Britain: Behind New Labour’s power struggle

Economic storms and class battles on the agenda

While the world and the British people were preoccupied with the terrorist outrage in North Ossetia, with a worsening economic situation, price rises and the daily struggle to make ends meet, what were the priorities of Tony Blair and his New Labour government?

They are who is in the pecking order at the top and who will inherit his crown when he is forced to vacate office; this is the real meaning of the brouhaha over his government reshuffle. Political commentators, trying to make sense of these developments, are like the Kremlinologists of old, who tried to discern who were the winners and losers in the power struggles in Stalinist Russia by observing who was on the plinth in Red Square during parades.

If the super-Blairite Milburn now "prefers to spend more time" with the government than with his family and has really "won out" over Gordon Brown and the "Brownies", then it is of little or no consequence to working class people. Blair, Milburn and Brown are all signed up supporters of the New Labour ‘project’. Both wings of the leadership of this capitalist party want to take the axe to what remains of the public sector, to brutally slash the numbers receiving disability benefits – now totalling 2.7 million – and to support the bosses in worsening hours, worsening conditions and cutting back on wages.

If there is a scintilla of difference it is in the mood music which emanates from the two camps. Blair and Milburn quite clearly want to use a New Labour victory at the next general election to carry out "substantial reforms" (read savage attacks) on welfare spending. Nervous of the reaction from working class people if a frontal offensive is launched, yet still supporting this programme, Brown wants it to be delivered on an instalment plan. In other words, the choice facing working class people from New Labour is between Milburn and Blair’s club or death by a thousand cuts from Brown.

One of the probable reasons for the resignation of Andrew Smith as Secretary of State for Work and Pensions was that he is one of the few Labour MPs who lives on a council estate, in Oxford. Some of his neighbours are "chronically sick and disabled", which would have been very uncomfortable for him when these measures go through. The fact that he lives in and represents such a constituency was not an unimportant consideration when jumping from the New Labour ship before he was pushed.

Struggle for power

Therefore, behind the naked personal ambitions and struggle for power within the government, there is a determination to remorselessly attack the living standards of working class people. This, in turn, is a reflection of the serious economic and social situation confronting British capitalism – in a sense, one of the most serious in history.

Unlike the big players in Europe that have a large manufacturing base, which has been most seriously affected in recent economic crises, Britain appears to have escaped the worst ravages of economic stagnation that have affected its European competitors. The low-wage economy and sweated labour of Britain, together with the role played by the City of London as a major earner of income from "services" in the financial sector, have provided a cushion against unfavourable economic winds from abroad.

Now, however, British and world capitalism could be confronted with an economic storm comparable to Hurricane Ivan that recently wreaked havoc in the Caribbean. The colossal bubble produced by the boom of the 1990s – sustained in particular by the massive accumulation of the twin deficits of the US economy, budget and trade – was in proportion twice the size of that which preceded the Great Crash of 1929. When it burst in the early years of this decade, Alan Greenspan of the US Federal Reserve took what capitalist economists described as "extraordinary measures" by injecting money liquidity into the economy, which kept it going.

Faced with a slowdown from 2001 onwards, interest rates were slashed. This, in turn, has led to a housing ‘bubble’ in the US and Britain, which itself has financed an unprecedented borrowing spree, fuelling consumer spending and sustaining this house of cards. House prices in Britain are at an unprecedented level, roughly five times average annual income. Household debt now exceeds £1 trillion (£1,000 million).

Some capitalist economists believe that there is no reason why this should not continue into an indefinite ‘golden’ future for British capitalism. They are in denial, as they were in the late 1980s: "There are good reasons for arguing that this historic norm (the widening of the ratio of house prices to income) may no longer be applicable in today’s economy." This was written by a capitalist economist in early 1989, a few months before the biggest property crash in 40 years.

Moreover, Greenspan has run out of buttons to press to sustain the US and therefore the world economy. Japanese and Chinese investors plugging the yawning chasms of the deficits will not continue if these go on rising. Combined with the rise in raw material prices, particularly the $45 a barrel for oil, the world economy could be heading for the rocks. Already, global manufacturing activity has cooled in August and, according to one economist, "We are seeing a global cyclical slowdown." Once the US economy slows, neither the eurozone nor Japan will be able to pick up the economic baton.

