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Jacob Rees-Mogg Is Waging Political War

And so far, he’s having more success than he ever did as a fund manager.

  • By Hazel Sheffield

Before Jacob Rees-Mogg became the British Conservative politician who could bring down the U.K. government over Brexit, he was a pre-pubescent shareholder activist. 

In a now-infamous photograph, a 12-year-old Rees-Mogg reads the Financial Times at home, a pair of teddy bears to his right, a typewriter to his left. He is wearing a wool sweater over a shirt and tie and looking, unsmiling, out of the frame. 

Rees-Mogg was not merely playing at being a grown-up. The boy who would later start Somerset Capital Management, a $9.8 billion emerging-markets fund, had been left £50 ($67) by a distant cousin that his father invested in shares of GEC, a U.K.-based industrial conglomerate, on his behalf. In 1981, when GEC announced a dividend of 10.25p, Jacob attended the annual general meeting to castigate the board. 

“What is the point of such a pathetic dividend when you have made a pretax profit of £476 million and have total reserves of £1.4 billion?” the schoolboy asked in a “contemptuous tone,” according to a report in the FT the following day. He was the only shareholder to vote against the dividend, despite the fact that his GEC holding had earned better returns than any other in his portfolio of 175 shares. He sighed: “I am always the only person voting against these things.”

More than three decades later, Rees-Mogg remains a contrarian and a figure of fun in the press — but he no longer stands alone. Technically, he is a minority figure in government, a so-called backbencher who has never led a government department. But lately, Rees-Mogg’s star is rising. He is the leader of a group of more than 60 members of Parliament — the exact number is unknown — self-funding a party within the ruling Conservative party. This Euroskeptic faction, under the name of the European Research Group, has one mission: hard Brexit. 

Beyond the U.K.’s borders, Rees-Mogg now belongs to a deeply conservative global elite wielding their power to protect their great wealth. In the aftermath of the Brexit referendum, it emerged that Robert Mercer — the American computer scientist and former co-CEO of the wildly successful hedge fund Renaissance Technologies — had donated the services of Cambridge Analytica, the tech company that used data to target swing voters in favor of Donald Trump during the U.S. presidential election, to the campaign for Britain to leave the EU. In December, Rees-Mogg met with Steve Bannon, the former Trump adviser, to discuss how conservative movements can win in the U.S. and the U.K. In an interview with far-right British commentator James Delingpole on a March 2017 podcast for Breitbart News, the right-wing American news website, Rees-Mogg spoke admiringly of Trump for cutting taxes and for not being afraid to offend those in power.

The present is a comfortable moment for the hard right. When the U.K. secedes from the EU, it will abandon 70 years of globalization. It will turn away from a world order that increasingly relies on supranational institutions to check the power of extremely wealthy individuals and corporations like Apple and Facebook, with market capitalizations far bigger than the GDPs of most nations. What’s more, it will squash a defining advantage to doing business in the City of London by forcing international firms to set up new bases in Europe to maintain financial services without incurring fees. 

Many financiers are wringing their hands over the consequences. Not Rees-Mogg. The little boy who asked GEC for a bigger dividend is alive and well in 2018. Only now he is part of a coterie of hard-right, wealthy businessmen rolling back globalization to protect their positions of power — all in the name of populism.

“It’s the classic Trump, Berlusconi, Johnson mold,” says Matthew Bell, a contributing editor at British society magazine Tatler. “It’s a very populist thing to do, and very clever. He’s done that, but he hasn’t married that up with populist beliefs. He’s extremely elitist and a product of the British elite.”

In an interview with BBC journalist Nick Robinson published in March, Rees-Mogg was asked why he supports Brexit. “It’s about democracy,” he said. “It’s about, Can your vote change your government? Does your government have the power to change the laws when it is elected? In the European Union the powers of the government were limited in wide areas. That’s what underpins everything that I believe about Brexit.” (Rees-Mogg refused repeated interview requests for this article.)

Nearly three quarters of the British electorate voted in the EU referendum in June 2016, with 51.9 percent of them voting to leave the EU. The victory was decisive, but U.K. politics has since stalled. The government is locked in negotiations in Brussels ahead of the transition period that will run from “Brexit Day,” on March 29, 2019, to December 31, 2020, when the U.K. becomes a fully sovereign nation once again. During this transition the U.K. will negotiate, sign, and ratify the terms on which it will trade. 

“Three million people who don’t normally vote voted in the referendum,” Rees-Mogg said in the BBC podcast. (The exact figure is 2.9 million more than in the general election of 2015.) “If you were to say to them, ‘You were right not to vote because we’re not going to take any notice of you anyway,’ that’s a real hammer blow to democracy.”

