57. Looking forward: Labour government



“In the past year, Britain entered a period of upheaval and turbulence. There were huge anti-war demonstrations which convulsed Britain and the world – compelling the New York Times to comment on the emergence of a “new superpower” – together with the rise in militancy and strikes in industry.” We pointed out in our 2004 New Year message to our readers that if the trade union leaders possessed one tenth of the determination of the working class, then the anti-union laws would have already been a dead letter. Instead, they – including, unfortunately, some of the so-called ‘awkward squad’ – acted like Rabbie Burns’s ‘wee timorous beastie’ in shamefully acquiescing to these laws.

There was boiling anger amongst trade unionists at the virtual reign of terror – in effect, a semi-dictatorship of capital – in the workplace. Some trade union leaders like Tony Woodley reflected this when he stated: “The only thing that talks louder than money is the united voice of mobilised people.” Unfortunately, he went on to argue that the government’s tax and economic aid policy should do more to “reward the good investor and punish the bad”.1 The implication was that a solution must be sought to the pressing problems of working-class people from the ‘good capitalists’ rather than the ‘bad’ ones. Capitalism is a system based upon production for profit and not social need, and it is this which drives on all wings of the boss class. Gordon Brown was asserting that Britain  faced a relatively ‘benign’ economic situation, with unemployment officially at a 28-year low.

However, the statistics did not take account of hidden unemployment. Like the Tories before them, New Labour had massaged the figures and concocted a whole series of ‘make-work’ measures to remove the long-term unemployed from the register. Millions had been shifted to the ‘disabled’ category. Under the ConDem government, these disabled workers would be cruelly punished. In reality, by 2004 the UK had amongst the worst poverty in the European Union, the longest working hours and the lowest ‘social spending’. Three times more UK children had fallen below the poverty line than in 1970. A tenth of the population received pay rises averaging 7.3% in the previous year, while the bottom tenth got 4.5%. The comfort blanket of the growth in services to replace manufacturing had been snatched away. Big business also ‘relocated’ jobs in the service sector to Asia and Eastern Europe, with 50,000 call centre jobs going in the previous two-year period and an estimated two million banking and insurance jobs destined to follow. The “sucking sounds of jobs disappearing” in Britain had even alarmed the CBI and produced panic in the government.

Workers in the countries where these jobs were going received one tenth of the wages of the workers they had replaced. Even if capitalism was capable in the medium and long term of plugging the ‘gaps’ left by the outsourcing of hundreds of thousands of jobs abroad, the net result was that British workers, particularly the low paid, would have fewer job opportunities and in general a lowering of wages and conditions. Today a certain ‘re-shoring’ is taking place with an estimated 100,000-200,000 predicted to be relocated from abroad to Britain in the next ten years. In the US tens of thousands of manufacturing jobs were re-shored in 2014 alone. This has arisen not because of some ‘benevolence’ of ‘good’ capitalists, but entirely for reasons of greater profit. The wages in some neo-colonial areas – China for instance – had risen and the capitalists were relocating not just to Britain but also to cheaper areas for them, such as SouthEast Asia and within China to even poorer areas.

For the capitalists, as always, it is a question of ‘follow the money’; their loot is invested wherever they can make a bigger profit, while the social consequences are secondary or non-existent. We said in 2004: “Like the US, the British workforce is in danger of becoming ‘hamburger flippers’ on the basis of diseased capitalism. High-paid, high technology employment is to be replaced by low paid, sweated labour. ” This is the reality in Britain and many other countries today. We also pointed out that “in desperation, the British capitalists, led by Blair and Brown, of course, have a half-formed idea that the continued prominence of the City of London in finance can now be linked to the expansion of the education and health sectors.” We predicted that tuition fees would be driven up to establish an elite system similar to the US ‘Ivy League’.

This process provoked ferocious opposition not just from the working class, but from increasing numbers of the middle classes. Reflecting this, over 100 Labour MPs threatened to vote against the government on Blair’s top-up fee proposals. It was clear to us that the social democratic dream of a ‘ladder of opportunity’ provided by education had been snatched away. The working class, particularly the youth, was being given a harsh lesson in the realities of capitalism as well as the class character of New Labour, as with the Tories before. We also anticipated that “it is destined to become worse under the baton of Brown”.

The key to the situation, then as now, lay in the labour movement and its ability to mobilise against these policies and the dead-end prospectus of the right-wing trade union and Labour leaders. The election of the left-wing ‘awkward squad’ represented a step forward for the movement compared to the right-wing leaders who preceded them. However, “The industrial and political limitations of many of this ‘awkward squad’ have been recently highlighted.” They were hesitant about leading workers into action partly because of “an almost fatalistic attitude” that privatisation cannot be defeated. We asserted that it could be defeated by a mobilised working class.

