John Rees: The Class Struggle Under New Labour (July 1997)
The Class Struggle Under New Labour
(July 1997)
From International Socialism 2:75 , July 1997.
Copyright © International Socialism.
Copied with thanks from the International Socialism Archive .
Marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
The Labour Party’s landslide election victory on 1 May 1997 has already made the record books: Labour’s largest ever Commons majority, the Tories’ lowest vote since 1832, the most cabinet ministers unseated in an election, the most women MPs ever elected, and so on. The victory had a still greater impact than the bare figures reveal because it was, in many quarters, so unexpected. Chief among those who could not find it in themselves to believe the consistent reports of the pre-election opinion polls was Tony Blair himself. His now infamous remark just days before the vote that ‘this is not a landslide country’ was matched on the very night of victory itself when he refused to believe the predictions of the exit polls until long after the first results were declared.
But the Labour leader was not alone in doubting that his party would win handsomely, or indeed that it would win at all. Many Labour voters and activists, and many to the left of Labour, were scarred by the experience of the 1992 election when victory seemed to slip away at the last moment, to the confusion of the opinion pollsters. They refused to acknowledge the vital differences between the two successive elections, not least the fact that Labour began the 1992 campaign some 5 percent ahead in the polls rather than the 20 percent lead they had attained for months before the 1997 election was announced. For some, the doubts became deeper as the policy and leadership of the Labour Party became more right wing under Blair. Surely, the argument ran, Blair is so like the Tories that people will become demoralised and refuse to vote for him. The ghost of this argument has survived its decisive rebuttal by the election result. Some, Labour’s leaders among them, now argue that Blair won because he was so right wing. On the left this argument leads to the pessimistic conclusion that the socialist project is as difficult to realise under Blair as it was under the Tories. ‘People are just right wing,’ it is said, and the fact that they would only vote Labour when the party was led by its most right wing leader in the post-war period proves the point.
The causes of Labour’s election victory are therefore an important part of the argument about its consequences. If the Labour leaders, and their pessimistic cousins on the left, are right that the Labour vote was only possible because of the party’s move to the right then the prospects for further change are both limited and dependent on the actions of MPs and ministers. If, on the contrary, Labour’s victory was a result of a pre-existing and longstanding radicalisation of working class consciousness strongly at variance with the policy of its electoral beneficiaries, then the prospects for socialists are much brighter.
 
Why did Labour win?
New Labour’s electoral strategy could not have been clearer. It unmistakably set out to distance the party from previous ‘Old Labour tax and spend policies’. Tory taxation and spending plans for the next two years are to be rigidly followed, Gordon Brown insisted during the election campaign. Little or no new money will be found for the NHS or for education. Nationalisation is ruled out but privatisation is endorsed – even in the middle of the election campaign Labour floated the idea of privatising air traffic control, and Blair personally accompanied Richard Branson on board one of his privatised trains. Indeed, the renationalisation of the rail network, one of the Road to the Manifesto commitments, was dumped by the time the election manifesto was published. All this was just a small part of Labour’s pro-business agenda. As both Gordon Brown and Tony Blair have repeatedly said, they see no reason why Labour should not be a ‘pro-business party’ on the model of the Democrats in the United States. The trade unions, by contrast, are ritually denounced. Their leaders were as silent as trappist monks during the election campaign. Since the election the Labour leadership has pushed ahead with its Party into Power document which plans to further reduce both the duration and the decision making powers of Labour’s annual conference, and the unions’ role in those decisions.
Now, if these attitudes had been shared by a majority of those who voted Labour, Blair and Mandelson could rightly claim that only by moving Labour’s programme into alignment with these views could they hope to win an election. The consequence would be that the post-election situation had little to offer those to the left of the Labour leadership. But this is far from being the case. For years before the election opinion poll evidence showed a yawning gap between the aspirations of the majority of working people (indeed a majority of all people) and the attitudes and policy proposals of the Labour leadership.