Yet democracy cannot exist without a common understanding of facts. And Rees-Mogg, like other “Leave” campaigners, has been known to bend facts to service his arguments. A central claim of the Leave campaign was that the £350 million sent weekly by the U.K. government to the EU could be redirected to the National Health Service. This claim was repeated by politicians on the right long after the numbers had been discredited, prompting the head of the U.K. Statistics Authority to write to Boris Johnson, a key pro-Brexit politician, declaring it “a clear misuse of official statistics.” 

When British tabloid The Sun published a chart showing that goods like Nike Air sneakers, steak, and cigarettes would be cheaper after Brexit, it was enthusiastically posted to Twitter by Rees-Mogg. Hours later the article disappeared from The Sun’s website. Within a month the paper published a “clarification” saying the numbers were incorrect because it had worked from retail rather than wholesale prices. Yet the post lives on in Rees-Mogg’s Twitter feed, despite repeated calls for it to be retracted.

Rees-Mogg takes the same approach to official statistics. In February leaked government documents revealed that the U.K. economy will be worse off outside the EU under every scenario modeled. In the worst case — the feared “no deal” scenario in which the U.K. fails to reach an agreement with the EU — economic growth could be reduced by 8 percent over the next 15 years. In response, Rees-Mogg accused the Treasury of “fiddling the figures.”

Rees-Mogg has vehemently rebuffed the views of many moderate Conservatives and of those on the left who are keen for the U.K. to remain in the customs union, the group of EU countries that has agreed to free trade. A major sticking point is the border between Northern Ireland, which is part of the U.K., and the Republic of Ireland, which will remain in the EU. 

A hard Brexit, which would include pulling the U.K. out of the customs union, could mean costly checkpoints at this border. This problem has given rise to alternative models of Brexit, such as a proposed “hybrid model” that involves the U.K. collecting EU tariffs on goods at the border, then rebating those charges if the goods end up in the British market, where they may have a lower tariff. 

“It’s completely cretinous. It’s a silly idea,” Rees-Mogg said of the hybrid model at an event in Westminster in late April, accusing the government of “faffing around.” Days later a 30-page memorandum landed on U.K. Prime Minister Theresa May’s desk, delivered by the European Research Group, demanding “as few additional requirements on EU trade as possible.”

“D-Day for May!” a tabloid screamed. “PM faces rebellion of sixty Tories as she faces Brexit ‘war cabinet.’”

Rees-Mogg denies he has given the government an ultimatum. Yet he is at the rudder of an uprising that may steer the course of the debate. In the process, Rees-Mogg has gone from eccentric backbencher to the bookmakers’ favorite to succeed May as leader, with odds of 4-to-1. But insiders say his ascent to prime minister is unlikely anytime soon, given that he doesn’t currently hold an office within the party. Rees-Mogg himself says he doesn’t dream of leadership. “I don’t take it much more seriously than I take myself. It’s all good fun, but it was summer froth,” he told the Financial Times in 2017. “I’m a quiet West Country politician who has been of a little interest over the summer. I wouldn’t put it any higher than that.” 

But Rees-Mogg feeds off froth. In Parliament he has built a reputation for funny speeches and filibustering. He once prevented the passage of the Sustainable Livestock Bill through Parliament with a long speech that included poetry, a rumination on the quality of eggs, and stories about fictional pigs. Sometime before he learned that his opponents could be outfoxed with froth, that unsmiling schoolboy once declared be would be a millionaire at 20, a multimillionaire at 40, and prime minister at 70, “when I’ve made enough money to afford to waste some time on politics.” 

If the bookies are to be believed, then at 49 he is well ahead of those plans.

Jacob Rees-Mogg was born in 1969 in Queen Charlotte and Chelsea Hospital in London and was raised by his nanny, Veronica Crook. He is fond of saying that Nanny, as he calls her, has been with the family longer than he has, which is true. Crook joined the Rees-Mogg family four years before Jacob was born to care for his elder siblings, Emma Beatrice, Charlotte Louise, and Thomas Fletcher, and remains with them more than 50 years later, looking after Jacob’s six-strong brood. 

Rees-Mogg is so attached to Nanny that she accompanied him the first time he ran for a parliamentary seat in Fife, a working-class Scottish town that had long been a stronghold for the opposing Labour Party. Ever since, Rees-Mogg has denied rumors that he and Crook traveled around the town door-knocking in one of the family Bentleys. On Crook’s recommendation, they had in fact taken a Mercedes, because “a Bentley would be most unsuitable for canvassing,” he later said. 

Rees-Mogg failed miserably in the election, gaining 9 percent of the vote, though he enjoyed talking to people in the constituency about their problems, a trait he learned from his father, a distinguished newspaper editor of the Times of London. “My father was always interested in everybody’s views regardless of their age and their background,” he once said. “That was very much my father’s view.”