The lack of confidence they displayed on industrial issues was mirrored on the political terrain. Some still clung to the false notion that Labour could be ‘reclaimed’. Yet 63% of the delegates at the Labour Party conference did not even want to discuss the Gulf War! George Galloway had been expelled, despite the opposition of Tony Woodley, Tony Benn and even Michael Foot! Bob Crow supported the disaffiliation of the rail workers from the Labour Party in Scotland and their affiliation to the Scottish Socialist Party, which we recognised was a big step forward. But at the same time, we stressed that the RMT “still remains affiliated” to the Labour Party elsewhere. We commented: “Why? New Labour is no different in England and Wales than in Scotland.”

It was to the great merit of Bob Crow and the RMT that, later, they were one of the very few unions who moved decisively in the direction of creating the basis for a new party, in Bob’s case by helping to form the Trade Unionist and Socialist Coalition (TUSC). We forecast: “British society is at a crossroads. If Blair is replaced by Brown this could foster illusions that Labour is in the process of being ‘reclaimed’ by the social-democratic ‘sleepers’, who will allegedly come out into the open. In reality, however, the character of the Labour Party will not be changed by this. Nor will illusions in Brown last for any length of time.”2 This is what happened when Gordon Brown took over the helm of government from Blair in 2007.

Yet even in 2004, Tony Blair’s position was extremely shaky. This was revealed over the issue of top-up fees in January of that year. Blair himself admitted subsequently that the closest he came to being removed from office, in a re-run of what happened to his heroine Thatcher, arose not over the Iraq war, where clearly he was in a small minority amongst the British people, but over top-up fees. Our headline in The Socialist read: “Top-up fees and Blair’s future in the balance”. As the vote approached in the House of Commons, one anonymous Labour MP told the Daily Telegraph: “Even if Tony Blair offers £20,000 a year and free flights to the Bahamas to every poor student, I’ll still vote against him. We’ve got to get the bastard out.” In polls, 60% were firmly opposed to top-up fees, including 51% of Labour voters. 85% believed that the proposal would lead to fewer people going to university. Also two thirds of people thought that Blair should resign if the Hutton report showed that he had lied over the leaking of Doctor Kelly’s name. Nearly 50% believed that he did lie!

Blair narrowly survived the vote on top-up fees. He saw a massive majority of 161 evaporate to just five, over what he himself called this “flagship” policy. At the eleventh hour, some spineless New Labour MPs bottled it – bullied and bribed into submission by Blair, Brown and their ‘muscle’, Education Secretary Charles Clarke. Blair had faced significant rebellions over Iraq, foundation hospitals and now, most damagingly, over top-up fees. At least 200 New Labour MPs voted against the government at some point during that Parliament. Gwyneth Dunwoody, a leading light in the witch-hunt against Militant in the 1980s, boasted to her Constituency Labour Party that she had rebelled against Blair’s government 27 times!

Blair was so worried about losing the whole policy he even had to rely on Gordon Brown to try and bail him out. But this served to further undermine the myth that Brown in some way was ‘secretly’ different from Blair. This was the man who was pushing PFI in public services, supported the war in Iraq and was on record as admiring the US economic system at the same time as being “whole heartedly” in support of top-up fees. We posed the question: “What more evidence do trade union leaders and others who back him as a ‘left’ alternative to Blair need to prove that Brown is fundamentally no different to Blair in his support for big business and attacks on working people?”

This was underlined not just by his vote in the House of Commons but also by the revelation of a ‘think in’ he had hosted with top business people, including the world’s richest man, ‘Sir’ Bill Gates of Microsoft. These fat cats told Brown he must stop taking money out of their pockets – and Brown listened attentively to them. Another participant, Jean-Paul Garnier of drugs giant GlaxoSmithKline, had been paid £22 million in a pay and perks package the previous year.

Despite this, there were attempts to build up the reputation of Brown, in anticipation that Blair would be forced to resign in the  foreseeable future. Some, including a number of left-wing trade union leaders, believed that this would result in a progressive, ‘Old Labour’ government and a chance to reclaim the Labour Party for the left. A new book was also published by the noted Keynesian economist William Keegan – The Prudence of Mr Gordon Brown – who wrote then and still writes today a weekly column for the Observer newspaper.

