#54 - After four years under Blair, what next for the working class?

April 2001

Behind the official figures

In order to prepare for the future one needs to make a clear assessment of the past, from the point of view of the working class. This is why this pamphlet is largely devoted to trying to draw a balance-sheet of Labour's first four years in government.

For this purpose one should be able to start from the many official figures available. However, these figures are often meaningless. And since they are constantly thrown at us to prove the government's achievements, it is worth taking a closer look at what is behind them.

Take for instance the Gross Domestic Product and employment figures. GDP is meant to measure the wealth created in the country, but it includes many elements which do not actually represent any new value. For instance banking and financial transactions account for nearly 20% of GDP. As if moving money around had ever created any wealth, when all it does is to provide a small parasitic layer of capitalists with a comfortable life on the back of workers' labour! Likewise the employment figure, which is supposed to measure the number of jobs worked, takes no account of the different kinds of jobs - part-time or full-time, zero-hour contracts, casual self-employment, temporary or permanent, etc.. Nor does this figure reflect the fact that many workers have to do several jobs due to the increasing proportion of part-time contracts. All jobs are simply lumped together into one big figure in order to make it look as good as possible. What is more, this figure is merely based on a sample of the population made up of a few thousand people. No wonder the behaviour of the GDP and employment figures often seem completely divorced from the real world. For instance, neither of these was affected by the hundreds of thousands of jobs which have been slashed in manufacturing since the Summer of 1998!

At times, even ministers have been caught at their own statistical tricks. In November 1998, for instance, the publication of the official average earnings measure was "suspended" because of its embarrassing irrelevance. Five months later a commission of academics set up by Gordon Brown produced a new measure - which is still used today. However, the method used to update this figure - which was the main cause of its past irrelevance - remained largely unchanged. To put it in a nutshell, this method involves increasing the measure in line with every wage agreement, taking into account the size of the workforce concerned. As a result it takes no account of the millions of workers who are not covered by collective bargaining - many of whom are among the lowest paid. Nor does it take into account workers on temporary contracts who rarely benefit from wage deals, not to mention the hundreds of thousands of workers whose jobs were cut or contracted out over the past years - which generally implies a pay cut if not the dole. In any case, by now, the measure of average earnings has become meaningless again.

The one thing that can be said about Labour's administration is that they have developed the massaging of statistics into a sophisticated technique. Under this government everything has been assigned targets - whether it be the number of unemployed who must be "counselled" off benefits, the proportion of accurate multiplications that a 10-year old should be able to do, or the number of NHS patients who should be "processed" per hospital bed. Having set all these targets, the role of official statistics is merely to make credible the claim that targets have been met and even bettered, if possible. Forget about the underlying reality. It has no bearing on this government's policies.

All this to say that the glossy figures about this government's alleged achievements in health, education, employment and the economy should be taken with a truckload of salt and in most cases left where they really belong - in the dustbin of parliamentary politics.

Blair's pre-1997 warnings

There is at least one thing on which Blair and the Labour leadership cannot be faulted: before returning to power in 1997, they cheated no-one as to their real intentions!

Much of Blair's "welfare reform", for instance, was actually outlined long before 1997, in 1994, by a so-called "Commission on Social Justice" which had been set up by Blair's predecessor, John Smith. In and of itself, the composition of this commission amounted to a political statement. It was chaired by Sir Gordon Borrie - the then director general of the Office of Fair Trading - as if social justice was no more than a matter of consumers' rights. Other members included the chairman of Northern Foods, one of Britain's largest agro-business groups, Christopher Haskins (now a Labour Lord), the head of research of a major consulting firm and, of course, the bishop of Guilford.

This commission provided a building block for Blair's present agenda by proposing a so-called "Citizen's Service" which would provide placements at £50/w, either with employers or in training schemes. This way the young unemployed would be made to work to earn their dole money and school leavers to accrue credits towards their university grants. As it happened, Blair's "New Deal", which replaced this "Citizen's Service", is very similar to the 1994 proposal. There are differences, though: the New Deal has been extended to all the unemployed under 55 (and soon even to the over-55s according to Brown's recent statement), it is more blatantly aimed at forcing people into low-paid casual jobs and the part concerning students has been dropped and replaced with tuition fees - no doubt because the middle class would resent its kids being treated like the unemployed youth. As to the Commission's proposal that everyone should be made to save for their old age through privately-run compulsory pension and insurance schemes, Blair's new stakeholders' pensions is a first step in this direction. These new pensions may not be compulsory yet, but as state pension provisions are being run down at the same time, the result will be the same in the long term.

From 1994 to 1997, the Labour party, now under Blair's leadership, ditched just about every past commitment they had ever made. They endorsed the Tories' agenda against the working class by dropping their past criticisms of Thatcher's anti-strike laws. They also endorsed the Tories' tax cuts for the rich and even embarked on an attempt to beat the Tory government at its own game by proposing wide-ranging tax breaks for long-term investment in shares. And Shadow cabinet ministers were sent round to social events organised specifically for the City and business world in order to spread the good news.

By the end of 1996, when it was already clear, for all commentators with some sense, that the Tories were on their way out, the pro-Tory business weekly The Economist summarised the situation by writing that the only choice for voters was going to be "between five more years of conservatism under John Major and five more years of conservatism under Tony Blair". In fact this journal had already pushed the reasoning further in previous issues by pointing out that the Tories had become so discredited that they could no longer take Thatcher's reforms any further. Thus, concerning the NHS, The Economist argued that "because Labour would be trusted by the electorate to keep the NHS intact and free at the point of use, it could actually go further and faster than the Tories in improving the system" through "the intelligent use of market forces".

This mouthpiece of big business showed that, by that time, the capitalist class was convinced that Labour was ready to replace the Tories in office and, more importantly, to take the Tories' agenda even further. Not that the capitalists had ever had any doubts about Labour's willingness to protect their interests while in office - the Labour party's long record in government was there to prove that they had nothing to fear in this respect. The only question mark for the capitalists was whether there was any risk of a Labour government overturning some of Thatcher's attacks against the working class for the purpose of increasing its electoral clout. Blair removed this question mark once and for all. By the same token he gave ample warning to the working population and the jobless as to what Labour had in store for them.

