrival and the early appointments to the new Cabinet represent the beginnings of the new politics that the referendum has ushered in.

As the former Chancellor Ken Clarke said in his off-guard comments about various contenders in the Conservative Leadership race, little is known about May’s policy views beyond her Home Office brief. The fact that she has ended up in Downing Street without a lengthy leadership contest means that her colleagues, party members and the public haven’t had the opportunity to learn more about her and what really motivates her. She has few political friends; and until the leadership campaign started there was no recognisable group of May supporters. Ministers and officials who have worked with her respect her cool grasp of detail, but she hasn’t spent time using patronage to build up a group of acolytes or supporters.

Her real source of advice comes from her two advisers, Nick Timothy and Fiona Hill, who are both former Conservative Campaign Headquarters’ staffers who advised her in the Home Office. Hill and Timothy had a difficult relationship with Cameron’s Downing Street and Osborne’s Treasury.

Hill ended up having to resign following a row with Michael Gove over counter-extremism policy and Nick Timothy’s tensions with Downing Street ended up with his hopes to enter the House of Commons in 2015 being dashed as he was removed from the Conservative candidates list

What are the likely consequences for business?

We are likely to see more focus on corporate governance issues and corporate taxation given May’s early comments about workers and consumers being represented on boards and her desire to tackle corporate tax avoidance.

May’s comments seem to suggest that she sees the government having a strong role in the economy, helping to deliver growth and supporting industry in a more strategic way. We should expect the Government to do more to support UK business, but be less welcoming to international takeovers of British businesses.

We should also expect a looser fiscal environment. May was supportive of the focus on deficit reduction in the last parliament, but she has called for the timetable to reduce the deficit to be slowed from George Osborne’s original plans to eliminate it by 2020.

May has attacked red tape, but has spoken about the importance of legislation in giving people job security and protection on health and safety etc. We should expect some deregulation, but perhaps new regulations introduced in key areas.

What has she said in the past on business issues?

In trying to understand May’s vision for the country, it is worth looking at some of Nick Timothy’s articles for the Conservative Home website. Back in April this year he wrote about the economy and globalisation arguing that that there was no inevitability about some of the impacts of globalisation on the UK. He argued that mass migration might have benefited liberal urban elites living in central London, but that the economic impact on the rest of the country had been negative.

His sentiments seem to reflect what he sees as a real problem of inequality splitting the country apart and the lingering sentiment that the Conservative Party is a party of the rich which holds it back electorally, but also a riposte against the ‘gilded elites’ who were seen to make up the Cameron and Osborne inner circle.

On the threats facing the UK steel industry from globalisation, he set out a range of interventions that Government could take to protect the industry, including reducing the burden of climate change legislation and introducing measures to ensure that UK infrastructure purchased British produced steel. He made it clear that he opposed former chancellor George Osborne’s approach to Chinese investment arguing against “passivity in response to China’s trade policy”.

It is striking that many of these ideas were expressed in Theresa May’s early statements as Conservative Leader and Prime Minster. Her speech to launch her national campaign as leader was in Birmingham, where Timothy was born. In the speech she talked about governing for the many, not for the privileged few and the need for the Government to have what she termed as “a proper industrial strategy.”

Many of these sentiments were set out in the one expression of May’s views beyond Home Office policy in a speech to a Conservative Home Conference in May 2013. In the speech she set out her beliefs in breaking up the concentration of power, condemning irresponsible behaviour at all levels of society, and confronting vested interests.

She was critical of the financial services sector, arguing that there is an “over-reliance on financial services.” She also highlighted “the public’s anger about companies that evade taxes and excessive corporate pay.” The inequality between London and the rest of the country was another core theme, as was the cost of living and stalling social mobility. All too often, she argued, the system doesn’t seem to be working for the whole country.

May also called for the state to be strong, small and strategic: “Strong, to provide security. Small, to protect freedom. And strategic, to make our economy more competitive and provide opportunity for all.”

On public service reform, she talked about increasing the number of charities, companies, and co-operatives that deliver frontline services. She talked about British public services being more entrepreneurial and exporting expertise overseas.

What does this mean for Brexit?

On Brexit she was seen as a reluctant remainer. Her campaign for leadership brought together MPs who supported remaining in the EU and those who supported Leaving. She has said that “Brexit means Brexit” but hasn’t been clear what she means by Brexit. She has talked about the importance of access to the single market, but she has also been clear that changes to the freedom of movement are essential.

During her leadership campaign her supporters have talked about the need for compromise where market access and action on freedom of movement come into conflict. Despite the hopes of many businesses that May’s victory will deliver a ‘Brexit light’, May has been clear that if compromise is needed between market access and action on migration, market access will have to give way to her delivering what she sees as the will of the people to curb freedom of movement.

The appointment of Liam Fox as new Secretary of State for International Trade and David Davis as the new Secretary of State for Exiting the European Union raises significant questions about the future direction of policy. They are both hard-line Brexiters who have suggested that the UK should leave the EU single market as well as ending its status as a member of the EU.

May’s challenge in making this vision a reality

She has made it clear that she wants her administration to be about more than just managing the UK’s exit from the EU. May’s challenge will be in transforming the sentiments that she has expressed about social and economic change into deliverable policy.

David Cameron started his first term with a broad vision of social and economic reform and while he did manage to deliver some of this, reforms to public services ended up being defined by the focus on the reduction of the deficit. His broader ambitions to deliver social reform were left until his second term and he left office before any of them came to fruition.

If May is to succeed in delivering the radical changes that she spoken about over the past few days she will have to rely on the ability of her cabinet colleagues to work collaboratively with Downing Street and the broader Government machine to deliver change. May has thrived in the Home Office by ploughing her own furrow and gaining a reputation for toughness in protecting her own turf.

What isn’t clear is the kind of Prime Minster she will be. As Gordon Brown, the last Prime Minister to take over mid-term, found to his cost, running the country is very different to running one department, even one as large and significant as the Treasury and in May’s case the Home Office.

May faces the enormous challenge of stamping her authority on Government, providing reassurance to the public and to business about the process of exiting from the EU. She must also find a way of unifying and motivating the Government, the Conservative Party and the public to deliver a successful deal with the EU and delivering on her wider aspirations for the country.