The Class Divide Grows
Despite all the claims of New Labour, the remorseless decline of British capitalism continued unabated, leading to a deterioration in social conditions and growing inequality. The gulf between the classes under the first Blair government had become a chasm. The gap between the highest-paid and the lowest-paid workers was now at its greatest since 1886. Wealth inequality was growing faster in the UK than in any other country in the industrialised world, including the USA. According to Tony Atkinson, warden of Nuffield College, Oxford, since 1993, while there was a steady increase in the inequality between rich and poor in America, the divide in Britain has jumped by two and half times.
Ranking social deprivation region by region and using up to 33 different categories such as low income, unemployment, poor health, and poor access to education and training, the Department of Environment placed large parts of Manchester, Liverpool, Middlesborough, and Newcastle among the 100 most deprived places in Europe. In scenes reminiscent of Engels’ Condition of the Working Class in England, the level of tuberculosis rates in some parts of London was heading for epidemic proportions. The London borough of Brent has a TB rate on a par with Russia – which after a decade of market economics now resembles a Third World country. Other London boroughs such as Newham, Tower Hamlets, Hackney and Ealing all have more cases per 100,000 inhabitants than Brazil, traditionally a TB blackspot because of severe poverty and poor sanitation.
Britain’s decline has assumed frightening proportions. After decades of neglect, the public infrastructure is crumbling before our very eyes. Housing, schools, hospitals, social services, roads, trains, tubes, buses, are clearly in a shocking state and, according to the perception of the overwhelming majority, are getting worse, not better. Expenditure on health in Blair’s first term was only one third of US levels, and one half that of France. Incredibly, The Observer newspaper pointed out that investment in the public sector under New Labour was actually lower than in the Thatcher years:
“Investment in hospitals, schools and transport infrastructure sunk to the lowest sustained level since the Second World War during Labour’s four years in power… Overall real investment declined by 4.4 per cent a year, a larger decline than was registered during Margaret Thatcher’s premiership.”
State expenditure in 1975 was nearly 60 per cent of GNP. Today the figure stands at around 40 per cent. While Blair has announced billions of pounds extra for the NHS, little seems to have changed on the ground. Hospital Trusts up and down the country are already overspent and have announced cuts in beds, services and jobs. In Scotland for example, reports show that PFI hospitals are facing a massive £31m debt.
Professor Allyson Pollock of University College London said: “PFI is a very expensive way of raising money for new hospitals.” She said the trusts have to pay the companies running the hospitals at least £31.5m a year, which includes profits for shareholders. This burden will mean freezing vacancies, abandoning life-saving treatments and cutting vital services. “The health board has already reduced all acute in-patient beds across Lothian by around 24 per cent in the new hospital to try to make it affordable. However, it appears that further cuts are now required”, she said.
The German Stern magazine described Britain as “The English Patient.” It pointed to the appalling conditions in Stepney Green in east London – one of the “most wretched and run down parts of England” – where terrible social deprivation exists in what used to be called “the soft South”. It explained that tuberculosis was rampant in the borough, where children are undernourished and sometimes up to ten people live in one room. Referring to a 1999 survey, it pointed out that “one in five adults in the land of Shakespeare and Harry Potter is practically illiterate and barely able to add up the small change in his pocket.”
Despite Blair’s promises about education, there was no real improvement. Even by September 2003, studies showed how little had changed in six years of New Labour government. According to a report from the Organisation for Economic Co-operation and Development, Britain’s education standards lag woefully behind its international competitors. Comparing the achievements of school leavers, in little more than a generation, Britain has fallen from 12th place to nearly, behind countries like Slovakia and Greece.
Under the Tories and now New Labour, the poor were getting poorer, but the rich in Britain were enjoying a bonanza. In the Sunday Times Rich List for 1997, the fortunes of the rich were increasing at an astonishing rate.
“For Joseph Lewis, the Bahamas-based billionaire who tops the Sunday Times list of Britain’s rich, 1996 was a vintage year for wealth creation. With profits from his outstanding skill at playing the foreign exchange markets, we estimate that Lewis trebled his fortune to £3 billion and it is still rising:
“Lewis is not alone. Last year was equally good for the other super-rich members of the Sunday Times list. The top 500 added a collective £16.299 billion to their combined wealth of £86.877 billion.” Three years later, they were still singing the same tune. “Britain’s super-rich have never had it so good”, states The Sunday Times. “The collective wealth of the top 1,000 in this year’s Sunday Times Rich List has reached almost £146 billion, a rise of more than £31 billion on last year’s list, or 27 per cent. This is the highest surge in the 12 years that we have been compiling the list.”