How not to create expectations

Pleasing the capitalists and middle-class electorate was not Blair's only problem. There was always the possibility of the working class seeing the Tories' election defeat as an opportunity to regain some of the ground lost by settling accounts with the bosses. Not only had Blair to convince the bosses that he would be capable of dealing with that too but he also had to prepare the ground to avoid, as much as possible, such a reaction on the part of the working class.

Not that there was any sign of a rise of militancy in the years 1994-1997, but the Labour leadership just could not take the chance. And besides, after 18 years of setbacks and attacks from the government and employers, it was virtually impossible to be sure of anything. So Labour made sure that the expectations generated by its return to power would be as low as possible.

This preoccupation was the other reason why Blair went to such lengths to spell out in advance his austerity plans to the working class. The chorus of the Labour and TUC leaderships' warning that there would be neither "free ride" nor "free lunch" under a Labour government was meant to dampen any enthusiasm among Labour's supporters and beyond, among the working class as a whole. It was spelt out that the Tories' so-called "reforms" - i.e. their cuts and privatisation measures - were there to stay and that Labour was as much a pro-market party as the Tories, except that it claimed hypocritically that the capitalist market could be made to serve the "public interest" as much as the greed of the wealthy. Whatever the nuances, it was made clear, therefore, that the working class could not expect any reversal of past Tory policies - but only, at best, a repackaging of the same policies.

This systematic dampening of workers' expectations had spectacular results on election day, in the form of a record low turnout which affected mostly Labour's traditional working class urban seats. In dozens of safe Labour seats, the party's vote went down in relative terms as well as in numbers. The most spectacular case was that of today's Education secretary, David Blunkett, who lost 5,000 votes in his Sheffield seat compared with the previous election. Maybe this had something to do with Blunkett responding to industrial unrest in the railways with a call for the right to strike to be restricted in public services? Or maybe it had to do with Blunkett's outstanding job- slashing record as leader of Sheffield's town council? But whatever was the case, Blunkett was not the only one among Labour's leading figures to be censored by the electorate. Prescott himself got a similar treatment in Hull, as well as Clare Short in Birmingham and a few elsewhere. In fact, the list of constituencies in which Labour lost votes in this way read like a tour of unemployed Britain. Those sections of the working class which had the most accounts to settle with the bosses and the most ground to regain - because of the deprivation imposed on them during the Tory years - obviously felt that voting Labour, or in fact voting at all, would get them nowhere in this respect.

So the Labour party paid for its anti-working class orientation by losing votes. This was entirely predictable but Blair could not have cared less. Thanks to the two-party system and the absence of any serious challenge from the left, he was certain that the working class' determination to see the Tories out would carry more weight than its rejection of Labour's renunciations. And above all, the last thing Blair wanted was to come to power riding a wave of enthusiastic illusions among workers which might have proved difficult to control and, in any case, would have been damaging for the bosses. The fact that Labour's victory was primarily a Tory collapse did not really matter to him since the result, for him, was exactly the same.

A government of "all the people"... in the City

Blair's statement, on the night of the 1997 election, that now Labour was "the people's party, the party of all the people" and that, by implication, this was also true of his government, was immediately exposed as the most blatant lie of the year.

Over the following week, a series of government appointments were announced. It read like the who's who of Big Business. For instance a certain David Simon (now Lord Simon) became minister of trade and competitiveness in Europe. This close friend of Blair, as he was described, was a board member of the mining group RTZ, the insurance group Allianz and the German bank Deutsche Bank, as well as an ex-chairman of BP and as such responsible for over 40,000 job cuts. Then came Geoffrey Robinson, the new Paymaster general who, although a Labour member unlike Simon, was nevertheless a millionaire and a former associate of Robert Maxwell. At the same time, Michael Bates, director of the financial multinational AMP and the engineering group Premier Farnell, among others, was invited to join in, to chair a working party on how to involve private business in the public sector. Soon after, it was the turn of Barclay's chief executive, Martin Taylor, to become chairman of a government taskforce on the welfare system. It would seem that for Blair, being a heavy weight in the financial sector was an essential requirement for determining the future of the poorest in society, since Peter Davis, the chief executive of Prudential, Britain's largest insurance group, was also invited to join this taskforce. Then the media magnate Lord Hollick was appointed to the DTI and Northern Foods' chairman Lord Haskins was put in charge of cutting red tape for businesses. This list could go on for much longer as new appointments of the same kind have been made regularly over the years since then.

Obviously Blair was determined to go out of his way to demonstrate his orientation to big business. No British government had ever had so many top businessmen in its ranks and corridors.

However, the links between Labour's administration and big business go far beyond and much deeper than these few dozen spectacular appointments. It is an open secret in any bourgeois government that ministers never take major decisions without consulting representatives of big business. And of course, Blair's government complies with this rule. Just as its ministers, Blair included, see as their duty to trade London's favours to foreign governments against profitable contracts for British companies. Of course, ministers claim to be seeking to "create jobs" for British workers. But is it jobs for workers or profits for shareholders that they are after? In Sierra Leone, for instance, Blair's military intervention and favours for one of the warring factions led by president Kabbah is entirely aimed at protecting the raw diamond monopoly controlled by the London-based De Beers company. No "British jobs" are at stake here, except maybe those of London-based mercenaries. But even if there were, this still would not justify the role played by this government in fanning the flames of a murderous civil war. But then, of course, none of this is unusual. The governments of all industrialised countries do these "little favours" to their respective capitalists as a matter of course.

What was more unusual, however, was to discover that BNFL, the semi-privatised company which was caught last year delivering nuclear fuel to Germany and Japan under falsified certificates, paid the Foreign Office £500,000/yr to have one of its employees in charge of nuclear issues at Britain's embassy in Tokyo! What is this if not outright bribery? Except that under Blair's government this is common practice as was revealed by the Observer shortly after.

