Why Governments Die #1: London CSI - Crisis, Stabilisation, Identification

A new mini-series analysing late stage British governments

A recurring problem in British politics is the difficulties of the ‘late stage’ government. Four notable premierships fit this definition: James Callaghan (1976-9), John Major (1990-7), Gordon Brown (2007-10) and Rishi Sunak (2022-4). Not only are they somewhat underrated, but the political and economic battlegrounds on which they governed were staggeringly different to their predecessors. Essentially, these Prime Ministers played the game of politics on hard mode.

Each, in different ways and to different degrees, could be studied as examples of political survival or stabilisation. But their lack of mandates, time, political capital and fiscal room unfairly demotes them to the backrooms of history as the ‘last-gasping no-chancers’. For instance, Jim Bulpitt’s ‘statecraft’ thesis, which contends successful PMs must mix electoral, party, and governing action for success, is an oft cited failure of these governments.¹ Without statecraft, governments are consigned to the footnotes of history or obscure pub quiz questions.

But we must pay more attention to these late-term governments. How these ageing administrations contended with their inheritances, attempted to identify structural problems and created policy solutions (along with their failures in doing so), explains why governments actually die. For this, and their serious and rational approach to governance, they deserve to be examined more closely.

Too often, accounts of these governments are defined according to what came after. As each of these four periods precipitated a change in government – and sometimes a change in epoch – their actions and position in political history are understood as the ‘prelude’ or ‘proto’ of what came next. This attribution is overly revisionist – with the effect of removing their agency, and sometimes originality. Actions, as well as larger forces, matter – and there are examples of ageing governments doing the impossible and winning elections.

Regardless, these four PMs’ governing impacts outgrow their electoral notoriety. The phases of crisis stabilisation, problem identification, party management and attempts at strategy and policy, are incredibly influential on future governing narratives and history. It is in the midst of shock and deep-seated problems that we begin our short foray into the often ignored yet hugely significant ageing governments of British politics.

Crisis and Stabilisation

From day one nearly all of these premierships contended with terrible – bordering on catastrophic – crises. But all four PMs largely excelled at stabilisation, even if it came with costs.

Over the summer of 1976 Callaghan watched helplessly as Sterling came under increased attacks. He recalls ‘there were heavy hints that I was a stopgap Prime Minister and the favourite forecast for the date of the next election was September 1976 [...] but having donned Wilson’s mantle I was determined to keep it.’² As the IMF crisis hit Bernard Donoughue, Head of the Policy Unit, read out the grim scenario to a depressed Callaghan: ‘Our reserves are down to £4 billion and the deficit this year and next will absorb that. Sterling is at an all-time low. Inflation is no longer falling. The incomes policy is lacking. We have record interest rates to protect sterling and finance the PSBR. Our import content is rising all the time. There is no prospect of unemployment falling.’³


Callaghan’s skilful negotiation, however, ended the IMF crisis while keeping a riven Cabinet together, reducing Sterling's position in the global currency system and minimising the cuts required to just £1bn in the next financial year and £1.5bn in the year following – while using £500m in BP sales to meet IMF targets. Over the next three years, despite Donoughue’s dire diagnosis, he ameliorated the problems of the 1970s, with a return of growth and reduction in unemployment and inflation.

Brown may have initially walked into a facade of calm – but the early rumblings of crisis were audible by the Summer of 2007, with money markets drying up as interest rates rose. The economic tsunami hit soon after with Northern Rock’s collapse in September 2007 – becoming the first run on a British bank in 140 years. Ed Balls, Brown’s trusted advisor, recalled ‘I was worried about contagion. We didn’t know if there were more Northern Rocks to come.’⁴ As it turned out, it was the beginning of the largest financial crisis in a century. On 15 September 2008, as Lehman crashed, the City of London and No.10 went into meltdown. HBOS lost half its value in one morning, while RBS was exposed, losing 35% of its value within an hour-long lecture from their CEO – who continued to peddle a warped view that ‘it's fine, we’ll just sell a few things.’⁵


When Brown called former investment banker and minister Shriti Vadera to ask how bad it was, she responded, ‘Oh crap, it's very, very serious.’⁶ But Brown rose to the challenge, overseeing a mixture of recapitalisation, nationalisation and guarantor-ship to avert further collapses. This combined with his international leadership at two G20 meetings where he reignited cooperation, delivering 1$tn to the IMF and fostering an understanding between the C6 central banks and governments.


