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Trust and referendums

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Voters may not trust bankers and generals but they trust their judgement . Conversely, they like Boris Johnson – but do not necessarily trust his judgement

‘Brexit puts jobs at risk, say 200 business chiefs’. This was the headline in the London Times shortly after David Cameron had announced the referendum. A day later some of the most senior army chiefs warned that a Brexit would put Britain at risk

Having been on the back foot over London Mayor Boris Johnson’s decision to back Brexit, Prime Minister David Cameron was keen to regain control early on. His ally Baroness Kate Rock, a Conservative member of the House of Lords and chief investment officer of multibillion Architas Fund, was dispatched to secure pledges from the captains of industry that a ‘Brexit’ would hurt the economy. She succeeded in signing up 197 companies, which employ 1.2 million people. The companies included household names like BP, Royal Dutch Shell and HSBC. It is a powerful and impressive list. It was made even more powerful when the letter was complemented by a similar letter from the senior army officers shortly thereafter.

But do such letters from businessmen and women win referendums? Will the letter from the admirals and generals persuade voters? Are voters convinced by the opinions of CEOs from the largest and most successful companies in the United Kingdom?

Interventions by businessmen and army chiefs have an effect. Former Labour leader Ed Miliband’s credibility was effectively undermined when 103 business leaders warned against voting for him before the general election in May 2015. The business leaders’ intervention effectively lost Labour the election.

Academic research suggests that the same is true for referendums; interventions by generals and businessmen matter. Evidence from other votes on European issues suggests that voters take cues from prominent individuals when they vote. Most ordinary men and women do not want to spend their lives pouring over the fine points of the Brexit deal. Rather they, look for so-called ‘information short-cuts’ and support the decision endorsed by prominent individuals whose judgments they trust.

But there is a snag with these findings. The general public distrusts businessmen. According to the annual trust-survey by Edelman only one in five trust business leaders. By contrast, a large proportion of the British trust the army according to research by Kings College London.

So what is the evidence from referendums in this country?  In the Scottish referendum there was, admittedly, some anecdotal evidence that interventions from businessmen backfired. In August 2014 CEOs from 130 companies warned against the economic risks associated with Scottish independence. A poll taken after the letter was published showed support for an independent Scotland creep over 50 percent for the first and only time during the referendum campaign. So, should business stay on the sidelines? Should those business leaders in favour of staying in the European Union keep quiet lest they recommendations lead to a backlash?

Not at all. First of all, there were other polls that showed the opposite tendency in Scotland.

But, more importantly, the general consensus is that voters will be swayed by economic fears in the forthcoming Brexit referendum.

Trust in business may be low but CEOs are considered a credible source – and so are army chiefs. People trust their judgements even if they don’t like or trust them.

Whatever misgiving the Scottish voters had about blue chip company directors did not alter the fact that the warnings issued by the business leaders were the deciding factor in the referendum.

Studies conducted after the referendum showed that risk to the economy was the one issue that swayed doubters to vote against independence. According to one Scottish commentator “people’s attitude to risk was the biggest determinant in how they voted, and those who rejected independence did so because of the economic risks, although their attachment to a national identity that was British rather than Scottish followed closely behind”.

Things have not changed. A poll by the National Centre for Social Research show that voters are overwhelmingly Euroskeptic but they will nevertheless vote for Britain to stay in Europe. Why? Because Brexit will put the economy at risk.

Voters predominately worry about their own security and their personal finances.

We may not trust, let alone like bankers, businessmen or ‘the city’ but we trust their judgments and are swayed by their opinions. Business leaders can influence the outcome of a referendum. They may not be successful in telling people what to think but they are certainly able to tell people what to think about, as a recent book on referendums in the European Union concluded.

In the battle between head and heart, economic fears trump emotional sentiments. Of course, whether this is healthy for democracy is another matter.

Please note: Views expressed are those of the author.

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