David Cameron’s decision to call a referendum on the EU was the result of intense Eurosceptic pressures from both within and outside his party. He found himself with little scope for manoeuvre as Ukip gained support and his backbenchers threatened rebellion. Pascal D König looks at what a competition theory usually applied to business can reveal about his misjudgment and eventual replacement as PM

König, Pascal D.

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By Democratic Audit UK 2017-5-16How the Eurosceptics brought down David Cameron: aserious case of supplier lock-indemocraticaudit.com /2017/05/16/how-the-eurosceptics-brought-down-david-cameron-a-serious-case-of-supplier-lock-in/David Cameron’s decision to call a referendum on the EU was the result of intense Eurosceptic pressures from bothwithin and outside his party. He found himself with little scope for manoeuvre as Ukip gained support and hisbackbenchers threatened rebellion. Pascal D König looks at what a competition theory usually applied to businesscan reveal about his misjudgment and eventual replacement as PM.Eurosceptics to the right of him … Michael Gove, who campaigned to Leave the EU, with David Cameron in2010. Photo: Number 10 via a CC-BY-NC-ND 2.0 licenceBusinesses have a tricky relationship with their suppliers. Generally, they prefer to keep them at arm’s length andavoid giving them too much influence, because too much dependence on a single supplier is risky. If that supplierbecomes aware it is indispensable, it may be able to dictate the terms of the relationship or even threaten abusiness by putting up its prices.But supplier influence is only one of the competitive forces acting on a business. The management theorist MichaelPorter identified five of them:• suppliers’ bargaining power• customers’ bargaining power• the threat of substitutes• the threat of new entrants• the intensity of rivalry in the market, which is influence by the other four.Porter originally conceived this as a framework for analysing the level of competition within an industry, though itcan also be used to develop a strategy to successfully position a product in a market. However, it is also possible to1/5identify these forces at work in the realm of party competition. In the Conservative party under David Cameron, theirconjunction brought about a complex competitive environment – an environment in which ideational supplierswere pivotal.The Conservatives faced a threat from a newly-popular competitor, Ukip. Over time different means and policiesemerge to tackle political issues – take, for example, monetarism replacing Keynesianism as a paradigm ineconomic policy. The customers – here, the voters – exert additional pressure if elections are close, there is a clearmajority behind certain policies or they can threaten backward integration, which in politics would mean they havedirect democratic means to take things into their own hands.Suppliers in the area of party politics can take various forms. Parties are often traditionally tied to certain ideationalsuppliers, such as associations, trade unions and churches. They may also depend on influential supporter groups,activists and sponsors, which can constrain the party leadership.Finally, party rivalry is considerable, and raises the stakes for parties to invest in an issue where no party is clearlymore competitive and where voters are volatile and available, i.e. do not take a principled stance on something.In politics, enjoying a competitive advantage means being perceived as more credible, competent and committedthan others, and sustaining that impression. As competition increases, the effort needed to achieve and sustaincompetitiveness rises too. Looking at parties striving for a competitive advantage against the backdrop of the fiveforces can help to make sense of the developments that led up to Brexit and its aftermath.Setting the sceneThe foundations for Brexit and Cameron’s resignation were laid during the financial crisis. During that period,financial and economic policy – as well as immigration policy – became strongly intertwined with European Unionpolitics. The financial crisis suddenly put economic issues at the top of the political agenda; immigration graduallyreplaced them there.As Cameron implemented austerity policies, his government deliberately distanced itself from the EU. Thelatter made an easy scapegoat in the light of its handling of the Eurocrisis, and the British government witnessed aserious of policies on the EU level (such as the Two Pack, the so-called Sixpack and the Fiscal Compact) thatput constraints on countries’ financial autonomy – and from which the UK opted out where it was concerned (as inthe Fiscal Compact). Under these circumstances, the idea that Britain could sort out the crisis by itself,unconstrained by the EU and without sharing the burden of other EU members, gained currency – perhaps evenmore so as British austerity paradoxically looked very much like the Eurozone austerity model. As Marc Vail hasargued, intra-party pressure and the threat from Ukip created incentives to complement an economic policy of strictausterity with vilifying the EU. According to Vail, the Cameron government demonised “the EU as an existentialthreat to Britain’s national sovereignty and an institutionalised threat to Britain’s economic well-being”. Economicpolicy and the stance towards the EU were interwoven.It therefore became hard to keep economic and financial policy separate from the issue of EU relations. Thequestion of the right policy solution became linked to the question of how and whether to stay in the EU – and soalternative policy paths towards prosperity emerged. Moreover, the idea of economic nationalism was strengthened,which played into the hands of Eurosceptic Conservatives. For them, the relationship with the EU is not only aquestion of British identity, but also about opportunity – or the sovereignty – to pursue a better economicdevelopment path.In 2011, the Prime Minister was already under pressure from Conservative MPs who were calling for referendum onEU membership. In their