Labour's Meltdown quickens – A return to the 1970s for British Workers?

The political landscape in Britain is changing before our very eyes. This morning’s prominent TV news is of the tanker drivers’ strike, showing scenes of pickets with Red Flags turning away lorries at Shell refineries. The next item is the deepening government crisis, followed by a warning from Gazprom that oil prices could reach $250 a barrel. It was like a typical news bulletin of the 1970s.

The political landscape is Britain in changing before our very eyes. This morning’s prominent TV news is of the tanker drivers’ strike, showing scenes of pickets with Red Flags turning away lorries at Shell refineries. The next item is the deepening government crisis, followed by a warning from Gazprom that oil prices could reach $250 a barrel. It was like a typical news bulletin of the 1970s.

GrangemouthDespite the Labour leadership’s pyrrhic victory in the Commons’ vote over the 42 day detention of terrorist suspects, regarded by many as an expediency to shore up Brown’s crisis-prone premiership, the Labour government is clearly heading for the rocks.

This is no mid-term blues for Labour. It marks a fundamental turning-point. There are definite parallels between today and the Tory government of John Major prior to Labour’s landslide victory in 1997. The Tories had alienated their traditional supporters in the same way Labour has alienated theirs.

Despite the 10-year fan-fair of the New Labour project that we were told was going to transform Britain, steal the ‘centre ground’ and render the Tory Party obsolete, the dialectic of history has served to turn things on their head. New Labour has crash landed. They now cease to talk of a fourth and fifth term. They are desperate to simply cling on to power. But with each passing day, this prospect is slipping out of Brown’s hands. The Tories under Cameron can smell power and have revived from the political dead.

‘Socialist Appeal’ long ago predicted this scenario. All attempts by Labour governments to work within the capitalist system have ended in disaster. It took the Blair/Brown government a bit longer because it benefited from the artificial prolongation of the world economic boom. But that has now come to an end.

The credit crunch is having a massive effect on the outlook of working people. House prices are falling, possibly by 30% this year. The shares in the building company Barratt Developments have collapsed from around £12 a share to 76p each, as sales drop to their lowest level for 30 years. Interest rates, the cost of borrowing and mortgage rates are on the rise. The City expects three rises in interest rates within months to curb inflation, despite the evidence of an economic slump. Food prices, fuel and utility bills are rocketing. Petrol prices are rising almost daily. The cost of public transport, together with other essentials like bread and milk, have rocketed in price. Many workers are being forced to choose between basic necessities. It has been estimated that the cost of living for working people has gone up by around 20%. In this period of slumpflation, the working class is being relentlessly squeezed. Unemployment is beginning to grow, and even the middle classes are feeling the pinch.

Of course, despite the increasing misery, the rich are still getting richer. The bosses of Britain’s top building societies are growing fat from the credit crunch. The ‘Nationwide’ annual report shows Graham Beale, the society’s former finance director who was elevated to the chief executive’s office just before the crunch took hold, ‘earned’ £1.7m in the year to April. That includes basic pay of £575,000, an annual bonus of £644,000 and a £357,000 payout from a ‘medium-term incentive plan’! Not paid in wobbly share-options, being too risky these days, but in straight cash.

For the rest of us it is a different story with wage restrain and declining living standards. Recently, the Royal Institution of Chartered Surveyors said that the downturn in the property market – nine out of 10 estate agents are reporting falling prices and the worse conditions  for 30 years – was likely to spill over into weaker high street spending and job losses for construction workers. The slump in Britain has certainly arrived and in set to get much worse. Official figures show a sharp increase in the cost of goods leaving Britain’s factory gates. Britain’s trade deficit with the rest of the world has once again reached record levels, at £7.6bn in April.

The situation in Britain and internationally now resembles more like the 1970s, which was a period of economic and political turbulence. It led to the collapse of the Callaghan Labour government and the victory of Thatcher in 1979. The rightwing blamed the ‘winter of discontent’ and the militancy of the British working class for this defeat, but it arose from the profound disillusionment with the pro-capitalist policies of the Callaghan government.