In order to counter this quite widespread view, at least in academic circles and a petty bourgeois layer within the Labour Party, we produced an analysis of its contents. Keegan attempted to show that Brown had not sold out but that his economic ‘prudence’ was part of a ‘longer’ plan. We wrote that ultimately, Keegan hoped, “Brown’s radical reforming zeal, in the best traditions of ‘Old Labour’ if not socialism, will be revealed.” In reality, Keegan showed Brown and his youthful (at the time) ‘guru’ Ed Balls to be deeply conservative, having accepted the agenda of Labour’s traditional enemies, the capitalists and the Tories. Indeed, we wrote that “this book should be obligatory reading” for all those who entertained the hope that Brown would be different to Blair and the Labour Party could be ‘reclaimed’. Keegan hinted at his own traditional right-wing social democratic views while attacking the ‘extreme left’, the supporters of Tony Benn in the 1980s. Predictably, he attacked “the so-called Militant Tendency extreme left group, whose antics were especially prominent in Liverpool”. He repeated the myth that “in the long run, Labour gained from the tough stand taken against the anti-democratic and potentially revolutionary Militant Tendency.” Like most bourgeois writers, the word “anti-democratic” is never substantiated. As we have pointed out, the biggest electoral victories for Labour in the history of Liverpool occurred during the time the City Council was under the leadership of this ‘anti-democratic’ group. In the 1980s, Keegan accidentally met some of the Militant leaders – including myself – at the BBC, where we were all appearing on the Radio 4 ‘Today’ programme. He subsequently wrote in his Observer column that the Labour leaders should not be concerned about Militant because their leaders were “old”. Most of us were considerably younger than Keegan at the time!

Keegan comments about the role of the trade union leaders in propping up Blair and Brown: “Gordon Brown and his colleagues were lucky that there was then also a ‘moderniser’ at the TUC in the shape of John Monks, at the time Assistant General Secretary.” Monks told Blair, then shadow secretary for employment, “that the TUC would not insist on the return of the closed shop, against which Mrs Thatcher had legislated”. Keegan also quotes the words of Balls prior to New Labour coming to power: “In order to do what a Labour government should do, you’ve got to earn credibility first.” Not with the working class, but with the bosses!

Balls himself had studied under the “guidance of Lawrence (Larry) Summers, who left Harvard to become a deputy secretary to the US Treasury in the Clinton administration.” One British Treasury official joked later: “Gordon Brown and Ed Balls are eclectic. They imported ideas to try out here which North American economists could not get through Congress.” They had adapted to the market and big business so completely that when Balls, probably in an unguarded moment, dared to suggest that a Labour government could still responsibly raise the top rate of tax to 50%, Blair replied, “Wash your mouth out.”

As bad as this was, the pre-election stance of New Labour was, if anything, mild compared to its actual practice when it came to power. The ‘landslide’ of New Labour in 1997 was achieved with a share of the vote slightly smaller than what Harold Wilson received when Labour won a four-seat majority in 1964! Nevertheless, such was the revulsion at and rejection of Thatcherism in Britain at that stage, New Labour’s massive parliamentary majority would have allowed it, if it so wished, to carry through radical measures. Keegan correctly points out in relation to the public sector: “Britain was and is a brutal example of what JK Galbraith described as ‘private affluence and public squalor’.” Within days of the election victory, the Bank of England was effectively denationalised. Yet a well-known columnist, not at all a socialist, James Meade, said “We nationalised the Bank of England in 1946 to prevent another 1931.”

In this book Keegan cannot disguise his disappointment with  the performance of New Labour, even by his own social democratic yardstick: “There was precious little sign of any narrowing of the gap between rich and poor – a gap that had always been the traditional focus of Labour governments… this continued to widen”. He further writes: “When Brown’s ally, Harriet Harman, introduced cuts in the benefits of lone parents, a former Conservative cabinet minister observed to me at the time: ‘On security, welfare-to-work, they are daring what we dared not do’. The same was true of the so-called Private Finance Initiative (PFI) and the Public-Private Partnerships (PPP) championed by Balls and Geoffrey Robinson, which Brown accepted.” He also quotes Tony Blair when faced with meltdown on the railways: “You can do anything you like as long as you don’t call it renationalisation.”

Yet despite the long catalogue of retreats, abandonment of previous positions, ingrained conservatism towards even minimal reforms, Keegan still held out the prospect that the “cautious approach” to fiscal and monetary policy by Brown and Balls, “prudent” in the short-term, was all designed for a long-term “purpose”. We commented: “Yet, the author clearly understands the parlous industrial and economic situation facing British capitalism, contributed to in no small measure by the New Labour government. New Labour has now been in power for seven years! Truly the mountain has laboured and produced a very small mouse.”3

In fact, the outcome of their policies was much worse than this. They paved the way for the Cameron-Clegg coalition government and then the Cameron-led Tory one with its vicious and cruel attacks on the poor and the working class. However Keegan could not help hoping against hope for improvements in the future. He concedes that the government Blair and Brown presided over was “a Labour government elected with an enormous majority [but] was pusillanimous in its approach.”4 Yet despite this he hoped, perhaps, that Brown would display his ‘real’ radical, if not socialist, soul in a third Labour government.

