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Socialist Party congress, 14-15 February 2015
Document on British Perspectives
This document was produced on 5th January 2015 and subsequently some amendments were incorporated during and following the 14th February congress discussion on Britain.
This brief perspectives document should be read in conjunction with the World Perspectives statement agreed at the 2014 International Executive Committee as well as the various articles in Socialism Today and the Socialist on events in Britain. The general election means that our national congress has had to be held earlier in the year and truncated. We have therefore deliberately tried to keep the document brief in order to enable as many comrades as possible to have time to study it prior to the congress. This remit of this document is not to cover every important issue in Britain today, or even to deal with every point on perspectives, but instead to politically arm the party on the central aspects of perspectives at this point in time, which we need clarity on in order to guide our work in the coming months.
Socialist Party executive committee, January 2015
British Perspectives 2015
1. As the 2015 general election approaches, the political situation in Britain is more unstable than for many decades. The outcome of the general election is impossible to predict. This reflects the unprecedented unpopularity of all the major capitalist parties, which in turn is at root caused by the continued economic crisis. As Larry Elliott summarised in The Guardian (29 December 2014), "The story of the past decade and a half is of the increasingly desperate attempts to prevent the Great Stalling of the global economy. Rock-bottom interest rates have failed to prevent growth rates slipping. Living standards in many countries are back to the levels of the early 2000s." This is what Christine Lagarde, head of the IMF, has described as the "new mediocre", but even this is an optimistic prognosis for the world economy.
2. Worldwide the global economic crisis has entered a new, more dangerous phase. Against the background of continued economic stagnation there is a whole number of new potential crises looming, including the possibility of a Syriza government in Greece posing once again the break-up of the Eurozone, the deflationary trends in the world economy, the slowdown of growth in China, and the possible consequences of withdrawing QE from the US economy. The capitalists, having used up much of their arsenal trying to prevent the complete meltdown of the world economy in the period since 2008, are at a loss on how to deal with them. This does not mean they will not once again take co-ordinated action to try and ameliorate the effects of new 'shocks', but the increased national tensions which have come to the fore as a result of the prolonged economic crisis will tend to make it more difficult to coordinate global firefighting. In addition, the measures that the capitalists have mainly relied upon up until now - low interest rates and massive quantitative easing - have had a limited, and diminishing, effect. They are also building up new bubbles in the world economy - not least in Britain - which will burst at a certain stage.
3. The plunging of the world oil price is partly caused by the US turn to shale, which has increased world oil output, and the conscious decision of Saudi Arabia to refuse to cut production in order to allow the price to fall. However, the biggest reason for the drop in oil prices is the gloomy outlook for world capitalism. While the fall in the oil price will mean terrible misery for the poor masses in many of the oil producing countries, it will mean some extra money in the pockets of workers in the US and elsewhere. It will not, however, lead to a new upturn in the world economy as some of the capitalist commentators hope. For Britain, both effects are present. The cushion of North Sea oil has been in decline for decades, the UK has been a net importer of oil since 2005. Nonetheless, there were still around 1.3 million barrels a day produced in 2013. Now Robin Allan, chairman of the independent oil explorers' association 'Brindex', has said that the industry is "close to collapse". Many of the oil wells will not make a profit if the price remains beneath $80 a barrel, putting the jobs of hundreds of thousands of the 450,000 workers employed in the oil industry at risk. It will also lead to a fall in the government's tax income, further increasing the deficit and be a possible trigger for further panic in the financial markets.
4. In the second half of 2014 Britain was hailed as a success story; the fastest growing of the G7 countries in the third quarter of 2014. Even this puny growth now appears to be slowing. However, even last year the UK economy only grew by a paltry 0.7%, the government deficit increased, and wages continued to fall for the sixth consecutive year. Pay in 2014 was 1.6% lower in real terms than the previous year. The cumulative fall in real earnings since 2008 is now over 9%. Real earnings are back at 2001 levels. For 18 to 25 year olds they are down to 1988 levels! Over the last six years, workers have suffered endless austerity. Poverty, hunger and destitution have returned on a level not seen since the 1930s. The public sector has been decimated with local authority spending on course to be cut by 37% from 2010-11 to 2015-16. What jobs have been created are overwhelmingly 'McJobs'. Britain's economy bears more and more resemblance to Spain or Portugal, with 4.5 million self-employed workers, more than any other country in Western Europe - two-fifths of all new jobs since 2010 have been self-employed. Most are self-employed because it is the only option available. This is the future facing the next generation: low-paid, insecure work.