Take, for instance, some of the findings of the 1996 British Social Attitudes Survey. A majority, nearly 52 percent, agree that the ‘government should redistribute income from the better-off to the less well-off’; between 56 percent and 66 percent, depending on which part of the country they live in, agree that ‘big business benefits owners at the expense of workers’; between 59 percent and 70 percent, again depending on locality, agree that ‘ordinary people do not get their fair share of the nation’s wealth’; between 66 percent and 75 percent agree that ‘there is one law for the rich and one for the poor’; and 69 percent believe that ‘unemployment should be a higher priority than inflation’, while 55 percent think that ‘unemployment benefit is too low and causes hardship’. Commenting on these figures the right wing Financial Times columnist Samuel Brittan wrote that ‘the British public remains hopelessly collectivist in its attitudes’, adding that the attitude towards big business revealed by the survey ‘represents something much more hostile than a call for tighter anti-monopoly laws’. [1]
These attitudes are underpinned by a deep sense of class identification. In 1991 the British Social Attitudes Survey asked people to indicate the class to which they belonged. Some 46 percent described themselves as working class and an additional 18 percent said they were ‘upper working class’ while another 4 percent simply said they were ‘poor’. But people are not only quite at variance with the ideologists of New Labour in their collectivist attitudes and in identifying themselves as working class, they are also diametrically opposed to the Labour leadership’s attitudes in their assertion that there is a struggle between the classes.
‘Class struggle’ is, of course, a phrase eradicated from the New Labour lexicon, most famously by Tony Blair in his speech to the 1996 Labour conference when he insisted that ‘there are no longer bosses and workers, them and us’ in modern Britain. The majority of people, however, think quite otherwise. The Gallup organisation has asked people the very same question – ‘Do you think there is a class struggle in this country or not?’ – every year since 1961. In that first year 56 percent thought there was a class struggle and 22 percent said not. At the height of the militancy of the 1970s, in February 1974, the figures stood at 62 percent who believed there was a class struggle and 27 percent who thought not. But those figures have been dwarfed by the responses given in the 1990s when there has never been less than three quarters of the population who agreed that there was a class struggle in this country. The most recent figures, for August 1996, found that 76 percent agreed there was a class struggle while just 15 percent thought there was not. [2]
The election result itself was further proof of the centrality of class in British politics and a standing refutation of Blair’s belief that victory was only possible by appealing to middle class voters. Labour’s lead was greatest among unskilled workers (social categories D and E, to use the government statisticians’ jargon) at a massive 40 percent. Next came the skilled workers (in category C2), with a 28 percent lead over the Tories. Then came the skilled white collar workers (C1, a category that also includes supervisors and lower managers), with a 21 percent lead, but the biggest swing to Labour. The only social group who gave the Tories a lead, of 11 percent, was that which included the wealthiest (the ABs). In Scotland, where many expected the Scottish Nationalists to profit from disillusionment with Blair, the scale of the class vote dwarfed all other considerations. The results of the French election of 1 June 1997 provide further comparative evidence that Labour could have won the British election on a much more left wing platform. Lionel Jospin’s Socialist Party achieved an even greater swing than Blair’s New Labour, but on a considerably more radical programme. Jospin, for instance, promised to create 750,000 new jobs, three times the figure promised by Labour. He also promised the introduction of a 35 hour working week.
The fact that Blair, Brown and Mandelson are so completely dismissive of those who point to these realities shows only that they, like most of the governing class in Britain, have more fully absorbed the ideology of the Tory era than they have understood the disastrous effects it has had on the lives of working people. But this huge disparity between the concerns of most ordinary people and those of the politicians did surface during the election campaign. An ICM poll of voters aged 18 to 40 years old, for instance, asked respondents to list the 14 issues which were most important to deciding how they voted. The politicians’ and the media pundits’ favoured election issues – Europe, lower taxes, the need for a change of government – came fourteenth, twelfth and eleventh respectively in the list of priorities. Voters’ first three priorities were education, jobs and health. Poverty, homelessness and employees’ rights – issues virtually unmentioned by any politician during the campaign – came sixth, seventh and eighth. Asked, ‘Which social issues do you feel most strongly about?’ respondents again listed concerns almost completely absent from the established parties’ agendas: racism, pollution and nuclear weapons were three of the top four. [3]
Other polls have shown a similar gulf between working people’s attitudes and Labour’s policies: majorities now think that the unions are too weak rather than too strong, that the rich should be taxed more heavily, that the railways and public utilities should be taken back into public ownership. Most remarkably of all, after decades of being told that free markets are the best form of economic organisation and that socialist planning has been conclusively proved a failure, 61 percent of Labour voters (42 percent of the population) persist in thinking that there should be ‘more socialist planning’ in the economy.