But those hopes, as we know, were completely dashed. This arose because the Brown government, as with the Blair government, was bourgeois to its marrow, remained within the framework of capitalism, did the bidding of big business and continued to disappoint, alienate and infuriate working-class people. It was quite clear from everything that had gone before that New Labour, 15 years after Thatcher had been overthrown and driven from office, was proposing measures more Thatcherite than anything the Iron Lady herself had implemented. Even the Liberal Democrats, who previously portrayed themselves slightly to the left of New Labour, pledged to privatise anything they could still find in public hands, including the Royal Mint and a wholesale sell-off of the prison service. Tories on the other hand were in reality proposing virtually the complete privatisation of what remained of the public sector, in particular education and health. We warned that with an election looming, and “Looking at the nightmare prospect of a new Tory government, many working class people will feel they have no choice but to go out and vote for New Labour… It is this fear of the long, dark night of a new Tory government… Despite deep-seated disillusionment with New Labour, they are most likely to win a third term.”5

However, the question was posed in this period: would New Labour go into the election with Blair or would he be unseated before then? There was much speculation as to whether he would become a casualty of the war in Iraq: “It’s like an elephant in Tony’s sitting room,” said one cabinet minister, “It doesn’t matter which way he looks it’s always there.”6 The Daily Mirror went further, calling Iraq “An ice splinter in the Prime Minister’s heart.”7 The press and media generally were full of reports and rumour of intrigue about if and when Blair would go. The bookies, often a good barometer of which way the wind is blowing, shortened the odds on him being Prime Minister at the next election. A YouGov poll showed that 46% of people thought he should go before then. But the Tories coming back to power would be a disaster. The Liberal Democrats opportunistically made a play for the anti-war vote but they had supported the troops when they went into Iraq and never called for them to come out.8

The mass disillusionment with the government was reflected in the June ‘Super Thursday’ elections, which combined the local elections with the European elections. They were a disaster for Tony Blair. Once more, there were threats, particularly from the left unions, to withhold or withdraw funds from New Labour. The Tories picked up an extra 283 council seats. But their 38% share of the vote in the local elections was no greater than under William Hague’s leadership, five years before and 13 months before their 2001 general election debacle. In other words, there was no real comeback for the Tories, even from their ‘traditional’ base. Another significant development, which was to become subsequently a semi-permanent fixture of politics in Britain, was the UKIP vote, 16% (2.6 million votes). Ken Livingstone, in London, who had been readmitted to the Labour Party in January, was re-elected as mayor, but with a smaller share of the vote than his first victory standing as an independent against Labour in 2000.

The election showed that while the Tories were not seen as a credible alternative there had been a massive shift away from New Labour. The overall effect of the election, therefore, was to fuel even greater speculation as to who would inherit Blair’s crown if he departed the scene. We commented: “Political commentators… are like the Kremlinologists of old, who tried to discern who were the winners and losers in power struggles in Stalinist Russia by observing who was next to the ‘leader’ on the plinth in Red Square during parades.” The super-Blairite Alan Milburn was seen as having ‘won out’ over Brown and the ‘Brownies’.

We concluded that this was of little consequence to working class people as “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 (2.7 million at present) and to support the bosses in worsening hours, undermining conditions and cutting back on wages.” Only the mood music was different from the two camps. Blair and Milburn wanted to use a New Labour victory at the next general election to carry out “‘substantial reforms’ (read savage attacks) on welfare spending.”

Brown was a little nervous of working-class people’s reaction if a frontal offensive was launched. He supported Blair’s programme but on an instalment plan! One Labour MP, Andrew Smith, resigned as Secretary of State for Work and Pensions, partly because he was one of the few Labour MPs who still lived on a council estate (in Oxford). Some of his neighbours were, he said, “Chronically sick and disabled,” which would have been very uncomfortable for him when the proposed measures went through. We can see from this that all the draconian plans enacted by the ‘ConDem’ coalition government between 2010 and 2015 were flagged up by the rotten Blair-Brown government.

The objective basis which necessitated cuts for capitalism was ultimately the dire situation of the British economy, which today is in a lot worse state under the Tory government. We postulated: “British and world capitalism could face an economic storm comparable to Hurricane Ivan that recently wreaked havoc in the Caribbean.” While house prices were escalating rapidly, household debt exceeded £1 trillion. Some capitalist commentators believed in an indefinite ‘golden’ future for British capitalism. They were in denial, as they were in the late 1980s when an economist wrote: “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.” That was in early 1989, a few months before the biggest property crash in 40 years.

These were heat lightning flashes of the coming storm, totally unexpected by the economic ‘experts’ of the system, which crashed over them in 2007-08. We linked this gathering economic storm to the desperate situation which would face the government elected after the next election: “Whoever is elected as the next government intends, as… Brown made clear, to further cut public sector expenditure… 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.”9 This also anticipated the role that was taken by the Coalition government later.