In fact the practice of private companies to second employees to work in government jobs, and even in some cases, paying for the privilege, was first introduced under John Major's Tory government. But it was only under Blair that this practice became systematic. So, in March last year, according to the report published by the Observer, BP and Shell both had staff in Britain's embassy in Washington (i.e. where worldwide oil policy is shaped) and in the Foreign Office's Middle East department (i.e. where oil is produced). The Ministry of Defence had staff seconded by its main suppliers - among others British Electronics (the merger of BAE and Marconi), Rolls Royce and tank manufacturer Vickers. The Department of Transport had staff from Tarmac, Kvaerner, Ove Arup and Bovis - i.e. companies which just happened to be involved in major road programmes. Tarmac had also seconded staff to the Department of Health, together with Taylor Woodrow and the accountancy firm Price Waterhouse, which are all involved in contracts to build or refurbish NHS hospitals under the Private Finance Initiative. British Telecom, BP, Shell, British American Tobacco and the pharmaceutical group AstraZeneca all had staff working at the DTI - the nerve centre of the government's subsidy system to the private sector. As to the Cabinet Office, which oversees the civil service and has ultimate control over the appointment of senior civil servants, it had no fewer than 16 staff seconded by major private groups, including Microsoft.

Of course, when queried by the media about this invasion of the civil service by staff seconded by private companies, the government had a ready-made answer: they said that these were merely people who were providing their "private sector expertise" to the departments in which they work. Isn't it strange though that no private company seems to have seconded staff in any of the many low-paid civil service jobs which are scattered across the country in places like Newcastle, Cardiff or Liverpool? It seems that, on the contrary, all these private sector staff tend to gravitate around the very top jobs and decision centres, just like... wasps around a pot of jam.

Detaxing capital

And indeed the tight links between this Labour government and big business are translated, in practice, into very concrete handouts to large companies in particular and the capitalist class in general.

One of Gordon Brown's very first gestures in his Interim Budget, in July 1997, was to reduce corporation tax - the tax paid by companies on profits - from 33 to 31%. This was in fact the only measure in this Interim Budget to be implemented immediately - in fact it was even backdated to April 1997. Two years later, corporation tax was reduced by another point to 30%, making it the second lowest tax on company profits in the industrialised world. Small and medium size companies were even better treated since their corporation tax was reduced to 20% and even 10% for small businesses.

At the same time, the National Insurance Contribution paid by employers was reduced in two ways. Its rate was cut and the "lower earnings limit" (i.e. the fraction of the wages on which no contribution is paid) was increased in three stages from £63/w to £84/w. This last measure is particularly cynical because it has a perverse, indirect effect on low-paid part-time employees. Indeed, anyone earning less than the "lower earning limit" stops contributing automatically to the National Insurance fund and, by the same token, their basic state pension is reduced proportionally when they reach retirement age. Already, according to TUC figures, 2.5m workers were below the "lower earning limit" at the beginning of last year, when this limit was still at £67/w. With the earning limit now increased by 25%, how many more have been be pushed out of the state pension safety net in that way? Quite a large number judging from the fact that at today's minimum wage rate, this "lower earning limit" represents more than 22 hours a week - that is much more than many part- time jobs. In other words, in order to help Brown to reduce the bosses' NIC bill, hundreds of thousands of workers have been made to lose part of their entitlement to the state basic pension!

Brown did not dare to cut the 40% top income tax rate introduced by the Tories, which is already the lowest in Europe. But he had many other tricks in his bag to reduce the taxes paid by the wealthy. So taxes on dividends have been cut to 32.5% for high-rate tax payers, and the complex system introduced to tax capital gains (i.e. gains made through buying and selling shares) has been left with so many loopholes that it effectively allows many shareholders to pay only 10% of their gains in tax. It must be said that, in addition, shareholders retain a long- established but exorbitant privilege - that of being entitled to a £7,500 tax free allowance on the gains they make on the stock market, that is almost twice the tax-free allowance of a wage-earner!

But Brown could not resist the temptation of putting a real cherry on the wealthy's cake. From April this year, UK residents are no longer liable to the 20% tax they used to pay on income from international bonds. This is all the more ironical because Brown has always justified his tax-cutting rebates on financial profits by claiming this would boost investment in British companies and therefore create jobs - which, of course, was a crude lie since what determines job creation in this society is not the amount of capital available but the profits which are expected. We still have to hear official justification for Browns's latest measure, which amounts to an incentive for UK residents to invest abroad.

However, whatever he may say, Brown's real motives are not very hard to guess. For decades, the City has built its affluence on relaxed financial regulations and low taxes. This meant that London operated effectively as a respectable tax haven, at least for the very rich capitalists, specially those based in North America and the Middle East. However, the advent of worldwide financial deregulation in the 1980s resulted in increasingly bitter competition between the world's financial centres. The City lost ground to some of its rivals - partly to Europe but above all to the USA where a string of British companies transferred their headquarters over the past period. And Brown is basically trying to entice foreign capitalists into moving their legal base to Britain, or at least to convince them not to move out of Britain, by offering them an even more favourable tax regime.

It is difficult to measure the actual value of the handouts offered by this Labour government to the capitalist class through these various forms of tax cuts on financial and non-financial profits. There are no precise official figures available on such delicate matters and if there were, they could not be trusted anyway. But one can get some idea of the general tendency from the fact that over the past four years, the share of corporation tax in the state's tax income has decreased both in relative and absolute value, while profits were increasing substantially. In other words, each year this government has been transferring billions of pounds of state funds to the capitalist class in the form of a reduced tax income.

Does this mean that the capitalists have increased their investments in production? Not at all. In fact quite the opposite. Even the government's figures show this. Between 1992 and 1997, private investment in machinery increased by an average 10% each year. But between 1997 and 2000, this average rate of growth went down to less than 7%. In other words Brown's tax handouts to companies and shareholders have been recycled in services, at best, but more likely in the financial sphere. And despite its hot air about job creation, this government made no objection whatsoever.

If the air we breathe could be privatised...

One thing that most workers took more or less for granted after the 1997 election was that at least Blair would not take the Tories' privatisation drive any further. But in fact they soon lost what few illusions they had on this account as well.

Indeed, one of the first announcements made by the new Labour government, just two weeks after coming to office, went relatively unnoticed: the new government intended to.. privatise the air. Every type of wave band was to be auctioned to the private sector, whether those used by pagers, mobile phones or cabs. Only the existing system of licensing for radio stations would remain intact, under state control. The rest would be a free- for-all. Ironically, Blair was thereby implementing a commitment made during the election - not by the Labour party, but by the Tories! In any case, this was the origin of the chaotic and exponential growth of the mobile phone industry and the main cause for the anarchic explosion of ugly transmission masts all over the country. Of course ministers hailed the alleged benefits of competition. Well, by now, any mobile phone user knows how much of a con this was: with the mobile phone market becoming saturated and controlled by just five companies, prices have started escalating.