This chasm between the ruling class and the mass of workers is the ideological inheritance of 25 years of social crisis, 18 of them under the Tories. The roots of renewed enthusiasm for the unions are not hard to find in the permanently high level of unemployment (affecting 20 percent of households even during a period of ‘economic expansion’), the job insecurity, the lengthening of the working day (twice as much overtime is worked now as it was ten years ago), the spread of low paid jobs, and the intensification of supervision and workload, in white collar and manual jobs alike, which have characterised this period. Add to this the recession, negative equity and debt hangover which followed the Lawson boom of the late 1980s and it becomes clear why looking to working class organisation as a form of economic self defence is increasingly attractive to workers.
The popularity of renationalising the public utilities and the railways, or of socialist planning in general, is not the product of outmoded dogma as Tony Blair imagines. Rather it is the wholly rational response of people who have had the free market, privatising creed rammed down their throats for 18 years and who find at the end of it all, for instance, that they have to phone three different numbers to find out a train time, that the services and ticketing are no longer co-ordinated, fares have risen, and that the service has frequently deteriorated. Or perhaps it results from finding that water companies making record profits are demanding their customers reduce the amount of water they use while failing to reduce the 30 percent of water that escapes through leaking pipes.
The same experience of life under the Tories stands behind disillusionment with the legal system. Not only is there, in many working class areas, the direct experience of an increasingly authoritarian police and legal system, there is also the cumulative experience, direct or at a distance, of the same system at work in the Great Miners’ Strike, the Wapping print workers’ dispute, the anti poll tax rebellion, against roads or animal rights demonstrators, against ‘illegal’ raves and anti Criminal Justice Act protesters, or anti-Nazi activists. Add to this the ideological effect of high profile miscarriages of justice – the Guildford Four, the Birmingham Six, the Bridgewater Four, Winston Silcott. And, at the other end of the social spectrum, one could note the effect of the notorious failures of the Scott inquiry, the Serious Fraud Office or the Downey committee to punish wrongdoing among our rulers. Taken together even this incomplete list proves that one does not have to be a trained sociologist to discover the roots of popular disaffection with this central aspect of the state’s activities.
All this, and much more, has seared into the minds of many working people an intense hostility to the Tories and, in some important respects, to the system they represent. It is this fact above all else which delivered Labour its election victory. Tony Blair may have done little to give voice to the feelings of people who would vote for him. He may have done nothing to indicate that there would be the fundamental change that so many hope for. But as misery piled on misery for another five years after 1992, under Major as it had done under Thatcher, all that Blair had to do was provide an electoral alternative to the government. The gradual decomposition of the Major government under the successive blows of the 1992 pits crisis, Black Wednesday (sterling’s ignominious exit from the ERM) tax increases including VAT on fuel, plus the Tory party’s own divisions over Europe, made Labour’s task all the simpler.
Of course, there was an obvious contradiction built into this situation: Labour was pursuing an extremely right wing project at a time when popular consciousness was moving in the opposite direction. The election of a Labour government has not resolved this contradiction – it has heightened it.
 
The effect of Labour’s victory on class consciousness
The first and most important effect of the election result on the consciousness that has built up over the preceding period is to give it the endorsement of official electoral politics. Even in the final stages of the Tory government many socialists and trade union activists still felt it hard to justify their argument that the Tories and their values were bitterly disliked. The hype of the Thatcher era and the very real after effects of the defeats of those years weighed heavily on their confidence. Even when they weren’t in a minority, they felt as if they were – and of course the media and the policy of the Labour leadership and the trade union bureaucracy added to this sense of isolation.
The election result has decisively ended that psychosis. Now it is obvious that the critics of Tory free market ideology, at least at the base of society, are in the ascendant. The sheer scale of Labour’s victory is important here. A majority of 30 would not have had the same effect. But with a majority of 179 it seems to many Labour voters that there is nothing that the party cannot do. Paradoxically, the speed with which the Labour government has moved to implement parts of its programme has enhanced this mood. Despite the fact that parts of what Labour has done are right wing (for example, giving independence to the Bank of England), despite the fact that parts of what it has done are mostly mere rhetoric (such as the ethical foreign policy), the sheer number of announcements has given the impression that real and fundamental change is both possible and realistic.
Much of the tone of the press coverage, especially on the front pages and in the feature articles, has been adulatory. Tony Blair and his wife, Cherie, were treated by some journalists to the kind of myth making which surrounded the White House when John and Jackie Kennedy were in residence. But from the very first another note also sounded. For days after the election the letters page of The Guardian was full of demands on the new government. Pressure groups and think tanks who for many a long year had been completely shunned by Tory MPs and ministers now felt their time had come: teachers wrote demanding immediate action on class sizes; the NatWest Staff Association demanded the reinstatement of the sacked Liverpool dockers; the Coalition Against Runway 2 at Manchester Airport demanded government support; the director of National Energy Action demanded the abolition of VAT on fuel bills and more; the Railway Development Society insisted that John Prescott intervene to regulate the industry.