The collapsing infrastructure on the privatised railways constituted a growing threat to public safety and was the cause of a series of major train crashes. The tragic disasters at Clapham Junction, where 34 people were killed and 110 injured, followed by Southall, Paddington, Hatfield and Potters Bar, again accompanied by many deaths and injuries, sent shockwaves throughout the country. The scenes of carnage, twisted and charred wreckage and ripped up tracks, provoked a widespread backlash against the privatised railways. The private rail companies had received billions of public money in subsidies, and still continue to do so, yet they had failed to put fail-safe systems in place on trains because of the cost. As one of the Paddington crash survivors put it:
“Money takes second place to lives.” Belatedly, some of the directors of these companies have been charged with corporate manslaughter. But, despite this, thanks to the deployment of expensive lawyers, they all appear very confident of escaping justice.
Opinion polls continually reveal massive opposition to privatisation in Britain, which has gone the furthest of any advanced industrial country. A Guardian/ICM poll in March 2001 showed 76 per cent wanted to see the railways renationalised, while 60 per cent wanted an end to private prisons. Regarding the privatisation of air traffic control, 72 per cent were opposed, with only 14 per cent of Labour and 14 per cent of Tory voters supporting the plan. Even 40 per cent said BT should be renationalised! This was surprising, as many workers had been given shares in the company, and even their union, the NCU, had in the past consistently rejected calls for its renationalisation. It was supposed to be one of the most popular privatisations carried out by Thatcher. Now all that has turned to dust. Contrary to all the propaganda of New Labour, privatisation is not a vote-winner but deeply unpopular with the electorate – even with many Tory voters. Yet Blair stubbornly reaffirms his determination to press on with “more of the same”.
In a transparent attempt to fool the public, the government has resorted to the policy of privatisation in the form of the so-called private-public partnership – a ploy originally dreamed up by the Tories. But people immediately saw through this manoeuvre. According to the polls PPP is deeply unpopular: only 25 per cent support it, including just 32 per cent of Tory voters, and a mere 23 per cent of Labour voters. The polls also show that all voters wanted public services to be run by the government or local authorities and overwhelmingly rejected the view that public services should be run for profit. Only 6 per cent, and just 13 per cent of Tories, thought they should be profit-run.
This reflected a massive sea change in public opinion. Despite years of privatisation, there is now a massive reaction against this policy, and indeed a growing distrust of market economics in general. Yet the leaders of New Labour are blind to the facts of life. For them, everything is for the best in the best of all capitalist worlds. The Labour election anthem of 1997 was Things Can Only Get Better. But the reality has been completely different. For the great majority, things were going from bad to worse. Despite the obscene wealth made by the super-rich, there now exists a general and well-founded perception that Britain is becoming transformed into something resembling a Third World country – at least in comparison to our neighbours in Europe. Yet this powerful and growing groundswell of resentment against “the market” was completely ignored by the Blair leadership, which continued to pander to the interests of big business and sing the praises of the wonders of “free enterprise”. And this is supposed to be realism!
For Blair, the way to reduce unemployment was to force the unemployed off the dole into very low-paid jobs while continuing to fiddle the figures as the Tories had done. The government has cracked down hard to stop the unemployed claiming benefits – even harder than under Thatcher and Major. Blair boasted in an interview with American business magazine Forbes, “We are the first government in 30 years in which the welfare bill is falling. People go on about the Thatcher government but their welfare bill went up every year. Our real welfare bill is falling. Now, we need to deepen that.”
The Blairites were increasingly seen as out of touch. In the May 2000 local elections, Labour experienced its worse election result since 1992, with the loss of 600 council seats. In Liverpool, then under a new Blairite leadership, Labour experienced its worst election result in the city for more than 50 years. This was in marked contrast to the success of the Militant-led City Council of the mid-1980s, when Labour went from strength to strength. In these elections, by contrast, Labour supporters stayed at home in droves, disillusioned with the government’s performance. Turnout was only 30 per cent nationally and 32 per cent in London. “I have a wife and two children to raise and I really thought in 1997 that we were heading for a bright new era. Tony Blair has failed to deliver. If anything, he is more Tory than many Tories”, stated Brian Cox, 31, an unemployed dockyard labourer.