Major inherited several rolling crises in 1990. His aides kept the piece of paper on which he frantically scribbled his problems after the first ‘Fidelio’ Cabinet meeting (where ministers escaped into the light of freedom – in other words a Cabinet in which they could talk). While his personal focus included inflation and unemployment, his Cabinet pressed the ‘urgent questions of Europe, the poll tax and the Gulf. None could wait [...] they would absorb most of the energies of the government’.⁷ The Tory party had fragmented between desires for European integration or a sovereign isle – divisions which were existential enough to sink Margaret Thatcher when mixed with her alienation of Cabinet colleagues and imperious tendencies. Worst of all was the economy, dipping into several technical recessions in the early 1990s due to double digit inflation and interest rates. It eventually led to a one million increase in unemployment over Major’s first year in office.

Meanwhile, the Middle East had descended into the First Gulf War – with British monitoring and participation in a precarious state, as one insider put it: ‘Bureaucratically it was getting into a tangle. It was constitutionally pretty dangerous.’⁸ While Major could only alleviate the European crisis with opt-outs for Maastricht, he handled the Gulf War with efficiency in marked contrast to his predecessor. And, after Black Wednesday, his government oversaw the beginnings of the longest run of continuance growth this country has ever seen – a governing feat.


Sunak and his team scrambled into Downing Street with just twenty hours of preparation. Liz Truss’ radioactive mini-budget had destroyed market confidence, GILTs, pension funds and Sterling in a matter of days. It was a feat a revolutionary communist would have been proud of. Sunak’s Chief Whip Simon Hart compared it to ‘setting off a bomb’.⁹ As an internal governing document showed on 12 October 2022 ‘there is a serious risk of a financial/sovereign debt crisis’ – her Chief of Staff (CoS), Mark Fullbrook, only then realising: ‘she’s fucked then, isn’t she?’¹⁰ This economic disaster translated into political disintegration, something an already deeply fractured party found almost impossible to absorb.


Unsurprisingly, for Sunak’s CoS Liam Booth-Smith, ‘structurally when we got in it was as close to as bad a situation as you can possibly conceive of.’¹¹ But Sunak effectively calmed the markets with consolidation: largely through maintaining the main NIC and income tax thresholds, but also by increasing the windfall tax on oil / gas companies. It was implemented hand in hand with a structurally-pivotal Chancellor – Jeremy Hunt. Sunak and Hunt brought Britain back from the brink of a serious financial crisis and, over two years, successfully reduced inflation from 11.1% to 2.2% (with large external help) and fostered the conditions for minimal growth – the 0.9% GDP growth in Q1 of 2024 the largest increase since Covid recovery.

Blocking Identification

Identifying the immediate problem is less an active move but a reaction. It is instinctual. However, the policies enacted to stabilise the country are not ‘natural’ – crises are subjectively defined, and thus the fixes are contestable. The choices made in dealing with this first or primary crisis – whether Callaghan’s cuts, Brown’s borrowing, Major’s interest rates or Sunak’s fiscal drag – had large hangover effects. What's important to note is that these late term governments can never escape harsh trade offs on policy and, perhaps most importantly, on governing strategy.

The successes of stabilisation partly lay the seeds of their downfall. While the primary crises were managed effectively, without offering a fix to the causes of said crises, long-term delivery and electoral success remained impossible. Problem identification – the definition and origin of deeper policy dilemmas they had inherited – proved too difficult for these PMs.

One example is that these governments preferred to avoid the necessary distancing, or reappraisal, of previous decisions / strategies. This is largely because the causes of the crisis can in part be attributed to their own party’s actions or even themselves in a previous role. Therefore, these PMs search for non-confrontational ways to categorise the causes of the crisis – which creates a flawed process of identification.

Another issue is the muddying effect of the external shock: whether the Bretton Woods collapse and oil crisis 1971-3, Europe in the 1990s, GFC in 2007-8 or Ukraine / Covid in the 2020s. These confused the picture – making reforms less easily definable, while creating serious economic hurdles. But they also have the effect of a ‘get out of jail free card’ – where governments used them as excuses for ineffective or risk-averse action. The Cheems mindset of something becoming ‘too difficult’ ensures more effective strategies can be intellectualised into the skip.

A final, more simple reason, is the time and energy it takes to govern. As Booth-Smith notes ‘a lot of the intellectual capital and energy’ was invested in fixing immediate issues – the stabilisation of the country and the premiership.¹² Bringing in the right people into No.10 to successfully identify the causes of rolling-crisis and devise workable reforms is very hard. It's therefore easy to see how Prime Ministers get sucked into jumping from issue to issue – losing sight of the larger picture or need for wider reform.

