Cameron at 10: From Election to Brexit

Osborne leaves Hilton’s home in the afternoon of polling day to travel up to his Tatton constituency in Cheshire. Cameron, Andy Coulson and Llewellyn, joined by Kate Fall and Gabby Bertin, who had been a press aide since the leadership campaign, go for dinner at Cameron’s home in Dean, several miles away.6 They are under no illusions. As they gather around the television screen, the results are greeted with a deadpan silence. The exit poll at 10 p.m. confirms what was expected: a hung parliament with the Conservatives as the largest party. There will be no election miracle. The Conservatives emerge after the final count with 307 to Labour’s 258 and fifty-seven for the Lib Dems out of 650 parliamentary seats. The Conservatives may be the largest party, and gain the largest number of seats (net ninety-seven) in a general election since 1931, but it is little consolation. They are left nineteen seats short of an overall majority. Pressure mounts suddenly on Cameron. Critics in the party and the right-wing press, suppressed during the campaign, are now on the airwaves blaming him for a lacklustre campaign and for failing to engage core Tory voters. At 3.30 a.m. on Friday, a newly-energised Brown flies south from his Scottish constituency, believing he can cling to power. Cameron says Brown has lost the right to govern, but does not publicly call for his resignation. The prime minister, for whom Cameron’s aides have such strong reservations, is far from finished yet.7

Before he went to bed, Cameron had told his team to reconvene in the morning so they can explore options. They all know, none more than Cameron, that a minority government in hock to the Conservative right wing will be their idea of a total nightmare. Cameron has no love for them, nor they for him. ‘Let’s face it, coalition really suits him,’ says one close aide. ‘Is he really going to be happy with a minority government, with Eurosceptics like Mark Reckless and Bill Cash knocking on his door every ten minutes?’

At 2.34 p.m. on Friday, Cameron speaks at a press conference at St Stephen’s Club, Westminster, saying that the Conservatives will approach the days ahead with the ‘national interest’ in mind, and he will be making the ‘big, open and comprehensive offer’ to the Lib Dems to work with him in forming a government. ‘Cameron’s decision to call for a genuine coalition partnership is very significant,’ says master of ceremonies, O’Donnell. ‘This wasn’t going to be a short-term deal: there was going to be a real commitment that it would last for the life of the parliament. That’s what he wanted.’8 Cameron’s words are deliberately chosen, falling short of mentioning a coalition by name, leaving some room for manoeuvre, and offering some reassurance to the large numbers of Conservative MPs for whom the Lib Dems are anathema. Cameron’s team knows that he must carry the party, including his leadership rival in 2005, David Davis, the Eurosceptics, and others on the right of the party who dislike his politics.

Five days of intense negotiation with the Lib Dems follow in the secrecy of the historic Cabinet Office at 70 Whitehall.9 Cameron delegates the details of negotiations to a four-man team: Osborne, Letwin, Llewellyn and Hague, who acts as their head.10 The Lib Dems include David Laws, Danny Alexander, Chris Huhne and Andrew Stunell. As they meet, television screens in the background show riots in Greece. The eurozone crisis, brewing since mid-2009, broke out into the open in February 2010. It focuses their minds on the importance of achieving a stable government to take Britain forward.

Hague and Alexander banish O’Donnell’s posse of civil servants from minuting their discussions. Left alone, both sides find an affinity: ‘Talks with the Conservatives go far better than we imagined. There were no rows or unpleasantness. They are polite and civilised. It started the relationship below the Clegg–Cameron level,’ says Laws.11 Hague emerges from the talks pleased not to have conceded more to the Lib Dems: there is an agreement to introduce a fixed-term parliament (later enacted in 2011), reform constituency boundaries, hold a referendum on the Alternative Vote (AV), reform the House of Lords, introduce a ‘pupil premium’ in schools, and raise the income tax threshold. These are not considered big deals: the Conservative team believe they will easily win the AV referendum, and neither the pupil premium nor the rise in tax thresholds are out of tune with party thinking.12 The Lib Dems insist they would only agree to support the package if they can secure a fixed-term parliament, thus binding the Conservatives into a coalition for a full five years. Tory negotiators agree, believing it will contribute to stability. To O’Donnell, the deliberations ‘provided a chance for both parties to drop their rubbish policies. It was all pretty much as expected. Obviously they agreed to go further than Labour on the extent and speed of the deficit reduction.’ The pace of the negotiations would have consequences. Some policies, such as NHS reform, get through, which ‘none of them understood – frankly no one examined them carefully’.13 Ken Clarke, who encouraged Cameron to form a ‘proper coalition’ after the election, is surprised at how soon an agreement is reached. ‘It was precisely because no one had any experience of forming a coalition that they drew up an extremely good agreement in three days flat – no one on the Continent would have done that so quickly.’14