The attempt of the Blairites to block Ken Livingstone as Labour’s candidate for mayor of London created a furore within the Labour movement. Livingstone secured over 74,000 votes, while Frank Dobson, the candidate of Blair, only managed to win some 22,000 votes. Livingstone’s support in the affiliated trade unions was even higher than amongst Party members. Scandalously, Dobson “won” the official nomination thanks to the handful of votes from MPs, MEPs and Labour candidates for the London Assembly. Mass protest meetings were held and Labour Party meetings suddenly came to life. In the end, however, Livingstone decided to stand as an independent candidate. For many Londoners, he was regarded as the legitimate Labour candidate and as a consequence easily won the mayoral election, while Dobson (with only 13 per cent of the vote) was humiliated, and pushed into third place behind the Tory candidate. In protest at the failure of the Labour leadership to listen to the concerns of Labour’s “core” supporters, the former right-winger turned “soft” left, Peter Kilfoyle, resigned from the government and became an increasingly vocal opponent of the Blair line. Later Dobson himself left the government and opposed Blair over Foundation hospitals, the Iraq war and other issues.
Despite this clear vote of no confidence in the local elections and in the London mayoral election, the Blairities continued with their Tory policies. For them, the poor showing in these elections was simply a matter of “presentation”! So, despite massive public opposition, they continued to push through the privatisation of air traffic control (dubbed the “Railtrack in the sky”), as well as the part privatisation of London Underground. In the latter case, some 6,000 workers were handed over to the private sector. Even National Savings was handed over to Siemens Business Services, who in turn ended the final salary pension scheme for their workers.
Once again, the disappointment on the political front saw the working class turn increasingly towards the industrial front. “Militancy is growing across the transport unions in relation to working hours which are directly related to safety”, stated a report in the Socialist Appeal. “Following ASLEF’s decision at its conference a few weeks ago to fight for a four day week, the RMT Annual General Meeting in Great Yarmouth Town Hall voted to step up the fight for a 35-hour week, including a campaign of industrial action.”
At this time, there were also strikes, notably strikes against bad working conditions at call centres. It had been argued in some quarters that these workers could never be organised or take strike action. But once again life proved the sceptics wrong. The strikes at BT call centres took place over the threat to discipline workers if they failed to complete calls within 285 seconds. These exploited white-collar workers had been subjected to Fordist production methods superimposed upon the emerging 24-hour service economy. As Sue Fernie, research fellow at the London School of Economics Centre for Economic Performance, stated it: “The possibilities for monitoring behaviour and measuring output in call centres is amazing to behold – the tyranny of the assembly line is but a Sunday school picnic compared with the control that management can exercise in computer telephony.”
A survey conducted by the Joseph Rowntree Foundation about the pressures on workers’ lives concluded that job insecurity was at its highest level since the Second World War. Far from job insecurity falling as unemployment fell, research showed that the workplace was dominated by a lack of trust, a loss of control over the pace of work, general anxiety, and a sense that workers were being driven to extremes. Despite two decades of “New Realism” and the campaign by the TUC for “partnership” agreements, only 26 per cent of workers said they believed workers and management were on the same side. The overwhelming majority believed that the class divide was as wide as ever. Despite these feelings, John Monks was at pains to declare: “There is a large degree of mutual interest” between labour and capital. This view was echoed by the distinguished Digby Jones, the Director General of the CBI:
“The TUC’s New Unionism project has outlined a significant change of philosophy. It is a recognition that the old union role of bulwark against managerial innovation and initiative is dead. In companies that operate in global markets, looking to prevent moves to end restrictive practices, or cut excessive overtime by shifting to annualised hours, are bound to be damaging to the long term interests of the business and its staff.”
While whispering sweet love-me-nots to the TUC leaders, British bosses were busy making plans to break union organisation. Union-busting firms that had made billions of dollars attempting to destroy unions in the USA were now being employed in Britain. “They earn lucrative fees by specialising in helping management to defeat ballots for union recognition, which often result in the sacking of pro-union employees”, wrote Anthony Barnett in The Observer. “Examples of their tactics include engineering one-to-one meetings between individual employees and management where workers are pressurised not to join a union because they risk bankrupting the firm and losing their job or benefits.” Richard Bensinger, a union adviser in the US, advised British workers: “Stop these guys at your shores. They are the lowest in the food chain.”
Meanwhile, there was growing industrial strife in the Post Office, as a result of the constant attempts of the employers to change working practices. Royal Mail management had been trying to impose new “flexible working” arrangements for years, provoking the workforce at every possible opportunity. This resulted in a spate of so-called “wildcat walkouts.” These conflicts were usually localised and illegal, exploding suddenly and then quickly dying down. To keep within the anti-union laws, the union leadership was keen to repudiate the strikes. But attempts to quell the strikes had no effect. In fact, the Post Office became a central battleground in the war between workers and bosses.