During the 1980s, the rightwing cabal around Kinnock/Smith/Blair/Brown within the labour and trade union movement, with the full backing of the capitalist class, abandoned all Labour’s left policies and crushed Labour’s internal democracy, promising that this would rescue the party and make Labour re-electable. The socialist aims of the party were abandoned and New Labour was invented, that aped all the main aspects of Toryism.

Despite this shift to the right under Kinnock and Smith, Labour lost the general elections of 1987 and 1992. It was only in 1997, after 18 years of Toryism was Labour finally elected back to power. It is a myth that this victory was down to Blairism. The Tories had been completely discredited by this time. The electorate wanted a complete change and hoped that Labour would offer something different. In 1997, the Tory Party flat-lined, producing its greatest defeat since the Reform Act of 1832.

However, Blair and his faithful Chancellor continued with pro-capitalist policies, even reducing public spending in the first few years to less than under the Tories. Although some reforms were given, such as the minimum wage, privatisation also continued as big business was brought into ‘failing’ schools and hospitals, making billions in the process. The Tory anti-union laws were also kept on the statute books, and Lady Thatcher was invited to Number Ten for talks. Blair soon trailed after George W Bush into the quagmire of the ‘war against terror’ in Afghanistan and Iraq. But for the masses, there was no alternative but to put their hopes in New Labour. Given the demise of the Tories, the capitalist establishment backed their ever-faithful Blair as ‘their man’ who would do their bidding. Until such time, that is, that he could no longer deliver for them. He managed to survive three terms given the favourable world situation. Although even then, Labour lost some five million votes during elections between 1997 and 2005.

But with the credit crunch biting and the world capitalist economy on the verge of recession, the climate under which the Brown government is operating has fundamentally changed. Everything is turning sour. The Labour government has exhausted its role for big business, which is now preparing for a new Tory government. They are turning against Brown as he is no longer trusted to hold the workers in check. The present strikes are an indication that he has lost control. The bourgeois want a strong government to deal with a resurgent working class. They will shortly be handed over to the school of Cameron for some new lessons.

Brown met his Waterloo at Crewe, following a collapse in the Labour’s share of the vote to 24% in the local elections. It was the worst result in more than 30 years. To rub salt into the wound, Labour also lost the London mayor to Boris the Barbarian.

Living standards continue to be eroded. Between 2004-05 and 2006-07, the last years of Blair’s premiership, incomes for the poorest third of house-holds, including skilled manual workers, unskilled workers and the unemployed, all fell. Child poverty has grown for the second year in a row and pensioner poverty has risen sharply as the temporary pre-election support for council tax bills in 2005 was withdrawn in 2006. Despite the desperate concessions over the abolition of the 10p rate of tax, many poor people will suffer as a consequence. The wealth created by the boom has gone largely into the pockets of the well-off sections of society, and especially the super-rich.

As a consequence, Labour’s traditional core vote has collapsed. According to the opinion polls, the Conservatives have this year overtaken Labour among the electorally-crucial C2 skilled working class for the first time since the Thatcherite victories of the 1980s. Even among the DE social groups, the unskilled working class and unemployed, traditionally solid Labour, support for the Brown government is barely level pegging with the Tories.

Blair and Brown have squandered all the support Labour had won in 1997. They have completely disillusioned swathes of Labour voters such as Linda Denning, a 40-something mother and former secretary from East Wickham. She voted Labour in 1997. “That day was heaven,” she said, revealing the great hopes she had in Blair. “Now it has all gone sour.” She cast her first vote for the Tories in May, after some reluctance, after feeling “bitter and twisted” about the unfairness of the tax paid by her husband, a locksmith.

“I was hoping it would give Labour the shock they needed,” she said. “I’m not a big fan of the Conservatives – I wouldn’t trust Cameron with my cat – but that speaks volumes about how Labour are doing.”

Another woman from the same outer suburb of London, Caroline Bellamy, who works in a shop and whose husband is a glassblower and loyal Labour voter, gave a very interesting response for voting Tory.

“The 10p business did it for me,” she said. “Gordon Brown is just not on our level at all. It should be a socialist government but it’s run by people who are the same as the Tories. I thought I may as well vote for the real thing.”