Letwin estimates that 80% of the policies hammered out in the ‘Coalition Agreement’ are straightforward because both parties have relatively similar proposals. The hardest concessions for the Lib Dems to swallow are retaining nuclear power stations and renewing the Trident missile system, which the Conservatives make clear are essential, but which the Lib Dems opposed in their manifesto. Both parties lose only some 10% of their favoured policies. The Conservatives lose out on inheritance tax, the West Lothian Question (namely the issue that since devolution in 1999, Scottish MPs could vote on English domestic matters) and the replacement of the Human Rights Act.15 Osborne is sanguine about losing inheritance tax. He knows it would be portrayed by Labour as a bung to the rich and has doubts about his ability to have got it through in his planned Emergency Budget.

Osborne thinks the discussions are not difficult because the areas of overlap are considerable. On the matter of Plan A however, the Conservatives are resolute: ‘The big judgement the Lib Dems had to make in policy terms was to back our fiscal judgement, which they had attacked during the election campaign,’ he says. ‘They consented because we insisted that it was non-negotiable.’16 Osborne believes that discussions the Lib Dem leadership held in private with O’Donnell, Nicholas Macpherson (the permanent secretary to the Treasury) and Mervyn King acted as a reality check, educating them in the need for urgent and tough action. He credits Vince Cable as a highly significant player recognising that Plan A was the right thing to do.17

Hague is struck by the naivety of the Lib Dem negotiating team, as by their lack of knowledge of nineteenth- and early twentieth-century coalitions. ‘Liberals always come out badly.’ Hague realises this, his Conservative colleagues know it, but the Lib Dem leadership he thinks does not. He is surprised too by their lack of familiarity with European coalitions, where the junior partner, whether in Ireland, Germany or elsewhere, is frequently annihilated at the next election. After the final meeting of the five days, Hague staggers home at 1 a.m. and tells his wife, Ffion, with prescience: ‘Well, we have formed a government … but we might well have destroyed the Liberal Party.’18

Without Clegg, the coalition would not have been formed. None of his predecessors as leader – Menzies Campbell, Charles Kennedy nor even Paddy Ashdown – would have countenanced a coalition with the Conservatives. Clegg insists too it will be a full coalition, not a ‘supply and confidence’ deal to enable a minority government to get through its Budgets and survive confidence votes, which would have been far more fragile. Clegg believes that the Lib Dems have the Conservatives on the run, and that unlike Labour’s team of Peter Mandelson, Ed Balls and Ed Miliband, the Tories are biddable: ‘Frankly, for Cameron and Osborne, the alternative to joining us was not pretty. They would have been out on their ears within two seconds at the hands of their own party.’19 So given this realisation, why does he not push harder?

The dominance the Conservatives achieve in the Coalition Agreement which emerges from the talks is much down to Letwin’s planning for such an eventuality.20 ‘In contrast, I was not aware of any detailed planning on the Labour side,’ recalls Gus O’Donnell.21 Clegg always deemed coalition a possibility, but put in less serious work during the campaign because the Lib Dems lacked the resources to do it. The Conservative Party is thus best prepared for coalition talks in May 2010 by a considerable margin.22 The Coalition Agreement is drawn up by centre-leaning, pragmatic Conservatives, and by right-leaning Lib Dems. Many MPs, still more members in both parties, do not share their outlook. Here at the very genesis of the coalition, the seeds of future strife and discord are sown.