But Blair did not just privatise potential resources like radio bands. There were still some state-owned activities that the Tories had chosen not to privatise, either because it had proved difficult to find buyers or because privatisation was unpopular among the Tories' own electorate, or both. Blair did not stop at such niceties. The decision to sell off the Royal Mint and the Tote was soon expedited. But disposing of the three remaining possible targets - BNFL, the company set up to manage both Britain's oldest nuclear power plants and its single nuclear fuel reprocessing plant at Sellafield, Air Traffic Control and the London Underground - was quite another problem. All three activities involved the safety of millions of people and were heavily dependent on large investments. Both Air Traffic Control and the London Underground required an on-going programme of state subsidies in one form or another before there was any chance to find buyers. As to BNFL, which was a highly profitable company, it had huge long-term liabilities, due to the estimated £13bn cost of phasing out its eight ageing Magnox nuclear reactors.

From PFI to PPP

In July 1999, however, Brown launched the idea of a 49% flotation of BNFL, which immediately generated huge indignation across the political spectrum - from Tory conservationists to the TUC leadership. This forced the government to backtrack, but not to give up.

Instead, the proposal was repackaged in a different way, this time as a "Public-Private Partnership" project, or PPP. And in fact, since then, Blair's government has completely given up any talk of privatisation, to use exclusively the term PPP.

It is indeed under PPP that Air Traffic Control was privatised last month. But what this amounted to was the setting up of a private company in which a consortium of airlines bought a 46% stake, while the government retained 49% and Air Traffic staff 5%. The "beauty" of the deal from Blair's point of view is in the small print. On the one hand, as a shareholder, the government can carry on subsidising the new company discreetly. But at the same time it is committed by the PPP deal to sell enough of its share in the near future to allow its private partners to build a majority stake. By this sleight of hand, Blair can boast of having avoided the privatisation of Air Traffic Control and retained a decisive role in its management, while the private shareholders can look forward to taking over full control and still retain the benefit of state subsidies. In short, this is a privatisation under another name and with the incentive of on-going state support.

By now, exactly the same privatisation scheme has been adopted for BNFL while a rather different version, but still under the cover of PPP, is being proposed for the London Underground.

At this point it is worth discussing in more general terms what these PPP schemes are really about.

In fact the origin of PPP goes back to another more limited scheme, the so-called Private Finance Initiative, or PFI, launched by John Major's Chancellor, Norman Lamont, back in 1992. At the time PFI was presented as a kind of ideological brainchild of the Tory party designed to expand a privatisation programme which was running out of steam. But in fact, although PFI was undoubtedly aimed at allowing more profits to be made by the capitalist class out of public services, it was primarily an accounting trick designed to maintain a minimum level of public investment without increasing the government's debt - at least on paper. Instead of borrowing the funds required from the money market or the banks, the government was meant to seek private companies willing to finance a public sector project in exchange for a payment spread over 20 to 30 years. It was a kind of lease-back operation which was not altogether new. Local authorities, for instance, including most large Labour-controlled councils, had been using such tricks already for a long time in order to balance their books.

Of course, the long term cost of such deals was significantly higher than would have been the cost of borrowing the funds directly. It was higher partly because central and local government can always borrow at interest rates which are lower than those available to private companies and because, in addition, the private companies involved in PFI deals made their own profit out of the deal. But the important point for Norman Lamont, particularly in 1992 when the Tory government was in deep trouble due to the pound devaluation, was to keep current borrowing and expenditure as low as possible, even if this meant effectively mortgaging the future resources of the state for several decades at a high cost.

As it happened, only a small number of PFI deals were agreed under the Tories and even fewer were effectively implemented. When Labour came into office, there was never any question of cancelling the deals which had already been signed. Just as the new government made a point of implementing the austerity plans of the previous Tory government, it also insisted on sticking to the commitments made under the Tories. Or at least such was the pretext given by Gordon Brown - according to him, since the plans had already been made, nothing could be done about it, which of course was untrue. And this lie was soon exposed when the Labour government embarked on a comprehensive programme of PFI projects itself.

As early as August 1997, all properties belonging to the DSS, including 700 benefit offices, were sold under PFI to a consortium led by the American bank Goldmann Sachs. The deal was a 20-year lease back arrangement and provided that the consortium would refurbish and maintain the properties, at a cost of course, for the duration of the contract. The same month, all but one of the 740 mainframe computers belonging to central government bodies were sold under a long-term maintenance contract. By August 1998, just a year later, a survey published in the Financial Times reported that £10.4bn worth of PFI deals had been signed since Labour's return to office. About 16% of this amount was accounted for by 66 PFI deals signed by local authorities - which covered projects like refurbishing schools, developing and maintaining a local airport or council buildings, installing central heating in old council estates, etc... However, as the Financial Times pointed out, one third of the total value of all PFI deals was accounted for by just one project - the Channel tunnel link. Altogether, added this business paper, private companies were still reluctant to commit themselves to such deals because of the shortage of profitable assets on offer.

Between privatisation and outsourcing

It was this reluctance which led Labour's think tanks to repackage PFI into PPP, partly because PFI had a bad name among the public, but mostly because they needed more flexibility to convince private companies to get involved. The idea was to extend PFI in two ways.

One direction, as the government's PFI task force explained at the time, was to propose another kind of deal involving a "very low capital value but large revenue payments because they are outsourcing a large chunk of people as well". This was the basis, for instance, on which the work of entire clerical departments in local authorities were subcontracted to private companies - something the Tories had never contemplated. For the private partners, this involved hardly any investment. All they had to do was to cut costs by cutting jobs and squeezing more work out of a smaller workforce - something that any cow-boy contractor does as a matter of course.