According to the Office for National Statistics in 1999, the Post Office accounted for nearly half of all recorded stoppages – 84 of the 195 incidents logged. But this, in fact, was a gross underestimate of the real position. In the financial year 2000-01, 63,000 working days were lost in disputes at Royal Mail – most of them spontaneous unofficial walkouts. In 1999-2000, the total number of strikes was greater than the 84 recorded officially, with Royal Mail admitting to 210 stoppages (only 27 of them official). In 1998-99, there were 206 (70 official), and in 1997-98, around 337 (176 official). In the year 2001-02, about 53,000 days were lost through strikes, many over changes to working practices. It was these developments that were to lead to profound changes inside the 284,000-strong Communication Workers Union. This was no “red plot”, as alleged by the right wing, but reflected the need for workers to transform their organisations.
The continuing crisis in the postal service led Royal Mail to demand the cutting of 30,000 jobs through voluntary redundancy. It was an added insult after spending millions in a failed attempt to re-brand its commercial image. Not satisfied with this, in their remorseless pursuit of cost cutting within the industry, Royal Mail bosses announced a further programme of job losses and the end of the second delivery. Marx explained long ago that social being determines consciousness. The workers had learned from bitter experience that only a serious struggle could defend their interests. The previous two decades of subservient trade unionism, epitomised by the right-wing TUC leaders, had ended in abject failure, with workers facing a further round of attacks. That is why the workers voted for the Left and new leaders, more responsive to the rank and file, replaced the right wing.
The continuing crisis of British manufacturing industry was reflected in the threatened closure of the Rover Longbridge plant, quickly followed by the announced closure of the Ford Dagenham plant after 70 years of car production. While the union leaders patched together a “solution” over Rover – backing the take-over by the Phoenix Consortium – there was no such rescue for Dagenham. After a lack-lustre campaign by the union leaders, which failed to inspire or persuade workers that they could win the struggle, the workforce voted to accept the plant closure. Many of those being made redundant hoped to get jobs promised by management in the diesel engine plant. In early 2002, the last Ford car left the production line at Dagenham after 70 years of car making – a testimony to the bankruptcy of modern-day capitalism. This was followed by the closure of Vauxhall’s car plant in Luton, and in a separate move the Japanese car manufacturer Nissan threatened to pull out of the UK.
The general election in June 2001 saw once again the victory for the Labour Party after a flat and dispiriting campaign. There was by now little enthusiasm for Labour, but even less for the Tories. The continuing crisis of the Tory Party allowed the Blair government to win an unprecedented second term, with a majority of 167 seats. During the election, The Times and Financial Times, two traditionally Tory papers, as well as The Sun, supported Tony Blair. With the Tories in a mess, the bourgeoisie were consciously backing Blair as a man they could now trust.
The lack of enthusiasm for Labour in the working class areas was shown in the sharp fall in the turnout of only 59 per cent. In Liverpool Riverside, a Labour stronghold, only 34.1 per cent turned out to vote – 18 per cent lower than the previous poor turnout of 1997. But while support for Labour fell, support for the Tories collapsed even more dramatically. The Tories were shattered, failing to win a single seat in Wales, and just one seat in Scotland. They were reduced to a small rump confined to the South East of England. The debacle immediately brought about the resignation of William Hague, opening the door for a new round of in-fighting. With Hague gone, the poisoned chalice was then handed over to another nondescript, Ian Duncan Smith.
Even during the general election campaign, Blair intentionally dropped a bombshell. To the consternation of trade unionists in the public sector, he promised urgent radical “reform” of the public services. This he said would now become the prime minister’s top priority. For the Blairites the concept of “reform” has a certain connotation. In the double-speak of George Orwell’s 1984, peace meant war, plenty meant scarcity and so on. And in the New Labour double-speak, reform means counter-reform. It meant continuing attacks on workers’ terms and conditions and the introduction of flexible labour and pay in the public sector. Blair was determined to bring private capital and the morality and methods of the “market place” into the public services, particularly in the form of PFI project. But by now Blair was pushing the loyalty of the Labour movement to breaking point. A massive reaction was being prepared.
In its second term, the Blair government continued unashamedly with its blatant pro-business policies. Gordon Brown declared he wanted to import US-style “enterprise culture”. And what does this “culture” consist of? The minimum wage in the United States is only $5.15 (£3.40) per hour and has lost 30 per cent of its real value since 1968. The Americans have no real welfare state or free health care. This in a situation where as many as 70 million have no health insurance and are constantly living in fear of becoming ill. On the other hand, pandering to big business, Brown announced that Capital Gains Tax was to be reduced from a maximum of 40 per cent to just 10 per cent.