On Monday evening, 10 May, with the coalition talks at a delicate point, Cameron meets his Conservative MPs in Committee Room 14 in the House of Commons. It is the most important meeting of that body in the entire 2010–15 parliament. His MPs have the power to strangle the discussions with the Lib Dems before they reach a conclusion. Cameron tells them that Brown is offering the Lib Dems the AV system without a referendum. He tells them that unless he can offer the Lib Dems an AV referendum, the talks might break down.

Critics later accuse Cameron of bouncing the party into a coalition in this meeting. During the discussions with the Lib Dems, only a handful of phone calls take place between the Conservative negotiators and the rest of their party, and senior figures in the 1922 Committee are disappointed to see only ‘some negotiators running by and asking for our views on what should and should not be considered’. Many feel the process is neither ‘systematic’ nor ‘comprehensive’. They also say the PM exploited the fact that 147, almost half of the 307 Conservative MPs elected, are new, overawed and highly biddable. Another ninety-plus had served on the back benches in Opposition and are eager for ministerial jobs. The scenario Cameron offered ‘made most colleagues think there was no choice’, says Graham Brady, chairman of the 1922 Committee. ‘A lot of people were unhappy with what was being done, but felt they couldn’t say so.’23 For the time being, discontented MPs are quiet. But they come to bitterly resent being told they effectively have no choice other than a coalition with the Lib Dems. It confirms their impression that Cameron and his allies would sooner deal with Clegg and the Lib Dems than with them. How right they are.

The Conservative shadow Cabinet discuss and approve the Coalition Agreement on Tuesday afternoon, with the world’s media speculating what is going on. Brown is pacing around Number 10 but knows the game is up. He is told by officials that he cannot go to the Palace to resign until details of the new government are locked into place. Cameron is given the green light. Suddenly, everything happens very quickly. Llewellyn needs the ‘If we win’ file. At 5.40 p.m., he calls senior party aide Laurence Mann to retrieve it from CCHQ. Behind Mann’s desk in his office in Downing Street throughout Cameron’s premiership is pinned a fading receipt for a short taxi journey that starts at 5.41 p.m. and finishes at 5.59 p.m. that Tuesday. Mann jumps into a cab in the street outside Norman Shaw building and asks to be taken to CCHQ. He runs in and lifts the file out of the party’s safe, trying to look as unobtrusive as possible. A group of aides crowd around him. ‘He is smiling,’ shouts out one. Mann is silent, jumps back in the cab and just before Big Ben chimes six o’clock, runs back up to Cameron’s office.24

Llewellyn joins him. Moments before, Cameron has called him back to the office from the marathon in the Cabinet Office. Llewellyn worries his departure might lead to media speculation that Cameron is about to form a government. So officials take him from the Cabinet Office through a tunnel that comes out in Horse Guards Parade. He then walks round the back of the Foreign Office and enters the Norman Shaw building, thankful for the detailed preparation work over the last few months which Mann carries in his hands. Cameron’s first hours in Number 10, which follow, have been described in Chapter 1.

Fast-forward to the next day. It is 2.20 p.m. on Wednesday 12 May. Cameron and Clegg are waiting inside the Cabinet Room for a press conference which they have decided will work better outside under a mid-May sun. Aides notice how well and naturally they relate to each other. Warmth, generosity and good humour are palpable.25 Clegg’s aides are watching Cameron closely. They do not know him well yet and do not know what to expect.26 Both leaders hear the journalists assembling for the press conference in the Rose Garden below. Neither have any illusions. They have both said and thought terrible things about each other. Moments before, Cameron has received a brief listing the criticisms he has voiced of Clegg, so he can be prepared for questions.27 ‘What we need is a show of unity and a light touch,’ Coulson tells them both shortly before they walk down the steps into the garden. They hardly needed the advice. The obvious rapport between both men grates with Cameron’s malcontented backbenchers. ‘They saw Cameron and Clegg looking rather smug about being freed from having to deal with their own barking wings,’ says a friend of Cameron’s.28 The word the backbenchers most detest is when Cameron says a minority government would have been ‘unappealing’. Not to them it wouldn’t. Payback will be just a matter of time.