Union conferences held in the weeks after the election also raised demands for reform. At the AEEU, FBU, GMB and CPSA conferences there were demands for change running far beyond the desires of the Blairites, often passed in the teeth of opposition from the union leaders. In the postal workers’ union, the CWU leadership accepted demands that the anti-union laws be repealed ahead of the union conference precisely because they were worried by the mood of the delegates. Of course, not all such demands were won and union conference delegates are not necessarily representative of the average consciousness in the class as a whole. But even the normally conservative conference of headteachers unanimously passed a vote of no confidence in Chris Woodhead, the chief of Ofsted. All of this made it clear that, at the very least, a substantial minority of working class activists are already deeply distrustful of the Blair government.
On the ground there were some signs that activists long ground down by the war of attrition with the Tories were so lifted by the election result that they were unwilling to listen to counsels for delay. There were strikes and protests, all of which ended in victory, by building workers on London Underground’s Jubilee Line extension, teachers in London’s Holloway School, lecturers at Kingsway College (plus a wave of strikes and protests in colleges across the country), 3,000 engineers at Immingham, firefighters in Essex, construction workers at Avonmouth, workers on the Isle of Wight ferry and postal workers at London’s NDO, among others. The overall strike figures remain low and the action so far has fallen short of making a decisive shift in the balance of class forces. But the importance of these examples is not just that they may be harbingers of future struggles. They are important because they are the visible manifestation of a much wider mood which exists among hundreds of thousands who are not yet willing to take action but want change; a mood perhaps best captured by the slogan of a gay and lesbian protest outside Sheffield City Hall in May: ‘Tony Blair, we won’t wait. Scrap Clause 28.’
It is easy to misread these heightened expectations because they can seem to be part of the fawning over Blair which is, temporarily no doubt, a prominent part of the press coverage. Seen in this light the expectations of the Labour government can seem like mere illusions. ‘Don’t these people realise’, the argument goes, ‘that Labour won’t deliver.’ And of course there is an important element of truth in this argument. Blair will realise hardly any of the expectations which Labour supporters have of the government. And Blair and Brown, credit where its due, have said as much.
But simply to speak of the illusions in Labour in this way is only half the story. Expectations become illusions if they depend for their realisation on waiting passively for the government to fulfil, or disappoint, those expectations in the fullness of time. But expectations are something very different if they begin to fuel demands for change and, in even an important minority of cases, promote action to achieve that change. In other words, expectation can become a license for confidence and an encouragement to action, not a promoter of passivity.
Let’s take one small example of this process. In late May Tony Blair attacked the salary rises of the directors of the lottery operator Camelot. They were hauled before Chris Smith, the national heritage minister, to explain their conduct. At one level a properly cynical response to this development is quite right: it is cheap progressive publicity for Labour and, in any case, Blair is close to Richard Branson who wants to take over the lottery and run it as a non profit making operation (although the ‘consumer friendly’ publicity will generate lots of profitable business for the Virgin empire). Certainly it is right to say that no anti-capitalist intent is visible here. Anyone who claimed that there were such intentions would be painting Blair in colours far more favourable than he deserves.
But that is far from being the only important argument about this issue. It is at least equally important to note that if a Labour prime minister attacks the salaries of the directors of one nationally prominent corporation it cannot help but give encouragement to every shop steward and union activist to make the same point about the managers and directors of their company. What seems like the promotion of illusions can turn into the inspiration for resistance. As the old adage has it, life looks very different depending on whether you view it from the cottage or the castle.
Of course, it is only the fact that working class consciousness had already moved to the left before the election, and that this move was bolstered by the election result, that allows this interpretation of events. If there were no such consciousness among workers then Blair’s manoeuvres would never have effects contrary to his intentions. But as such a consciousness does exist much of a socialist strategy depends on recognising the contradictory impulses of Labour’s statements and exploiting them to the advantage of rank and file workers. Concretely, in this case, it would be a mistake if every resolution over pay and conditions in every union in the country did not make use of Blair’s attack on the directors of Camelot to sanction action against directors in other firms who have enjoyed similar rises over recent years.