Cosy complacency

In this chilly and stormy world economic environment, the cosy complacency that "Britain is different", fostered by both capitalists and Gordon Brown, will be shattered. The very hysteria which surrounds their attempts to drive down living standards is itself a reflection of the fear of the future. The purpose is to drastically reduce the working class’s share of the economy in order to boost the profitability of big business thereby, they hope, sustaining the capitalist economic merry-go-round. This will produce poverty on an unprecedented scale, massive inequality and workplace conditions designed for one thing: to squeeze more and more labour power out of the working class.

Germany is a terrible warning to the British workers as thatcherised Britain was to the Germans until recently. Under the whip of the Schröder government, fast-tracked Thatcherism is the order of the day, with wages reduced to poverty levels and a savage lengthening of the working week. The workers in one factory, terrified by the bosses’ threat to outsource production, were persuaded to lengthen the working week from 35 to 60 hours! This was not stopped by the trade union leaders but by the German "health and safety" body, which said that it was "dangerous" to the health of the workers involved.

In Germany and France, the capitalists intend to raise the 35-hour week maximum to at least 40 hours. The Economist wants the "beast… properly killed… A convincing death scene for the 35-hour week written by government, is now sorely needed." [31 July, 2004] Shamefully, "Socialist Party officials" in France are now backing the French bourgeois in its assault by saying that the law introducing the 35-hour week, passed by the Jospin government, was a "mistake".

Similarly, New Labour government minister Denis McShane writes in The Guardian, trying to persuade workers that the ending of the 35-hour week – chaining them longer to the workbench or desk – is really in their interests. All this against the background of unprecedented levels of stress, characterised on a world basis by the independent International Labour Organisation as a "world full of anxiety and anger". According to this body only 8 per cent of workers now live in countries that provide "high levels of economic security".

The threat of outsourcing is held like the sword of Damocles over the heads of working class people, compelling them to tolerate wages and conditions that would have been unthinkable not so long ago. Even with their sacrifices, it is estimated that one million jobs will be lost from Europe in the next ten years – 750,000 of them going from Britain.

The cushion of North Sea oil is also running out, with oil imports exceeding exports in June for the first time in 11 years. One spokesperson declared: "This is no blip, production rates are in decline." Moreover, the rising price of oil will cut Britain’s economic growth rate, which will lead to a rise in unemployment and eventually squeeze the margins, that is the profits, of the bosses. This in turn will force them to resist even the meagre wage increases granted at the present time.

Whoever is elected as the next government intends, as Gershon and Brown have made clear, to cut further public sector expenditure. At the forefront of this attack are the members of the Public and Civil Service Union (PCS). Brown’s plan to reduce public sector jobs by 100,000 is the biggest attack on a single workforce since the Tories’ assault on the miners. Moreover, it has a similar purpose in cowing and rendering powerless the working class in the face of a capitalist offensive. Even the almost totally anonymous Brendan Barber, the TUC’s General Secretary, has admitted that the attack on the civil service is a "particular flashpoint at the moment".

Wishful thinking, a refusal to face up to reality of the situation, is the worst mistake that can be made by those claiming to lead the working class and the labour movement. It is possible that the attacks on the civil service will be dragged out, maybe some of them postponed until the general election is out of the way. But the determination of the government is without doubt to pursue a policy of slash and burn within the civil service. Blair’s intention is clear by the appointment of Alan Johnson, the only trade union leader to support the abolition of Clause IV from the Labour Party’s constitution, as Andrew Smith’s replacement.

PCS strike ballot

Quite rightly, the PCS is balloting for strike action, which all workers hope will be successful. They should not be taken in by the blandishments of either government spokespersons or, unfortunately, some trade union leaders who hope they can pick up members after carnage is visited on the civil service, that this is merely a question of transferring workers from the ‘back office’ to the ‘front line’. All these jobs presently being done are vital and are ‘front line’ as far as the working class is concerned. An attack on the civil service is not just an ordinary industrial dispute but impacts dramatically on the lives of the working class as a whole. It is therefore a combined political and industrial struggle.

Vital to any success in defeating the government’s proposals is to win broader popular support by explaining the vital role of civil servants. It is also central to throwing back the bosses’ offensive, which could be given a significant blow if public sector workers organised a one-day general strike. This would be aimed against the capitalists as a whole, who in Britain are so bloated with arrogance that Digby Jones, the CBI Director-General, can declare that unions were useful in the past when workers were "largely unskilled"(?) but are now "obsolete".

A Ryanair manager went further in a memo, advising staff they were better off spending their union subscriptions on "fast women, slow horses or even greyhound racing", on the grounds that this would at least provide "a few minutes of fun". These provocative, anti-union, anti-working class comments have been made even before a serious economic crisis bites Britain.