Jacob Rees-Mogg’s paternal grandmother was born in New York to an Irish Catholic family that had emigrated during the potato famine. Beatrice Warren became a successful Shakesperean actress who came to London in 1920 to work at the Old Vic Theatre, met Jacob’s grandfather Fletcher Rees-Mogg, and never returned to the U.S. 

The family remains devoutly Catholic. Jacob Rees-Mogg named his children after popes and saints — much to the amusement of the British press, which reacted with delight when the sixth and youngest was christened Sixtus Dominic Boniface Christopher. 

Rees-Mogg’s politics are inextricably linked with his religion. He believes that the “art” of conservatism lies in changing what needs to be changed and holding on to things that don’t. He traces this view back to the Reformation in the 16th century, when the Church of England broke away from the pope and the Roman Catholic Church. Rees-Mogg notes that whereas the right wing recognizes that man is fallen, the left thinks he can be perfected. 

“The Christian view of humanity is that man can only be perfected in the next world, not in this, so as a Conservative you just have to get on with it,” he said on the Breitbart podcast last year. “If you’re on the left, you think this world is all there is; you have to create this new Jerusalem.”

For the first years of his life, Jacob Rees-Mogg lived at 13 Cowley Street, a house that once formed part of the outer garden of Westminster Abbey. From the attic he could see the towers of Westminster Abbey and, at night, hear the striking of Big Ben, the bell in the clock tower of the Houses of Parliament. 

At the age of nine, Jacob was described by his teacher at Eton, a British boarding school favored by the ruling class, as a “particularly dogmatic” Thatcherite. “I became a great fan of Margaret Thatcher,” Rees-Mogg said of the former prime minister in 2016. “I became a great fan of hers before I knew very much what she was doing, and then she won the Falklands [a ten-week war in 1982 between Argentina and the U.K. over disputed territory in the South Atlantic] and I thought she walked on water. That was when I was about 12.” He wasn’t old enough to join the Young Conservatives at this time, so became a paid-up member of the proper Conservative Party.

People were suspicious of this serious little boy who aped Thatcher and managed stocks for sport. “They said, You can’t really be like that,” he told the Financial Times over lunch in September. “I just am. The most definitive answer I can give is that nobody would deliberately develop my image.”

By the time he got to Oxford University to study history, Rees-Mogg had learned to use his eccentricity as currency. “At university he was a contrarian,” says Meg Hillier, a Labour MP who was at Oxford at the same time. “He liked being controversial and taking different positions.” If student journalists like Hillier wanted a funny comment, they would go to Rees-Mogg. “He cultivated that side of it early.” 

Rees-Mogg joined the Union, the university debating society, and the Oxford University Conservatives Association. Hugh Harper, who was president of OUCA in 1988, remembers Rees-Mogg as an active and hardworking member, if more interested in debating at the Union: “I don’t think any of us considered that his No. 1 ambition was the Tory leadership.”

Though his peers made fun of his posh accent and his dress sense, Rees-Mogg would not, by the standards of Eton and Oxford, have been considered particularly wealthy. “He’s not actually that grand if you take his background,” says Tatler’s Bell. “He’s upper middle-class. Generally, if you’re posh and privileged, you hide. He has done the opposite and been very much that person. People now respect his authenticity for just being himself.”

Rees-Mogg had unquestionable privilege, but his family was not immune to hardship. His father was forced to sell the family home in Somerset, Ston Easton Park, in 1978, after rising inflation made its restoration untenable. “It was the only time I ever shed a tear over a business decision,” William Rees-Mogg wrote in his memoirs. He would later suffer heavy losses on the Lloyds London Insurance Market, forcing him to keep working into his 80s. 

Jacob Rees-Mogg initially followed his father into journalism, but switched to a career that would ensure his financial stability even as he pursued politics. After a brief stint at The Telegraph on the diary, the part of the newspaper that deals with the comings and goings of high society, he joined J Rothschild in 1991 under the guidance of Nils Taube, a fund manager renowned for his caution as well as his returns. According to one newspaper obituary, Taube made “more than 15 percent a year for the two funds he ran continually between 1969 and 2006.” Rees-Mogg learned from him a deep respect for research and slow thinking.

He took this with him to Lloyd George Management, run by Robert Lloyd George, the great-grandson of the Liberal prime minister, in Hong Kong. “Jacob joined us in 1994 and worked three years there, then ten years in London,” Lloyd George said in an email. “He did not have a stellar performance record! And you are right that he always had his sights set on politics.” 