This kind of approach is all the more important because Blair quite deliberately follows an approach which combines either small reforms, the appearance of reform or the rhetoric of reform with policy which is wholly reactionary. Thus Blair talks of a ‘People’s Europe’ in which ‘there is less obsession with ourselves and our institutions, more focus on the things that matter to people’ but, in reality, he refuses to support the social chapter in the new European treaty unless if encourages ‘flexible labour markets’ (ie low pay and job insecurity). Yet these are the very things that most trade unionists think the social chapter will alleviate. Similarly, Blair’s priority of ‘education, education, education’ is already being used by teachers and parents campaigning against Labour’s plans to close schools, ‘fast track’ the sacking of teachers, and send in ‘hit squads’ headed by the very man, Chris Woodhead, who became hated as the head of Ofsted under the Tories. Or again, the government’s decision to lift the ban on unions at GCHQ can give confidence to every activist trying to organise a non-unionised workplace, despite the fact that Labour is committed to keeping the Tory anti-union laws which make the task so difficult.
These contradictions are going to repeat themselves across the entire front of government policy. Blair and his advisers are keen to emulate Bill Clinton’s ‘tough love’ approach, described by The Guardian’s Larry Elliot as an ‘anomalous mixture of liberalism and authoritarianism. The Prime Minister will be Tony, just as Bill Gates of Microsoft is Bill, but the jeans and open necked shirt approach has to co-exist with ruthlessness ...’ [4] Peter Mandelson seeks to exploit this contradiction to Labour’s advantage, almost matching each reactionary policy with an announcement of some cosmetic or superficial measure which appeals to the progressive sentiments nurtured by Labour’s victory. The vestiges of political control may be removed from the Bank of England but, don’t worry, Labour will run an ‘ethical foreign policy’. Single parents will be targeted for ‘welfare to work’ interviews but at the same time Clare Short plans to ‘end world poverty’ by freeing overseas aid from being tied to business deals. Refusal to tax the rich is coupled with the windfall tax on the profits of the utilities.
This public relations operation is already seen for what it is by a very substantial proportion of Labour activists. For some, doubts about Blair have not been alleviated by the scale of the election victory. And as time passes it will be the hard core of pro-capitalist policy which emerges as by far the dominant, and obviously dominant, part of the New Labour equation. The full force of circumstances pushing Labour in this direction will become clear when we examine the economic prospects facing Labour (see below). Here it is only necessary to note that Blair is ideologically committed to allowing the ‘full rigour of the market’ to do its work.
It was this commitment to the market which stood behind Blair and Brown’s decision to make the Bank of England independent, as Larry Elliot explains:
This change … underpins Labour’s technocratic approach to running the country. Once you have dispensed with the idea that conflict is natural – even healthy – and that there are [any] real class or sectional interests, the answer to every problem is to call in the experts. It makes perfect sense to hand over the interest rates to the Bank of England and to call in the head of BP as minister for export promotion. They are, after all, likely to make a better fist of things than elected politicians. [5]
Since this was written Martin Taylor, chief executive of Barclays Bank, has been appointed to head a Whitehall team on tax and benefits, and Lord Hollick, chairman of United News and Media, has been called in to advise on industrial policy. Indeed Blair has been forced to admit that he has made more political appointments in Whitehall than the Tories did. He also looks set to have more unelected ministers in the Lords than the Tories, making a mockery of the election pledge to reform the upper house. In this world ‘independent’, ‘expert’ and ‘neutral’ are simply euphemisms for free market economics.
Blair and Brown and the massed ranks of their advisers will stick to this element of their project long after the elements of superficial radicalism have been swept away. It is an article of faith among the Blairites that ‘corporatism’ was to blame for keeping Labour out of power for 18 years and, more broadly, that ‘planning’ was the root of all evil in the Stalinist states. They are consequently much more ideologically committed to market solutions than the previous generation of Labour right wingers.
This pro-market stance puts them on a trajectory diametrically opposed to both the interests and the consciousness of the vast majority of people who voted Labour. Yet it would be a mistake to assume that, even when this contradiction becomes sharper than it is today, such a conflict will result in the Blairites giving way or changing course. One only has to recall the ruling classes’ free market policy, in particular the defence of the gold standard, followed by Labour’s Ramsay MacDonald and Philip Snowden in Britain in the inter-war years, to see that no amount of evidence of failure, or working class discontent, or even the wrecking of their own party, is necessarily enough to make Labour’s leaders shed their belief in the market.