In the National Health Service the government was planning to introduce the Tory idea of free-standing foundation hospitals. Given the higher status of foundation hospitals compared to ordinary hospitals, they would naturally attract the bulk of resources and investment, and create a two-tier system within the NHS. They would be free to set their own rates of pay and conditions. These hospitals were also to be given powers to attract more private patients than ever before. Dave Prentis of Unison correctly described them as “private hospitals” which paved the way for the wholesale privatisation of the NHS. Alan Milburn, the health secretary, outlined his intention to bring the private sector in to build and run “fast track” surgery centres for the NHS. Private sector firms would also bid to take over the management of “failing” NHS hospitals. This would mean 17 reorganisations of the service in as many years. Again, the same hair-brained pro-market ideas would apply to schools and other educational establishments. Lord Young, ex-Tory Industry Secretary, declared with unusual frankness: “The Chancellor is stealing our clothes.”
Unison, the GMB and other unions strongly attacked the pro-market policy of the government. John Edmonds of the GMB said: “The government should be using its extra investment to improve NHS services rather than increasing private company profits.” But the government was not listening to the unions, only to big business, which was naturally very keen on the idea, licking its lips at the thought of the killing it could make. Tony Blair went so far as to denounce workers in the public services as “wreckers” because they dared to oppose the handing over of hospitals to private profiteers. This was not a casual remark, but a calculated provocation to millions of dedicated, hard-working and low-paid workers in the public services, who were already at the end of their tether.
Blair’s “wreckers speech” provoked Bill Speirs, general secretary of the Scottish Trades Union Congress, to comment: “When I heard it, I thought, ‘when was the last time I heard a prime minister use language like this?’ It was when Margaret Thatcher talked about the unions as ‘the enemy within’ in 1984.” Even John Monks stated he was scandalised when he heard rumours circulating in Millbank Towers that the Blairites wanted to provoke and defeat a major public sector union, much as Thatcher had taken on the miners. “There are some in Labour Party headquarters election campaign who said they relished an early confrontation with a major public sector trade union”, said Monks. “I could not believe it.” This was clearly part of a strategy on behalf of the Blairites to provoke a split with the unions, break the union-Labour links and create a new openly capitalist Party.
This plan was partly put into operation in the autumn 2002, when firefighters became the new “wreckers”. From the very beginning of the dispute the government took a belligerent approach to the firefighters. Typically, Blair rounded on the FBU, accusing the union of being under the control of “politically-motivated” leaders. This attack was reminiscent of Wilson’s denunciation of the seamen’s union in 1966, ironically led by John (poacher-turned-gamekeeper) Prescott. The government wanted the FBU to accept the Bain report, which intended to “modernise” the service by cutting some 6,000 jobs. Such “reforms” would be a disaster for the fire service, putting the lives of many people at risk for the sake of cost-cutting. Prescott, who resigned from his own union over his refusal to support its policies, threatened to impose a deal on the FBU using the new Fire Services Act. “If the FBU does not accept the final offer I will use the arbitration powers in this bill to bring about a settlement,” he said. There were even noises in government circles about banning strikes in essential services, a measure that would have received the unqualified support of the Tories.
Although the firefighters were firmly behind the dispute and there was overwhelming public support for their cause, the FBU leaders unfortunately failed to launch an all-out strike or effectively step up their action, and the dispute dragged on fruitlessly, leading eventually to an impasse and a retreat by the FBU. The deal, while granting modest wage rises, has opened the door to the so-called modernisation of the fire service, with all the attacks and cuts that would entail. The FBU members will now be forced to fight a rearguard action to defend their position against cuts and redundancies.
In the dispute with the firefighters, Blair stuck in his heels, refusing all calls to compromise. This shows how far the right-wingers are prepared to go. At every step of the way they have provoked the trade unions. But in so doing, they have prepared an almighty backlash from the working class, whose patience is being pushed to its limit. The scene is being prepared for the biggest explosions in the class struggle not seen for decades. Unofficial action by BA workers forced management to retreat over new working practices. London postal workers are engaged in official strike action over pay, the first for over seven years. Local authority workers also plan industrial action. In the wake of a series of tube derailments, rail unions are threatening strikes over safety. The recent elections in the trade unions have indicated the beginnings of a sharp turn to the left within the mass organisations of Labour. As the Blair government becomes an increasing barrier to working class advance, the workers will tend to swing over to the industrial front. However, as divisions increasingly open up within the Labour Party, this same tendency will be expressed in the Labour Party itself.
 The Observer, 27 May 2001
 The Sunday Herald, 14 September 2003
 The Sunday Times, 19 March 2000, my emphasis
 Socialist Appeal, June 2002
 Ibid, July 2000
 The House Magazine, 11 September 2000
 The Observer, 24 January 1999
 The Financial Times, 21/22 December 2002