The other direction in which PFI was expanded through PPP, was in terms of the state's own involvement and a relaxation of the relatively drastic funding guarantees demanded from private partners. Instead of handing over entire projects to private companies, the state could remain a partner in the joint venture, thereby providing its financial guarantee to its partners but also leaving open the availability of more state funding if need be. Thus, for instance, a PPP deal came into effect in Glasgow's 29 secondary schools last September, with the schools, cleaners and janitors being entirely taken over by a private consortium led by the Miller Group which will own and maintain the school buildings for 30 years. Meanwhile the local authority will retain responsibility for teaching while leasing back the school buildings from the consortium. At the same time, the deal provides for possible investment in these schools by the local authority, to face teaching needs or unforeseen circumstances. On such terms, which place all the risks on the local authority, the Glasgow council had no difficulty in finding a partner.

This is also more or less the model on which the proposed part-privatisation of the London Underground is based. In passing, it is worth noting that this part-privatisation has already been partially implemented. Indeed, two years ago, power generation and part of the electrical maintenance of the Underground was taken over in a 30-year deal by a consortium which involved, among others, BICC and ABB. At the same time the management of ticketing was awarded to EDS, an American company.

A common feature of all these PPP deals is that they are closer to a long-term outsourcing agreement than to privatisation as such. But then of course, there is always the possibility that, at some point during the life of the contract, once the workforce is used to working for private companies, the outsourcing is transformed into an outright sale. On the other hand, as was shown by the examples of Air Traffic Control and BNFL mentioned above, PPP deals can take a form which is much closer to privatisation.

But whatever may be the case, in addition to resulting in drastic cuts in jobs and conditions for the workers concerned, the consequence of all these deals is that, in the coming years and decades, an increasing part of the state's resources will be used to pay for the profits of these private partners. So, for instance, Gordon Brown may well be boasting about his plans to increase the NHS and education budget above inflation over the coming three years - although not as much as he makes it out, by far. But what he does not say is that a significant part of this budget, over and above the promised increase, will go straight into the pockets of the numerous private companies which have signed up to PFI and PPP deals in these sectors, not to mention the many business consultants and financial companies which take their cut of these deals for their entire duration. So that, all in all, the real amount of public expenditure going to services benefiting the population is likely to go down rather than up.

Public services - less and less public

Besides, as always when private profit gets involved in public services, there is a price to pay by the public itself in terms of degradation of the service provided.

The example of the privatised railways is there to show the cost of the parasitism of capital in public services - a cost which is measured in terms of lives lost for passengers and for railway workers, more accidents on the job, deteriorated safety and working conditions, appalling pay and aggravated chaos all round.

Of course, Blair can always blame the Tories, because after all, it was not Labour who masterminded the privatisation of the railways. They can always claim, as Prescott did, that the present catastrophic situation in the railways is solely due to the huge number of companies created by privatisation and the even much larger number of subcontractors operating across the country. All this may be true. But what has this government done to prevent the situation from getting worse after they came to power? They just sat on their hands. And when a predictable accident did happen, they used delaying tactics by setting up public enquiries, whose conclusions were never acted upon, and appointed regulators who were much more interested in the welfare of shareholders than the safety of passengers.

Meanwhile, over the past four years, the railway sharks have been making billions of pounds of profits, mostly paid by the government's annual subsidy. And when yet another accident sparks off such indignation among the public that Blair feels he has to be seen to be doing something, the next thing we hear is that yet more billions of public funds will be thrown at Railtrack to carry out the renewal and maintenance of tracks. There is no question even of any penalty for the big shareholders and managers of this criminal company, let alone of confiscating Railtrack's assets without compensation - which after all would only be legitimate since these criminals have already spent the money which they should have devoted to the renewal and maintenance of tracks. And yet, without bringing the railways back into public ownership, there is no way the massive investment programme needed to resolve the present crisis will ever take place, meaning that this crisis can only get worse.

But instead, Prescott claims to be playing tough just because he got Railtrack directors to allow the government to have an observer on their board. And what difference will this make? Just look at Blair's ministers. When train operating companies like Virgin-Stagecoach have the nerve to increase their fares by 10% because they claim that they cannot bear the cost of this disruption indefinitely without damaging their profits, this government only manages to whine about how regrettable this is. And in the same breath, they congratulate themselves for having renewed the South-West Trains franchise to a cow-boy company like Stagecoach which has a consistent record of inflicting appalling conditions of transport on passengers because of its constant cost-cutting on drivers and rolling stock. How far can Blair and his ministers go in their nauseating submission to the City?

Besides, while Prescott blames the present chaos on the railways on the huge number of companies involved, what else is this government doing in the NHS and local government? Through the combination of PPP and Labour's own version of the Tories' compulsory competitive tendering, known as "Best Value", local authorities are being turned into administrative bodies pulling the strings of a maze of subcontractors. Except that some of these subcontractors are often very large companies, sometimes even multinationals like Onyx or Serco, which have the means to impose their diktat on most local councils. Isn't that a recipe for chaos and brutal degradation of services? Already in London, half-a-million housing benefit claimants have been waiting for their benefits to be paid for more than six months - partly due to Labour's obsession with imposing a constant reassessment of claimants' situations, but mostly because of subcontracting across London's boroughs.

As to the NHS, where PFI and PPP deals are already in an advanced stage, it provides a graphic illustration of what to expect in the years to come if Labour is allowed to carry on with its policy. Not only has the so-called "health market" introduced by the Tories been kept intact in the NHS, and actually aggravated under a different terminology, but as part of deals involving private sector companies, management techniques borrowed from the production line have been introduced in hospitals. Targets have been set for the productivity of nurses, beds, medical equipment, etc.. An article published in the British Medical Journal last year denounced the consequences of these management practices, using the example of Worcester Royal Infirmary, one of the first hospitals to have been rebuilt under a PFI deal, which will open next year. The combination of financing costs, which were underestimated by the contractors and the need to allow them large enough profits has resulted in a significant reduction in the number of beds initially planned. Due to this and to the running down of its only other hospital, Worcestershire will end up with a number of acute beds which is half the national average. In addition, under the management conditions imposed by the contractors who will run the hospital, the number of nurses will be cut by almost one fifth and the ancillary staff by one-third.

In the meantime, to make up for the shortage of beds, equipment and manpower in the NHS, Blair has officially endorsed a practice which is, in and of itself, an indictment of the bankruptcy into which this policy is pushing the health service. The so-called "Concordat" passed between the Health Ministry and private hospitals is effectively codifying the right for NHS hospitals to buy treatment and bed space from private hospitals. Not only is this shocking in that it amounts to providing state subsidies to the profit-making health industry, but it is even more outrageous when one bears in mind the fact that the government is actually putting pressure on NHS hospitals to draw more resources out of private beds in their own wards - which means inevitably pushing for more private practice in NHS hospitals at the expense of NHS patients.