Moreover, these pro-market attitudes are much more than an economic orthodoxy. Every aspect of Blair’s social policy is riddled with the same assumptions. If there is unemployment it can’t be the fault of the market, it must be a result of welfare (described by new minister Frank Field as ‘the enemy within’). If there is ‘choice’ in the supermarket, why not ‘parental choice’ in education? And if ‘choice’ isn’t working it must be the fault of lazy teachers and failing schools. If young people are breaking the law the answer can’t be a job or a decent wage, it must be ‘fast track sentencing’.
Even a commentator as sympathetic to the Blarite project as The Observer editor Will Hutton finds Labour’s orthodoxy unsettling:
The Conservative vote may have fallen to the lowest since 1832, but the lesson drawn by some at the top of the Labour Party is not – in social policy at least – that neo-conservative approaches to welfare and work should be qualified. Paradoxically, they should be intensified.
For these Labour zealots, Hutton argues:
… systems of social insurance become obstacles to work because those who use them become scroungers and welfare cheats...welfare must become conditional upon effort, and offer no more than a safety net between jobs; if inequality results, it must – like death and taxes – be seen as an unavoidable fact of life about which the community can do nothing. [6]
In both social policy and economic strategy the contradictions between the needs and desires of working people and the direction upon which the new government is set can only grow sharper. But even today, in its current unstable form, these contradictions open up opportunities for socialists, if they know how to take them. This requires that where Blair is at his most reactionary – in his Downing Street meeting with Thatcher, in sending the hit squads into schools, in freezing public sector pay – the left should unequivocally condemn the government and explain how its policies are linked to its acceptance of the very same capitalist priorities that the Tories were thrown out of office for defending. But this criticism will be all the more effective if we take some of Labour’s pronouncements as the basis for arguing against the government. Is spending £13 billion on the Trident missile system and another £3 billion on a new class of nuclear submarine, for instance, an ‘ethical foreign policy’? Is it an ‘ethical’ domestic policy when we are told there is no more money for hospitals and schools? If it is wrong for Camelot directors to increase their own six figure salaries by 30 percent, is it not also wrong to put an academic who ‘earns’ a six figure salary in charge of the commission which will decide the level of the minimum wage? Even before the election, an editorial in The Independent pinpointed exactly the kind of paradox Blairism creates:
... New Labour’s bid to have capitalism and all its works without its ‘cultural contradictions’...strives to produce rules for social life when economic life is less rule-bounded than ever. The question is whether government can impose these rules ...
Mr Blair would like parents to spend more time with their children. Quite right. Does that mean that he is in favour of maximum 48 hour weeks, or new laws to force employers to recognise the domestic circumstances of their staff? [7]
Such arguments can gain a substantial audience now. The probable economic prospects mean that the size of that audience is likely to increase the longer the Labour government lasts.
 
Short term economic prospects under Labour
Labour has come to power during the recovery phase of the business cycle. Unemployment is falling, even if the Tory government’s fiddling of the figures is discounted. The rate of inflation matched former chancellor Kenneth Clarke’s 2.5 percent target in May. The deficit on government spending, the public sector borrowing requirement (PSBR), is £3.6 billion less than the Treasury estimated. The Financial Times crowed, ‘Mr Gordon Brown...seems to have the ball rolling nicely’. [8] The TUC seems to agree that the economy is not in bad shape and that unemployment will keep falling this year. The TUC also considers that growth is relatively high in spite of some worrying signs on the inflation front, and that consumption is relatively strong and will be fuelled by the building society conversion payouts.
Yet behind the headline grabbing statistics a more complex picture emerges. Firstly and most obviously, at 2.5–3.5 percent the kind of growth rate forecast for the economy during the peak of a ‘boom’ is about the average over the trade cycle in the post-war period. So there will be no expansion of investment in industry or welfare on the scale of 1945 based on this economic performance. Indeed investment has remained almost unchanged by the present expansion, a much worse performance than during the boom of the 1980s (see tables 1 and 2).
Secondly, economic expansion poses its own problems. For instance, price inflation may only be running at 2.5 percent but wage rises are running at 4.5 to 5 percent. Labour is committed to a freeze on the wage bill for public sector workers. But if workers in these areas see their real living standards decline, while workers in the private sector are using the effects of a tighter labour market to claw back some of what they lost in the last recession, then public sector workers are more likely to take action to rectify the situation. And Labour is not even going to be able to take any solace from the fact that workers in the private sector will feel more warmly towards the government if their wages are rising. The ‘feelgood factor’ that so eluded the Tories is equally likely to escape Labour’s grasp, and for the same reason. Many people feel no better, even when their wages are rising, partly because they are having to work longer and harder to get the extra money in the first place. But they also feel no better because, when they do get more money, they don’t spend it. Instead they save it – or, more likely, they pay off debt.