His caution did not serve him well from 2003 to 2007, when he managed the Lloyd George Emerging Markets Fund during a commodities boom and a bull run in Asian markets. The fund trailed the benchmark MSCI Emerging Markets Index for four of those five years, according to data from Thomson Reuters Lipper uncovered by the Financial Times for an article entitled “Jacob Rees-Mogg’s Lacklustre Record as a Fund Manager.” The paper notes that in 2006, the Lloyd George Emerging Markets Fund rose 12.9 percent, compared with 16.39 percent growth for the MSCI index. 

In 2007, Rees-Mogg and two Lloyd George colleagues left to set up Somerset Capital Management, domiciled in the Cayman Islands and Singapore, using their experience in emerging markets to form the basis of the fund’s investments. In 2010, when he was finally elected as a member of Parliament for North East Somerset, Rees-Mogg handed the reins to Dominic Johnson, though he maintains that if he loses his seat in Somerset, he will return to finance. 

Finance is my profession and my great interest,” he told The Spectator magazine in 2017. “Had I lost my seat in 2015, I would have gone back to SCM and continued my career.” 

Somerset Capital Management declined to give a view on Brexit or Rees-Mogg, other than to say he is not involved in the day-to-day running of the firm. Rees-Mogg continues to receive about £14,500 for 35 hours’ work a month, plus a dividend from shares in the company. 

He derives his substantial income from these holdings, plus an MP’s salary just shy of £75,000 in 2017 and a property portfolio inherited from his father and managed through a company called Saliston. A former classmate from Eton, James Pockney, is listed as director of that firm. Rees-Mogg also stands to inherit a fortune worth an estimated £45 million and a stately home in Kent through his wife, the former Helena de Chair, who is the daughter and sole heir of Lady Juliet Tagdell, a British landowner and member of the aristocracy.

This is the closest Rees-Mogg has come to the aristocracy, the uppermost class of British society with its inherited land and titles, though he has long cultivated an image as a caricature of the mad English gentleman, even dressing his young sons in matching suits and outsize rosettes for photographs on the campaign trail.

Rees-Mogg’s position in British society is better described as “member of the establishment,” the self-selecting, closed group holding power. Few in society were more establishment than William Rees-Mogg, who in later life became guardian of the nation’s morals as a member of the BBC board of governors. A comedy sketch show called “Spitting Image” sent up the elder Rees-Mogg in the song “Uncle William Offers You Safe Viewing,” which includes the lyrics: “He knows what’s acceptable, he knows what’s obscene. He’ll never let a penis penetrate your screen.”

But even the British establishment is not immune to progress. “The one that exists now is very much a metropolitan, elite, left-wing, politically correct establishment that has a certain set of views that if you challenge you’re considered a philistine,” Rees-Mogg told Delingpole in the Breitbart podcast, “and that’s not the establishment to which I belong.” 

His establishment, Rees-Mogg says, is one of gentlemen’s clubs, tradition, and believing the British constitution to be a perfect and beautiful system. His voting record in Parliament attests to the fact that the world, since the 1950s, has become foreign to the likes of Rees-Mogg. He has voted consistently against same-sex marriage, a smoking ban, and measures to prevent climate change. He opposes abortion under any circumstances and admits to never having changed a diaper.

Rees-Mogg knows that on most of these issues, he has already been defeated. “Getting back things that have been lost is an entirely fruitless exercise,” he told the BBC’s Robinson in March. “Events move on and political life changes, and trying to reinstitute old practices tends to appear to be faintly ridiculous.”

Ridiculous, maybe, but espousing traditional cultural values gives Rees-Mogg appeal to a white working class frightened by rising economic insecurity and social deprivation. It places him alongside other hard-right leaders who, finding themselves in an increasingly liberal, borderless world, advocate pulling up the drawbridge and returning to ancient systems in which they don’t have to share power.

For this group, Brexit is a milestone in a much bigger mission. And as the outspoken leader of the elusive European Research Group, Rees-Mogg has found a way to make sure that milestone isn't diminished.

The group is reported to have received more than a quarter of a million pounds from members and Euroskeptic MPs, many of whom claim the money back in parliamentary expenses, paid for by the taxpayer, as research. This has prompted calls for the group to be investigated over appropriate use of MPs’ expense accounts. The funding goes toward the creation of the documents at the center of the Brexit debate. Members are also said to have access to a closely guarded WhatsApp messaging group and a private newsletter akin to a “directive to be obeyed,” which aims to prevent the Brexit deal from being softened.

It is in this role that the eccentric backbencher is stepping out of the shadows. The modern world is a threatening and unfamiliar place for a ruling elite whose power no longer seems secure. Many battles have been lost. But Rees-Mogg is in the spotlight at a moment in history when there is still everything to play for, amid a set of far-right friends happy to lend a hand to ensure victory. 

If the 12-year-old Rees-Mogg could see himself now, even he might crack a smile.