But this is exactly what Blair's "priority" for the health service really means: splashing out "new" billions which will either go straight to private contractors or bolster profit-making operations within the NHS!

Pushing people into poverty

Earlier this month two surveys showed that the number of millionaires in Britain had increased by 17% over the year 2000, reaching 74,000. Besides, 4 million people, or just under 7% of the population, were said to own between £30,000 and £200,000 in cash and shares, over and above their properties, pensions and life insurances.

Predictably, the media hailed these figures as evidence of Britain's "economic affluence" - which is a provocation against the over 90% of the population who do not benefit from this "affluence" and even more so against the large section of the working class which has paid for this affluence through sharp deterioration of its conditions.

But what is this "affluence" really about? When on the opposition's front bench under John Major's government, Gordon Brown was a vocal exponent of the "fat cat" bonuses scandal. But since 1997, Brown has encouraged the same fat cats to award themselves even larger bonuses in the form of share options. This, argues Brown, is to reward "skill", encourage "entrepreneurship" and, therefore, job creation. Except that the beneficiaries of his largesse are capitalists whose only "skill" is usually to have inherited their family's fortune and whose "entrepreneurship" consists of launching one job- cutting programme after another in order to boost their companies' profits. But since the government itself gave a lead by awarding six-figure salaries to all its top appointees in regulatory bodies and other quangos, salary packages have rocketed in top business circles as well. Thanks to this government, the "fat cats" of Major's days look like poor relations by today's standards.

Of course, the rise of directors' salaries and bonuses goes together with the rise in shareholders' income and company profits. The policy of the Tory governments of the 1980s and 1990s was primarily aimed at boosting capitalist profit in a context of economic crisis. Blair and Brown continued this policy, but in an aggravated form due to the capitalists' sharpened appetite. And someone has to foot the bill for this. In an economy which is more or less stagnant, a sharp increase of capital's receipts can only reflect a reduction in the share of the national income that goes to the vast majority of the population.

This is the cause of the "poverty gap", which has pushed millions of people at the bottom of the social ladder into poverty. Among these modern-day poor are pensioners relying on a devalued basic state pension and inadequate means-tested benefit and unemployed workers who have been pushed out of the benefit system by Labour's New Deal without having the slightest chance of finding a job. But a new feature of Blair's rule is that there is also an increasing number of working poor - workers surviving on casual employment, often intermittent and part-time, but without really making a living out of it because wages are so low.

Even the government's own figures cannot conceal the extent of today's poverty. Last year, its statisticians estimated that 26% of the population lived in poverty - that is with less than half the average income. The increase of poverty, including under the present government, is also well-documented. For instance, in 1983, in the early years of Thatcher's rule, it was estimated that 14% of all households lacked 3 or more necessities (such as fridge, cooker, etc..) because they could not afford them. By 1990 this figure had increased to 21%. And since 1997, it has gone past 23% to reach over 24% last year.

Of course Blair and Brown keep repeating their pledge that they will "pull out of poverty" so many millions of people (usually they talk about children because this has more emotional impact this has). Brown has already produced all sorts of tricks out of his conjurer's hat - Working Family Tax Credit, Child Credit, stakeholder pensions, etc.. Each one of these devices are packaged in such a way as to look like a good deal. But they are mere tricks - i.e. what this government promises to give with its left hand will be taken back with its right hand, in the form of lower entitlement to other benefits. All in all the poor section of the population is not better off as a result of these tricks. But it is definitely being coerced into taking casual employment in order to get WFTC, for instance, or into handing over its savings for retirement to private insurers through stakeholders' pensions.

Social exclusion and Labour's gesture politics

As to Blair's claim to wage war against exclusion - to the extent of appointing well-paid officials to a so-called "social exclusion unit" - it is a cynical joke. For instance, Brown's contribution to this war in his last budget was to offer large tax-rebates to companies undertaking refurbishment work in inner-cities. Those who remember the Thatcher period may also remember the result of a similar measure taken by her government after the inner-city riots of the early 1980s to "revitalise" the poorest working class areas. Property developers moved into Brixton, the slums were replaced with new or refurbished buildings and many poor households were forced to move out by unaffordable rents. In fact, fighting social exclusion by excluding the excluded is the usual method of today's Labour governments. Everybody remembers Straw's disparaging remarks about the homeless and beggars who "should be taken off the street" - "out of sight, out of mind", such is the motto of this government!

Meanwhile ministers do not even consider it worthwhile to wage war against the loan shark racketeers who hold the poorest to ransom. Blair is keen to be seen launching his "Universal Bank" pet project, in order to allow even the poorest to have a bank account. This, according to Labour's think tanks, is the way out of exclusion! But what if the only thing the poor can put in these accounts are debts? The loan sharks will remain kings. Provident Financial, for instance, one of many companies in this dirty business, lends an average of £100 over two years. Payments are collected door-to-door weekly (thereby giving salesmen an opportunity to pressurise people to take on more loans) and interest rates are often over 100% if administrative costs are taken into account. It would be easy for Brown to limit this racket, if only by banning these punitive interests rates which are imposed on the poorest - as is the case in many other European countries. But contrary to common belief, loan sharks are not all small fry, by far. With its 1.5 million "micro borrowers", as they are called, and many billions in other businesses, Provident Financial is a City heavy weight. And the last thing this government wants is to be seen infringing the freedom of the City to squeeze profits out of the population, socially excluded or not.

And yet it does not take an Oxbridge graduate to understand the causes of today's social exclusion. It is not due to a lack of skills as Blair keeps repeating, with his arrogant way of implying that the poor are somehow responsible for their poverty. Social exclusion is the product of two decades of mass unemployment and growing casualisation on the one hand, and increasing dereliction in every aspect of social life, particularly housing, on the other. "Wiring" derelict council estates to the internet cannot provide their mostly unemployed inhabitants with a sense of being "included" - contrary to what an idiotic headline trumpeted in The Guardian last month. Nor will "inner-city entrepreneurs" create the millions of real jobs paying decent money that would be needed in order to really pull the poor out of poverty.