Crisis Addiction

Without adequately identifying the causes, or believing in the need to fix said causes, these PMs developed an addiction to solving crises. It becomes, in essence, a comfort zone – believing this skill alone will achieve both governing success and electoral victory.

Callaghan, for example, believed too much in his unique ability to deal with the trade unions and his party. Come autumn 1978, no long-term solution for union power had been attempted, the government having backed off a tripartite solution, inspired by Germany’s industrial settlement and recommended by the Bullock Committee. While unlikely to be a silver bullet, this was at least a credible alternative that was never attempted. Education reform, in his Ruskin speech, was also a moment of what could have been. And so, the underlying issues of union power imbalance went unaddressed, ending in the Winter of Discontent, and with it any hope of re-election.

Brown, finally reaching No. 10, had a meticulous plan of events and press releases for the summer. But it all went out of the window after a series of crises struck: foot-and-mouth disease, flooding in the North East and terrorist attacks. His effective responses cemented his reputation as a ‘Volvo’, a PM of reliability and strength. But fundamental questions of political direction went unanswered: What was his vision for a government of renewed purpose? Before too long, his reputation for solidity slipped away during ‘the election that never was’, and the rest of his time in office was spent handling the GFC. The early months of his premiership had set the tone – efficient governance in crisis, but a government that otherwise lacked direction.

As for Sunak, his major success came in handling the dilemma of Northern Ireland in the post-Brexit settlement via the Windsor Framework. On AI there was also meaningful work and progress. But Sunak mistook technocratic efficiency, exemplified by his Five Pledges, for structural fixes. His more in-the-round ideas of ‘Capital, People, Innovation’, which could have challenged the nation’s deep-seated issues, never saw serious implementation or definition. Thus, his ‘longer-term’ decisions announced in Autumn APC, while bold, failed to hang together as a coherent proposition to fix Britain’s structural weaknesses.

Major and Norman Lamont’s commitment to an integrated Europe triggered the ERM crash and ‘Black Wednesday’, due to Britain’s diverging and still declining economy. Major’s public service reforms and social vision (something Tony Blair identified in 1997) never completely manifested itself – even with a greatly repairing economy. However, compared to the aforementioned three, Major came closest to a period of statecraft in which he combined crisis management, the 1992 budget, European vision and party / governing style to an against the odds election victory. But his premiership unravelled in his second term, even if he bequeathed to Blair a rejuvenated economy.

It's not all shock and awe

Crisis and stabilisation are key to the performance of late-stage governments. The influences these processes have on identification, and later strategy / policy creation, partly explains why these governments die. The costs, governing time and attitude it fosters greatly reduces their chances of successful statecraft.

However, this is not an all-inclusive list. Late-term governments have comparatively little political capital, and are forced to manage ageing and divided parties, a hugely significant limitation in their pursuit of long-term governing and electoral success. It is here we will pick up in our next piece of the series.

Tom Egerton is a political writer and researcher, his next book is Sunak at 10: The Last Tory PM in Downing Street? - for anyone willing to chat please DM him. His latest book, The Conservative Effect: 14 Wasted Years? (CUP) can be ordered here: with Cambridge, Waterstones or Amazon. Follow Tom on X / Twitter here.

1. Jim Bulpitt, ‘The Discipline of the New Democracy: Mrs Thatcher’s Domestic Statecraft.’ Political Studies, (1986), 34:1, 19-39. https://doi.org/10.1111/j.1467-9248.1986.tb01870.x

2. James Callaghan, Time and Chance (London: Collins, 1987), p. 395.

3. Bernard Donoughue, Downing Street Diary Volume II: With James Callaghan in No.10 (London: Pimlico, 2009), p. 71.

4. Anthony Seldon and Guy Lodge, Brown at 10 (London: Biteback, 2010), p. 89.

5. Ibid., p. 147.

6. Andrew Rawnsley, The End of the Party: The Rise and Fall of New Labour (London: Penguin Viking, 2010), p. 575.

7. Sarah Hogg and Jonathan Hill, Too Close to Call: Power and Politics — John Major in No.10 (London: Little Brown, 1995), pp. 14-15.

8. Peter Hennessy, The Prime Ministers: The Office and Its Holders Since 1945, (London: Penguin 2001) p. 442.

9. Simon Hart, Ungovernable: The Political Diaries of a Chief Whip, (London: Macmillan, 2025), p. 173.

10. Anthony Seldon with Jonathan Meakin, Truss at 10: How Not To Be Prime Minister (London: Atlantic, 2024), p. 248.

11. https://www.spectator.co.uk/podcast/if-anything-we-went-too-late-exclusive-interview-with-sunaks-chief-of-staff/

12. Ibid.