A comparison of consumer spending in the boom of the 1980s and in the expansion of the 1990s (table 3) makes the point. Between 1982 and 1986 consumer spending rose by 20 percent. Between 1992 and 1996 it rose by half that figure. Personal savings figures are equally revealing (table 4). In the 1980s boom and its aftermath saving plummeted to finance consumption whereas in the 1990s expansion savings have risen to pay off debts and ward against greater job insecurity.
And although government debt is somewhat smaller than first estimated, the total is still so great and spending plans remain so tight that most analysts assume that Labour will have to either revise its plans or face conflict over cuts and wages. In fact the debt has doubled since 1990. Some think government debt is so great that even if spending is increased, conflict with cuts protesters and unions is still likely. The National Institute Economic Review, for instance, argues:
While government borrowing in 1996/7 has turned out to be lower than was forecast in the November budget, by 0.5 percent of GDP, this good news should not obscure the fact that the deficit remains very large ...
With substantial tax increases to be avoided, the new government will have little option but to follow existing spending plans. Total government spending is set to rise on average by only 0.5 percent per annum in real terms over the next three fiscal years.
The institute report continues:
Many commentators claim that these plans are not achievable because they imply a substantial fall in the level of provision of public services ... It is difficult to see that further tax increases or spending cuts can be delayed indefinitely. [9]
The Labour government’s problem is very great indeed. Even under the Tories’ public spending grew by about 2.3 percent a year – four times greater than the 0.5 percent Labour is planning. If Labour overshoots its spending targets, as the Tories often did, but still keep spending lower than at any time since 1963-1964 an £11 billion (4 percent) a year overspend would remain. If spending were to hit the average for the last 18 years the overspend would double. The deficit would then be £10 billion higher than the figure which is precipitating the crisis today.
The NHS looks set to be a particular sufferer. Department of Health funding is due to increase by just 0.8 percent in real terms this year. In 1998 it will fall by 0.7 percent. In 1999 an 0.1 percent increase is planned. Within these figures, capital spending will be cut by 22 percent over three years. The shortfall is supposed to be made good by private finance. Overall, ‘The projected growth in health spending over the next three years is far lower than the average growth in health spending since the Conservatives took office in 1979, or at any time over the last 35 years’. [10]
In other words, British workers face their own version of France’s Juppé plan, the austerity measures which provoked the 1995 strike wave, whether or not Blair decides to adopt the Maastricht criteria for the single currency. As the Institute of Fiscal Studies Election Briefing 1997 reports:
Given the tightness of the [government’s spending] plans, there will be considerable pressure for them to be overshot... Health is one area where pressure to allocate more resources in future years will be immense. Both parties have said in their manifestos that they will increase the real level of resources going into the NHS each year, but the spending plans as they stand only have real increases written into them for the first year ... Another example of where spending plans could come under strain is the funding of public sector pay settlements if average earnings growth in the economy starts to pick up. [11]
This last point, the pressure on public sector pay is important. The Tories’ public sector pay freeze did succeed in cutting about 5 percent off the government paybill. But this was achieved less by reducing wages and more by cutting the number of jobs, particularly in the civil service, and by contracting out. But now earnings in the private sector are rising faster than inflation it will be more difficult for Labour to continue down this road, not least because jobs in many services have already been cut to the bone. In a survey by Nursing Times 78 percent of nurses reported staff shortages. [12] In the NHS Labour’s high profile commitment to increasing the numbers of ‘frontline staff’ make further staff cuts difficult and the pay issue more pressing.
Labour could thus face a double jeopardy – a bonfire of expectations caused by spending cuts and conflict over wages. In the case of the NHS it is even possible to judge how far the distrust of New Labour has progressed. Even though nurses voted Labour in unprecedented numbers in the 1997 election, and despite the fact that over 30 percent of them said they trusted Labour with the NHS (compared to 5 percent for the Tories), still more, some 41 percent, said they trusted none of the political parties with the NHS. [13] Now, there is still a considerable difference between not trusting Labour to defend the NHS and having the confidence to defend it by your own actions. Nevertheless, these figures do show that those who wish to argue for the self activity of health workers in defence of the NHS will not find themselves confronted by an audience which has a pronounced faith in the government whose policies they will have to resist.