The coalition angers many Conservative MPs further because it means fewer jobs to go around for them. The Coalition Agreement doesn’t say anything about ministerial posts, only policy. Cameron and Clegg agree that positions should be allocated in proportion to the number of MPs, i.e. roughly three to one. But for Cabinet, the Lib Dems do even better with five full members. They say that in addition to Clegg and David Laws, the Chief Secretary to the Treasury, they want Energy, Business and they also claim Scotland, because the Conservatives have only one MP north of the border. Lib Dems debate amongst themselves whether Clegg should have his own Whitehall department; Cameron is very happy to place him in the Home Office. Conversations with allied parties in coalition in Europe hurriedly take place: they conclude that the deputy prime minister (DPM), as he will be called, should mirror the prime minister himself and not run his own government department, allowing him to range across all departments. They later wonder whether they have made the right call: the Civil Service fails to provide matching resourcing for the DPM’s office to allow it to compete with the considerable resources at the disposal of the prime minister. The ratio of eighteen Conservatives to five Lib Dems in full-time positions in the Cabinet rubs salt in the coalition wound for many in Cameron’s party, especially when it is announced that these five posts will be retained for the Lib Dems all the way through the life of the parliament. But at the top, all is harmony. ‘What struck me was how relatively easy the appointments for the coalition government were to make,’ says O’Donnell. ‘Much of it was attributable to the closeness of Cameron’s relationship with Clegg. I was really amazed by how mature both sides were, even down to agreeing who should chair the various Cabinet committees.’29

Cameron works closely with Osborne and Hague in making the final switches required for coalition. Hague himself becomes First Secretary of State. The Conservative Cabinet appointments see very few surprises; one is Theresa May to Home Secretary, an appointment that brings tears of joy to her eyes. The appointment of Iain Duncan Smith to Work and Pensions Secretary is another surprise as he hadn’t held a portfolio in Opposition, though he had made it clear it was the post he wanted. Finally, it is a surprise that Chris Grayling is not offered a Cabinet position (though he later joins in September 2012 as Justice Secretary).

The decision to have a small-scale Number 10, attributable to Letwin, causes some consternation. Letwin looks back fondly to his time in the Policy Unit in the 1980s when Downing Street was regarded (not always correctly) as operating very effectively under Thatcher. Two factors were in their minds. ‘Because tensions between the prime minister and Chancellor had gone on for decades and were endemic, we wanted the whole of Number 10, Number 11, the Treasury and Cabinet Office facing in one direction. We knew the money would never be controlled properly if we were not absolutely sharing the same overall strategic direction,’ recalls Letwin.30 Avoiding Number 10 breaking up into a series of sub-units, all pulling in different directions, was another concern. A small PM’s office was thus considered by some to be much more biddable. Others understand that a strong Number 10 is necessary for the delivery of policy. In the months leading up to the election, Hilton and Rohan Silva spoke to some of the key New Labour figures, including Blair (twice), his chief of staff Jonathan Powell, head of policy Matthew Taylor, and speechwriter Phil Collins. They all said that Number 10 should remain big, advice that was ignored. Various Labour-devised units to enhance policy implementation, like the Delivery Unit, are promptly closed down in Number 10. Cameron will be a trusting, ‘hands off’ PM: why does he require a large office at the centre? But he soon realises he has been hasty to throw the baby out with the bathwater. He is critically short of capacity at the centre. The Policy Unit is thus expanded again from 2011, partly as a result of the patient chivvying of Jeremy Heywood, who repeatedly points out that Number 10 is not fit-for-purpose. But the inner circle around Cameron does not scale up: it remains small and tight. There are real gains from this, not least cohesion. But its social exclusivity is a source of irritation and anger which is to rebound on Cameron all the way down to the general election in 2015. Do they have the experience, the breadth and the stomach to master the maelstrom of political, social, military, security, economic and diplomatic challenges that are about to be hurled at them?

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