The temper of the working class in Britain is indicated by the series of strikes or threats to strike that have occurred in the last year. The firefighters, for instance, inflicted a partial defeat on the government’s attempt to renege on the agreement which ended their dispute and local government workers have been in action. British Airways’ workers have been, in effect, on a ‘go slow’, which has compelled the bosses to give concessions. Eurostar and other transport workers have been on strike, and many others too.

But in the coming change to the economic climate the offensive of the employers can be much more serious than before. This requires a leadership at all levels of the labour movement equal to the temper of the working class – which is angry and embittered at what they are forced to accept. With the exception of fighting leaders like Mark Serwotka of the PCS, most trade union leaders – including the so-called ‘awkward squad’ – have been docile and ineffective in the teeth of the employers’ offensive. The TUC, like a firm proud of its corporate identity, has recently boasted in its review to Congress of the effectiveness of its "brand name". This will not stop the capitalists from seeking to intimidate and threaten working people with closing down factories as easily as matchboxes unless they bend the knee to big capital.

Fighting combative trade unions are necessary. TUC membership is now at its lowest level since 1944, partly because of objective factors such as the contraction of manufacturing industry. Some of it, however, is due to ineffective leadership and policies. Typical is the acceptance by the trade union leaders – particularly the ‘Big Four’ of the GMB, TGWU, UNISON and Amicus – of the minimal, and largely paper, ‘concessions’ given by Blair at the Labour Party’s recent policy forum at Warwick University.

Majority no longer trust Blair

This was the quid pro quo for the unions bankrolling at least half of the income of the Labour Party. The other half now comes from donations by the new capitalist backers of Labour for what is now a capitalist party. The discrediting of its leadership, the woeful state of its party, has reached such a stage that it can no longer be disguised. Only estate agents and journalists on The Sun, the Daily Star and the Daily Mirror – considered to be the lowest of the low by the public – were rated more untrustworthy than government ministers. The lies on Iraq mean that the majority – 60-70 percent – no longer trust Blair, his government or his ministers.

The Labour Party’s membership itself has dropped from 400,000 in 1997 to 190,000 now, which is probably a gross exaggeration too. Even former witch-hunter general Peter Kilfoyle, who drove the ‘Mersey Militants’ out of the Labour Party in the 1980s, now wistfully looks back to that period, which he admits was a time of "active involvement" and interest in Labour affairs. Then, of course, Labour was, at bottom, a workers’ party but now is completely in the pockets of the bosses.

Labour may limp over the general election finishing line in May, in all probability with a reduced majority. The Tories have the mark of Cain – or at least Thatcher – still on them. Even William Hague, mooted for a return to the Tory leadership to replace the woeful Michael Howard, says he prefers to play the piano and make money instead! The Liberal Democrats, who masquerade as a ‘radical’ party like all pro-capitalist parties, now eagerly embrace the free market, privatisation and the dismantling of the health service.

Such is the domination of globalised capitalism that this is the logic of all those who accept working within its limits. Even the Scottish National Party, under its refurbished leadership of Alex Salmond, has come out against a further extension of public spending. New Labour’s Scottish First Minister, Jack McConnell, has equally declared in favour of treading in the footsteps of his mentor Blair, which heralds the limitation or ending of concessions to the workers of Scotland.

Therefore, the idea peddled by those like Labour ex-deputy leader Roy Hattersley of a return to social democracy – by which he means the maintenance of a minimal state sector, opposition to wholesale privatisation and improvements in living standards – is a dream at the present time. All the pro-capitalist parties are moving in the opposite direction to that which the working class will move in the next period.

The calamitous economic and social situation in Germany has resulted in a majority of those in the east and almost 50 percent in the west opting for "socialism" in opinion polls. The hammer blows of events, which are coming, will propel workers elsewhere, including in Britain, in the same direction. At the same time, British workers are disenfranchised, without a mass political pole of attraction that can offer a way forward. That is why the Socialist Party’s idea of creating the basis for a new mass workers’ party is more urgent today.

The forces that will lead to such a development will mature out of the visible failures of capitalism, the incapacity of this system to show a way forward, the failure of the New Labour ‘project’ and the growth of the Socialist Party, which will, in turn, mean a more effective voice in arguing for socialist change. This is the real alternative for working people, not the sham largely personal conflict at the summits of New Labour.

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September 2004