On the other hand, when hugely profitable companies cut thousands of real jobs at the stroke of a pen, either by cutting production or by resorting to massive outsourcing with low-paying contractors, it would be vital to stop them before they generate yet more social exclusion. But when this happened with Ford, BMW, Vauxhall, Corus, Unilever and so many others, ministers threw up their arms, stating that such measures were commercial matters in which the government could not intervene. But, obviously, it could have intervened, just as it does in so many commercial matters such as competition issues for instance. Only, jobs cuts are a different kettle of fish. What is at stake there is not just company profits but also the relationship of forces between bosses and workers. The capitalists may be willing to let the state regulate, to some extent, their commercial wheeling and dealing, but not their ability to exploit the working class. Trying to limit, let alone ban, these massive job-cutting exercises would have put Blair on a collision course with the capitalists. It would have been a political choice - the only effective one in the fight against social exclusion - but precisely the kind of choice that this Labour government is determined not to make.

Rights for workers or attacks against them?

It is not just those without regular employment who are paying dearly for Labour's term in office after having paid for the previous Tory terms - employed workers do as well, including those in relatively stable permanent jobs who have been lucky enough not to come under the axe.

And yet, according to Blair's ministers, these workers should feel grateful towards this government for the "new rights" they have been granted over the past four years. But why should they?

Of course, a national minimum wage has been introduced for the first time ever in Britain. Except that its level, which was already appallingly low even when it was unofficially set before the 1997 election, has remained at practically the same level over the past four years. In fact, this minimum wage was never designed to meet workers' needs, but only those of the bosses. Employers needed a cheap workforce. Labour delivered it to them by providing them with legal legitimacy to hire workers on wages which were so low that they should never have been allowed in the first place, particularly at a time when part-time employment was rising rapidly. The fact that this minimum wage was never designed to protect workers against scrooge bosses was spelt out by the ridiculous means deployed for its enforcement - 115 inspectors for the entire country! Besides it provided no protection for self-employed workers, nor did it ban zero-hour and similar contracts - an easy way for employers to bypass the minimum wage legislation by reducing the number of hours for which they paid their workforce. And if four years on, in the run-up to a general election, Blair condescends today to talk about increasing the minimum wage to £4.10/hr by the end of the year, it is still only because the CBI's director general has already publicly given his go- ahead for precisely this figure.

The working time regulations, or 48-hour law, which was introduced subsequently presented similar features. On paper, it looked great. For the first time ever, workers would have a statutory right to refuse to work unreasonably long hours. Except that this law was never intended to work that way.

As it turned out, those sections of the working class which worked the longest hours (transport and catering in particular) were not covered. Moreover, even for the sections which were covered, there was a built-in clause which enabled employers to pressurise their workforce into opting out from the provisions of the law - thereby committing themselves to work any number of hours required of them. But even more importantly, because of the much wider impact it had, this law included a legal framework allowing - and in fact encouraging - employers to seek ways of reversing existing agreements by getting the unions to agree to flexible hours on the basis of "business needs" in exchange for a working week which would be shorter in average over six months or a year. Not only did this mean in many cases the disappearance of premiums for overtime or unsocial hours, and therefore a much reduced wage packet, but it also meant that workers could theoretically be forced to work even longer shift than before for part of the time and that, in addition, they had less control on their own time.

The same kind of vicious loopholes were included in the provisions of the law providing for paid holidays. For a section of the working class, the statutory right to three (and the following year, four) weeks of paid holiday could have been a real improvement. Except that, as in the case of the minimum wage, enforcement provisions are non- existent and there are all sorts of ways for the bosses to ignore the law. For instance, the paid holiday provisions only apply to workers once they have been 13 weeks in the job. It is not hard to guess that this fact alone has led to a substantial increase of short-term contracts lasting less than 13 weeks. Employers have used other means to abide by the law without having to pay a penny more - for instance by cutting wages, which is legal since there is nothing in the law that prohibits it. Others avoid it by relying on temps. In theory temp agencies are considered as permanent employers and, as such, are responsible for providing paid holidays. But often they provide some payment under the heading "paid holidays" in each wage packet, but without giving workers the time off and they get away with it because no-one is there to enforce the law.

Union leaders argue that there is one law introduced by Blair which should be seen as a major landmark by workers - the new employment law which creates a procedure for unions to win recognition. But so far there is no evidence whatsoever that this procedure puts workers in a better position to defend their conditions against employers. Indeed, the recognition procedure is designed to remain entirely in the hands of the union machineries and ACAS, the conciliation service. The workforce concerned can only play a role by voting once. Whether its desire to be represented by a union is taken into account or not is just as much outside its control as it was before this law. Moreover, while this law does provide some rights to outside union officials, it does not give workers the right to organise a union branch inside the workplace nor to have shop stewards on the ground.

All in all, the main feature of this law is to provide the union machineries with a better chance of increasing the number of workplaces in which they have bargaining rights on behalf of the workforce and, by the same token, to increase their depleted membership figures. But to what extent is this a step forward for workers?

For instance, have workers in the car industry been better defended against job cuts over the past two years because of the long-standing union recognition agreements in their companies? In fact, it was the union leaders themselves who went to great lengths to sell these job cuts to the workforce, together with extensive attacks against their conditions. And while the T&G national automotive negotiator Tony Woodley was discussing how to cut worker' jobs and conditions with Ford or Vauxhall managers, instead of seeking ways of organising a fightback, another national official of the same union, Jack Dromey, was sitting in Blair's PFI commission and the union's national secretary himself, Bill Morris, was wasting members' dues in meetings of the governing body of the Bank of England and of the House of Lords' reform committee. What do workers stand to gain from these bureaucrats wielding more power, when they are so comfortably integrated in the bosses' system and, therefore, very unlikely to ever want to rock the boat?