Despite her confusion about ‘the real thing’, her resentment was clearly aimed at the fact that Labour was carrying out Tory policies and should instead be a socialist government. Many more who feel the same way as her and feel completely let down by New Labour cannot bring themselves to vote Tory and will simply abstain from voting altogether. It will be this fact that will determine the fate of the Labour government.

The damage that could be inflicted on Labour in the next general election was startlingly revealed by the desertion of the working class in May. This result, carried into the general election, would see a Labour debacle on the lines of 1931, following on from the betrayal of Ramsay MacDonald.

The feeling of impending doom in the Parliamentary Labour Party, like a good old-fashioned hanging, serves to concentrate the mind in face of oblivion. The prospect of swathes of Labour MPs loosing their seats and careers in the forthcoming general election will engender a sense of panic.

The Financial Times, the organ of British finance-capital, needs to inform its upper class readers of the likely developments in the next few years. It needs to work out the perspectives for the ruling class in the same way we need to outline the likely perspectives for the working class. Often we can reach the same conclusions as the strategists of capital but from the opposite class standpoint. It is therefore very interesting to note what they say at the present turning-point.

“The solid numerical evidence to support Labour MPs’ worst fears of a melt-down at the next general election will fuel divisions within the party. MPs are split tactically and ideologically over how Mr Brown should respond to Labour’s worst poll ratings since records began.

“Leftwing MPs and unions are urging the prime minister to revert to old-style Labour policies, such as higher taxes on the rich, to woo back the core vote. But the Blairites argue it would be electoral suicide to abandon Middle England.”

In a distorted fashion this split at the top is a reflection of class pressures. The unions and left MPs are more under the pressure of the working class and are demanding a change in direction. The Blairites are faithfully reflecting the interests of the bourgeois in attempting to hold the line against a return to traditional “socialist” policies.

“Since the May meltdown, Labour’s old ideological fault lines have re-emerged,” states the FT. “The Blairite modernisers and the left are promoting their own very different policy solutions to stem the party’s decline – and the FT’s research into recent voting patterns neatly illustrates the backdrop against which this internal battle is being waged.”

“The left is convinced the route to salvation lies in mobilising the party’s demoralised working class base, through policies including wealth distribution, a focus on poverty, more social housing and windfall taxes on energy companies…

“The Blairites want to maintain a broad coalition embracing the aspirations of the middle classes, pushing on with radical reform of public services and pursuing tough policies on crime and immigration and – possibly – tax cuts.”

While these are still minor tremors, “some Labour figures fear they may herald a political earthquake.” This is a correct political assessment. These divisions at the top represent the wind blowing the tops of the trees first.

The Blairites together with Brown’s supporters, which are ideologically fundamentally the same creatures, are presently in command. Hazel Blears, the community secretary and John Hunt, the business secretary, who wants us to all celebrate wealthy people, epitomise this rotten bourgeois wing. They are steering the ship to utter disaster.

“The real ideological battle will happen when Gordon goes,” states a cabinet minister. Again this is a correct assessment.

“If Mr Brown holds on until the next election, and loses badly, some modernisers fear the tide could start running strongly to the left…” states the FT. “ ‘Under a meltdown scenario the party might start talking about reconnecting with its working class roots, and there would be the rhetoric of betrayal of our supporters,’ says one moderniser. ‘The party would be virtually bankrupt and the trade unions would start to demand more say for their money to keep the party going.’

“That is where Labour ended up after the 1979 election defeat to Margaret Thatcher,” concludes the Financial Times. (11th June 2008)

From this brief but very astute assessment alone we can see how the ruling class is thinking and how things are likely to turn out in the next few years.

With the Blairites in the saddle, the Brown government is wedded to its pro-capitalist agenda. They have already announced plans to close ‘failing’ schools and have big business run ‘failing’ hospitals. They will not change course. As a consequence, more voices of dissent will be heard, especially from the trade unions.

The party is in dire financial straights after the donations from rich businessmen have evaporated. Labour has debts of £24m and is due to have to renegotiate £13.5m by Christmas. The unions are already making demands and threatening to tighten their purse-strings. Last week, the GMB union conference announced the threat to withdraw financial support from 35 MPs before the next general election because of their failure to back traditional Labour policies. This was followed by further threats from the CWU national conference to cut finance to Labour MPs given their failure to fight privatisation of the Post Office.