5. The growth in the UK economy is based overwhelmingly on increasing the exploitation of the working class, and the re-inflating of the credit and housing bubbles. Increased consumer spending is based - almost completely - on a loosening of credit conditions. In November, consumers took on the highest level of new debt in seven years, with the months borrowing on credit cards, loans and overdrafts hitting more than £1.25 billion. To a far greater degree than before 2008, borrowing is being used not just for new purchases but as a means to make ends meet. Meanwhile, British manufacturing remains exceptionally weak and the productivity gap with other major economic powers continues to widen - output per hour is 16% lower than if the pre-crisis trend had continued - three quarters of US levels, which have also been falling. The dramatic growth in part time working explains the fall in productivity per worker, but these figures - for productivity per hour - show that this is not the whole explanation for Britain's woeful productivity levels. These are partly explained by the fall in the oil price, but also by the decline in the fortune previously made in the financial services sector, which previously disguised the UK's poor productivity. At root, of course, it is the low levels of investment which are responsible for Britain's falling productivity.
6. Interest rates in Britain are the lowest for three centuries and a vast £375 billion has been pumped into the economy via Quantitative Easing (QE). If this had been handed over to the British public, it would have meant an extra £24,000 per family. Instead, the money has gone to the richest in society. One report in 2012 estimated that the richest 10% of the population had by August 2012 gained between £100,000 and £350,000 each. The biggest share of this has gone to the top 1% or even 0.1%. QE really is Keynesianism for the rich. Yet, in a condemnation of modern capitalism, these huge sums being pumped into the economy have not resulted in a growth in investment. The collapse of City Link sums up the reality of British capitalism. More than 2,300 employees were made redundant on New Year's Eve and another 1,000 'self-employed' drivers laid off without - in some cases - even receiving the back wages due to them. Many had worked for years for City Link, with no sick pay, guaranteed hours, holiday pay or right to redundancy pay. These self-employed drivers owned and paid for the upkeep of their own vans. Now, if they can get work with another courier, they will have to cover the costs of re-spraying their vans. In addition, other workers were employed by an agency, again with no employment rights. While even the permanent employees are receiving only statutory redundancy paid for by the taxpayer, Better Capital - the private equity firm that owned City Link - is expected to recoup £20 million of its investment in the company. Jon Moulton, the head of Better Capital, has donated £450,000 to the Tories between 2004 and 2011. The government's response has been to set up a Facebook group to 'help' City Link staff find new jobs. Historically, City Link was the nationalised road freight company established in 1948. It was one of the first companies Thatcher privatised. Yet unsurprisingly, not only the government but also the Labour leadership have ruled out renationalising it.
7. In response to five years of austerity and falling wages, there has been mass struggle which reached its highest point in the one-day public sector strike of 2011. The derailing of that struggle by the right wing union leaders inevitably had, as we have explained previously, an effect for a period in undermining the confidence of workers that it was possible to take effective action against austerity. However, in the second half of 2014, there was a new upsurge in struggle in the public sector particularly over pay, including one day of co-ordinated strike action in July across local government, the NHS, civil service and fire service. This was significant not least because the big Labour-affiliated unions were forced to call the action in the run up to the general election. To tell workers to 'wait for Labour' was simply untenable. The local government action has now been called off, despite nothing of substance being offered. However, such is the anger of the rank and file over the deal, that Unison branches have used the rules to call a special local government conference in March; this is only the second time this has happened in Unison's history. An escalation of the action in the NHS in England is planned with a 12-hour strike in January and 24 hours in February. This action is over pay, but also in part a protest against the catastrophe facing the NHS. It has drawn in not only the big NHS unions, but a whole number of the smaller professional unions, including the radiographers and midwives, that had never previously taken strike action.
8. However, the scale of the fightback has not - as yet - come close to equalling the scale of the attacks. The primary responsibility for this lies with the right-wing trade union leaders that have refused to lead and repeatedly settled for rotten deals. When it comes to fighting local authority cuts, there has often been a refusal by the union leaders to sanction any national action and local action has not been encouraged. Because it is local authorities covering predominantly working-class areas that have had their grants from central government cut most dramatically, the worst cuts are overwhelmingly being implemented by Labour councils. Contrast this to the history of refusing to implement cuts and winning extra funds from the government of Liverpool City Council from 1983-87, which terrified the government as the release of the Cabinet Papers from the period has once again revealed. The right wing union leaders, however, have accepted hook, line and sinker that today's Labour councils have 'no choice' but to carry out the cuts, and have effectively acted to defend the role of Labour councils to their employees. However, these and other betrayals have only been possible to such an extent as a result of the legacy of the pre-crisis period: the pushing back of the consciousness of the working class and - linked to this - its low level of organisation both in terms of active participation in the trade unions and, crucially, the absence of a mass party of the working class. Never before has the working class faced such a huge attack on its living standards so ill-prepared.
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