view, the UK had surrendered too many powers to the EU, which was seen as bloated,wasteful, over-regulated and a barrier to economic growth. In 2015 a newly-formed group of 50 Conservativesdemanded major concessions from Cameron’s renegotiations with the EU. The Tory MP Steve Baker, who led the2/5group, warned that the government would only be supported as long as he obtained political independence fromEurope, more freedom from regulation and a greater ability to trade freely.Certainly, Eurosceptic Conservatives were influential before the crisis, with a long-standing and extensive network. AEurosceptic consensus had been growing since the mid-2000s. However, their ideas and agenda became moreimportant as austerity took hold. Euroscepticism was a relatively marginal issue before, but the developments duringthe financial crisis put it at the centre of party politics, and the question of EU membership was openly debated.As John FitzGibbon has identified, the Tory Eurosceptic network not only extends well beyond their MPs, butstretches beyond party lines and even encompasses financial supporters and the media. This gave them the abilityto mobilise support outside of parliament. It also meant that they could, under certain circumstances, be in aposition to bypass the party leadership formulation of policies – or as it is put in management theory, threatenforward integration.While economic and financial issues were still high on the political agenda, the issue of immigration gradually rose inimportance and demanded policy responses from the government. At the same time, immigration – in part combinedwith law and order – became tied to EU affairs, as many migrants had come to Britain when their countries joinedthe EU. As the combination of anti-immigration sentiment and Euroscepticism were becoming more popular, Ukiprose in the polls, putting additional pressure on the Cameron government.How Cameron dealt with an intricate competitive situationThe Cameron government thus found itself in a difficult situation. Solutions to immigration and the financialcrisis were increasingly hard to separate from the question of European integration. Competing merely on economicpolicy, for example, was not enough. To be truly competitive, it needed to signal competent and credible handling ofEU affairs. Ukip was threatening the Conservatives not just on immigration, but also through its emphasis oneconomic nationalism and independence. Pressure also came from within Cameron’s own party, with EuroscepticConservatives playing an important role as an ideational supplier and thus effectively constraining Cameron’s scopefor strategic decisions.Then came the 2014 European Parliament elections, in which Ukip could – and did – achieve major success, havingalready made considerable gains in the 2013 local elections. Voter influence in terms of sanctioning potential washigh, and Ukip was threatening to enter Parliament. Finally, while party rivalry is generally intense in the majoritarianand adversarial British political system, the 2010-15 coalition government and the relatively close majority after the2015 general election meant additional competitive pressures.3/5Calling a referendum under these circumstances was a way to deal with these threats. It allowed Cameron to signalcommitment and credibility in the issues of immigration and political and economic sovereignty from the EU. Hebasically tried to play voters against internal critics, which could have removed the EU from the top of the agendaagain.However, this move only bought Cameron more time, ensuring that voters would have a strong influence over EUaffairs at a later stage. Moreover, his gamble ensured immigration and austerity/economic issues became evenmore closely associated with European integration – also visible in the 2015 Conservative manifesto, whichpromised to scrap the Human Rights Act and restrict benefits for EU migrants. As the referendum date came closer,it became more and more clear that neither side enjoyed overwhelming support among the electorate. At the sametime, Cameron was in a tough competitive position. The Conservatives could hardly be presented as credible andcommitted supporters of the Remain position, particularly with Eurosceptic Conservatives and their supporterslaunching their own campaign. Other parties, while they also had splits on the EU issue within their ranks, were in abetter position. The hard Eurosceptics and Brexiteers in Cameron’s own party made it virtually impossible for him tocredibly take a pro-EU stance, which in turn meant it was harder for him to appear credible on immigration and theeconomy.His previous strategic decisions thus limited Cameron’s ability to present himself as a party leader with a distinctiveand competitive stance on the EU. Only after the referendum result did the Conservatives adopt a very clear stance,even showing a readiness for a hard Brexit. By becoming the party of Brexit and of “putting Britain first”, it couldregain credibility. Cameron’s gamble, which is perhaps far from having reached its conclusion, thus led to a partialrebranding of the Conservatives. The party strengthened its association with economic nationalism and control overimmigration – certainly an image and reputation that other parties can hardly achieve and challenge now.While they now seem to enjoy a competitive advantage on those issues, the Conservatives will have to prove thattheir solutions continue to deserve support. Moreover, they risk ending up having a competitive advantage in anarea – a market segment – that is popular with a declining number of voters.This post represents the views of the author and not those of Democratic Audit.4/5Pascal D. König is a postdoctoral researcher at the Goethe University, Frankfurt. His researchfocuses on political communication, political strategies, and party competition. Recent workcentres on a comparison of governments’ policy communication and on strategic policy action.5/5

How the Eurosceptics brought down David Cameron: a serious case of supplier lock-in

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