Along with growing discontent in the working class as the recession starts to bite, the pressures in the unions and on Labour MPs will mount. The determination of Brown to hold the line when everything is falling apart will only serve to exacerbate the situation. Labour is heading for a catastrophic defeat at the next general election and Brown will go down as the most unpopular prime minister in history. The Blairite Project of New Labour will come crashing down.

The Financial Times explained that this outcome will have parallels with the 1979 defeat. This was a shattering blow and resulted in a realignment with the trade unions and Labour Party. It prepared the way for a swing to the left in the Labour Party and the rise of ‘Bennism’. The rightwing were shattered and eventually a rump of renegades split from the party to form the SDP. New rules we brought in to democratise the party including the mandatory reselection of Labour MPs. It also provided fertile ground for the growth of the Marxist tendency, which terrified the bourgeois, fearing that the rightwing would loose control of the Labour Party.

Once again we are in an epoch of sharp and sudden changes in Britain and internationally. It reflects the growing crisis of world capitalism, which will impact greatly on weak British capitalism. The working class have now passed through the school of Blair/Brown and have found it wanting. However, no other mass alternative exists on the electoral front. The sects offer no alternative as was witnessed by their lamentable performance in the May elections. The working class will simply pass them by.

A massive electoral defeat for Labour in the next election will doom the Blairites, who will draw the conclusion that the Labour government did not go far enough to the right. As in the past, the defeat will cause a crisis within the mass organisations, which will begin to shift back to the left. How else will Labour be able to rebuild its base in face of an emboldened Tory government? Blairism has been tried and failed. It will be discredited in the eyes of the rank and file. A move to the left is therefore inevitable under these conditions.

The sectarians who dance around on the fringes of the labour movement are completely blind to these processes. Like the French Bourbon kings, they have forgotten everything and learned nothing. They are incapable of thinking dialectically, of the processes and interactions between the mass and its traditional organisations. As Ted Grant explained many times, the coming convulsions in the working class must have their reflection with the mass organisations. The attempt by some sects to found a New Workers Party is a road to nowhere. When a resolution on this issue was put this week to the national conference of the CWU, despite ten years of Blairism and the moves to privatise the Post Office, it went down like a lead balloon! It had no support. Despite the hostility of the delegates to New Labour, they are still determined to put pressure on the party. The idea of creating another ‘new’ Labour Party is utopian under current conditions. The whole history of the working class movement over the last 150 years has proved this beyond doubt. The trade unions built and finance the Labour Party, and represent historically their political voice. They will be forced to drive out the Blairites and push the party to the left.

It is true the trade union leaders have acted as a brake to hold back the working class over the last ten years, hoping to arrive at a deal with Blair. But they have been rejected and are now under pressure to defend living standards. Paradoxically, at a time when the Tories are back in power, the basis of the conservatism of British life is being irreversibly undermined. It will open up a period of sharp class struggle.

In Britain more than in the rest of Europe the consciousness of the working class, and particularly that of their leading layer, lagged behind the objective situation. Now events are forcing the workers and youth to catch up with a bang. The coming years will see a renewal of the workers’ organisations, within which the ideas of socialist and Marxism will re-emerge in a dramatic fashion. We must prepare ourselves for these events. Above all, we must develop a powerful Marxist tendency within the mass organisations that can offer a clear and decisive way forward when the need arises.

The 1970s was a period of enormous struggle in Britain and internationally. We are entering such a period once again. On the basis of the great events which impend and the determination of the ruling class to place the full burden of the world crisis on the shoulders of the workers, a new generation of class fighters will emerge. This will open up many opportunities for the ideas of Marxism and will again pose before the working class the need to change society.

In the words of Trotsky, “This will be one of the greatest dramas in world history. The destiny of the British proletariat in this struggle will be linked with the destiny of all mankind.”

See also:

Join us

If you want more information about joining the RCI, fill in this form. We will get back to you as soon as possible.