In addition to these budgetary considerations, the Labour government has to reckon with the fact that, if the duration of recent business cycles are any guide, the current weak expansion will give way to another slump at some point around the mid-term of its time in office. Rising unemployment would then begin to put more pressure on social spending during the harshest period of the current plans.
And if Labour continues with its plans for constitutional reform – devolution, reform of the Lords, and possibly, though not probably, the introduction of proportional reform – these issues could add an important political dimension to the developing crisis of Blairism. Such a crisis is unlikely to be simply the result of conflicts over the nature of the constitutional reforms themselves, since they are wholly compatible with a capitalist economy. But such issues nevertheless have a habit of becoming cyphers for much more deep rooted social and economic problems. The referendums which Blair proposes on devolution and on the election of a mayor for London, for instance, could easily become votes of confidence in a government which is becoming unpopular for reasons quite unconnected with devolution or the local government of the capital.
The political effects of all this are difficult to predict in detail, and the exact timescale on which they will be played out is even more difficult to estimate, but the broad outlines are not so hard to imagine: growing discontent with Labour among the mass of the working class and intense pressure on the government to continue making cuts and to ‘stand firm against the unions’ from the ruling class.
 
Prospects for socialists
The enormous radicalisation of consciousness which was the inheritance of the Tory years remains the central fact of British politics for all those concerned with building a socialist organisation which can mount a fundamental challenge to the capitalist class in Britain. This mood has been extended and deepened by Labour’s victory. In most workers’ minds expectations of the Labour government co-exist with doubts and distrust that Blair will really be able or willing to deliver real improvements in their lives. In the immediate future the success of the socialist opposition to Blairism depends on knowing how to address this contradictory consciousness in such a way that it becomes a coherent, rank and file opposition to Labour’s attempts to police the social crisis on behalf of capital.
Concretely this means that where Labour attempts to carry out Tory policies they are opposed in the name of all those, the majority of the population, who voted against the Tories precisely because they rejected these policies. Where Labour either makes rhetorical gestures in the direction of reform or, in a minority of cases, where it actually makes a reform of some substance, socialists should use the example as a platform to encourage the self activity of the class and to demand that the inconsistencies in Labour’s policy are eradicated by extending the logic of the reformist measures (i.e. by demanding that the lifting of the ban on unions at GCHQ is extended into support for unionisation in other non-union workplaces, say in the print industry, and by the government’s abandoning of its support for the Tory anti-union laws).
In the mid-term the ‘sado-monetarist’ strategy followed by the Labour government will clash increasingly sharply with a working class movement which has drawn hope and confidence from its electoral victory over the Tories. When a similar clash occurred under the last Labour government in the late 1970s the Communist Party and the Labour left were the decisive force able to corral a movement fresh from its victories in the early 1970s. They ensured the acceptance of the Social Contract, which tied that movement to the failure of the Callaghan government. Now the battle for independent rank and file working class action against a much more right wing government will be fought without such an impediment. Even if the Labour left revives, its roots in the organised working class and its ideological coherence will be much reduced by the demise of the old CP.
This battle will, however, be more ideological than in the past despite the erosion of the reformist left. Blair is himself more ideologically committed to the market than previous Labour leaders. Every corner of his policy is steeped in individualistic, pro-market ideology. But, more importantly, the intensity of the social and economic crisis inevitably makes the capitalist system and its politics volatile and unpredictable across the whole range of social, political, economic and ideological issues. In the last extended period of Labour government, 1964–1970 and 1974–1979, the key issues deciding the fate of the struggle were not just battles over wages and conditions. The struggle over the Vietnam War, Northern Ireland, Europe, the IMF austerity package of the late 1970s, over education and the family, women’s and gay rights, the nature of the Stalinist states in Eastern Europe, and racism and opposition to the National Front, all helped to decide which currents on the left survived and which did not because they determined who would get a hearing among newly radicalised workers. Today’s struggles will be no less all embracing and demand no less political clarity from socialists.
The decisive battles will therefore be decided by the weight and coherence of the revolutionary alternative inside the working class movement. That alternative is currently larger than it has ever been, but small, too small, when judged by the enormity of this task. Yet there is time for us to remedy this deficiency in the struggles still to unfold – if we are clear that the British working class has taken one important step forward and that Tony Blair may yet come to see that he was not its most important beneficiary.
Notes