Of course, the course of events might have been very different had the balance of class forces been less unfavourable to workers. There is no example of past governments introducing laws concerning workers' conditions which were not full of loopholes designed to provide the bosses with ways of twisting the law to their advantage. In the 1970s, when Heath's Tory government or Wilson's Labour government introduced legislation, it was the resistance of the working class (or even just the threat of it) which kept the bosses from using these loopholes. But during the past four years a general climate of impotence prevailed resulting from a long period dominated by unemployment and setbacks in the class struggle - an impotence which was reinforced by the union leaders' systematic policy of "partnership" with the bosses in order to boost their profits. In this climate, the bosses were bound to feel confident enough to take advantage of any possible trick to use the new laws against workers. Blair and his government knew this very well. But instead of reducing these loopholes to contain the greed of the bosses and provide workers with a bare minimum protection (all their talk about major "new rights" was pure hot air, of course), they knowingly chose to enlarge them as was shown by the lengthy process before the adoption of each one of these laws, in which they repeatedly backed down in front of the bosses' demands. It is their pandering to the capitalists' favours which has resulted in so many stabs in the back of the working class.

Where is the Labour party heading?

In the early 1990s, Labour's shift to "New Labour", was seen by many people as a fundamental change in the party's nature. This was particularly the case on the Left but also, although to a much lesser extent, among Labour's rank-and-file members and supporters. After Blair managed to get Clause Four thrown out, the same people declared that Labour's transformation was now completed - it was no longer "the party it used to be."

However, it is one thing to feel in solidarity with those working class Labour supporters who feel betrayed by their party - and we do. But it is quite another thing to encourage illusions in Labour's "good old days."

Indeed, it would be an illusion to consider Labour's policy today as fundamentally different from what it was, say since World War II as Labour's postwar policy is often counterposed to Blair's policy. The reality is that long before Attlee's postwar government, Labour had already ceased to be a reforming party - that is a party which was prepared to enforce social reforms or even protect the basic material interests of its working class supporters against the greed of the capitalist class.

If the postwar Labour government created the NHS, it was primarily because the damage caused by the war to the country's economy and the health of its population made it necessary for the state to intervene, at the lowest cost possible, in order to provide the capitalist class with a workforce that was fit to work. As a result the NHS was formed, not as an entirely new project designed to provide for future needs, but by piecing together the patchwork of decrepit health institutions that had existed so far. State funding was used because private sources of funds just did not exist for such a venture, and centralisation was adopted as the cheapest way to do it. This is why, right from the word go, the rationing of care was one of the features of the NHS.

If the same government nationalised whole sections of the country's heavy industry - although not those that were profitable - it was only because the capitalist owners of these industries were not prepared to fork out the long- term investment required to modernise facilities which had become obsolete during the war. By the same token, these nationalisations were a means to subsidise capitalist profit on an unprecedented scale since, in addition to paying an exorbitant price for valueless shares to their owners, the Labour government took responsibility for providing the rest of industry with the coal, gas and electricity, railway transport, etc.. it needed to operate private factories.

What was different in the postwar period - which dictated Attlee's policy - was on the one hand the destruction of the economy caused by the war and the lack of investment in the period preceding the war and, on the other hand, the fear of the capitalist class that the working class might take revenge for the hardship it had suffered against the war-mongers and profiteers. After all, the memory of the revolutionary wave following World War I was still vivid and the capitalist class was prepared, at least in the first years, to keep a relatively low profile rather than risk triggering an explosion of anger.

This is why there was in fact a consensus between all parties, on the setting up of the NHS (it was actually the implementation of a project drafted during the war by a Tory minister), the nationalisation programme (the Tories only objected and very mildly to Attlee's part-nationalisation of steel) and the welfare state in its original form - i.e. as a basic safety net against poverty for all. This all-party consensus only reflected a consensus within the capitalist class itself. And the main parties - including Labour - only implemented what the capitalist class considered necessary and possible in the given situation from the point of view of its own interests.

In this respect, the Labour leadership never changed its policy since. It has always implemented the desires of the capitalist class while it was in office. Only when it was in opposition, and even then in very cautious terms, has Labour ever challenged the demands put by the bosses on workers, for the sole purpose of maintaining its electoral support among workers. What has changed since 1945 is not the Labour party as a political instrument of the capitalist class, but the circumstances which determine the demands of the capitalist class itself.

In the 1970s, following the return of the world economic crisis, the capitalists were all too keen to be bailed out by the state, then under a Labour administration. State intervention in the economy was not considered a swear word in business circles in those days, because this was a channel for the massive investment in the economy that the capitalists were not willing to make. Nor did Wilson meet much opposition from business when he encouraged the closed shop system in factories or introduced SERPS, the second state pension. This was considered by the capitalists as an acceptable use of government authority and state funds at a time when the working class was showing a certain degree of dynamism which, in the bosses' view, needed to be tamed by using adequate carrots.

It is worth noting that although Thatcher was quick, after arriving in office in 1979, to launch a drive against SERPS, she took a lot more time to make moves towards privatisation. There were good reasons for this. Capitalist profits only returned to their pre-1974 level in the mid-1980s, thanks to state funds and to the brutal rise of unemployment. Until that point, the bosses wanted the state to carry on funding the necessary investment in heavy industries. It was only then, once profits had returned to a high enough level, that Thatcher's programme of large-scale privatisation came on the agenda.

But this return to high profitability did not mean that the capitalists were more willing to invest in long-term projects than before. Instead they required the help of the state to screw more profits out of the same labour force or even, when possible, a reduced one. Productivity gains were made by increasing exploitation, not by increasing investment. And the state went on subsidising profit through different mechanisms, like tax rebates, for instance, regional subsidies or bargain-basement privatisation.

On all accounts, the capitalists' appetite was whetted by the effect of unemployment on the balance of class forces. The defeat of the miners' strike, in 1985, was the consequence of the policy of the trade-union leadership, both the TUC and that of the mining union. But the fact that such a long and militant strike did not generate a more powerful spontaneous echo in the rest of the working class, showed the lack of confidence that existed in its ranks. This is the kind of lesson that the bosses are always quick to learn. Because they saw a weakened working class, the bosses felt stronger. And they came to view the idea of the state spending large amounts of its resources on social expenditure as less and less acceptable. So with time, the pressure was increasingly on governments to reduce social expenditure as much as to "leave business to take care of business". In reality, all this concealed the fact that an increasing part of the state's resources were to be diverted towards the capitalists' coffers.

It was against this background that Labour returned to power in 1997. And the new Labour government did what all past Labour governments had done before: it played by the rules set by the capitalists. Only these rules seem more intolerable than they had been in the previous decades, and so they should. But this is only the result of the confidence of the capitalists, in other words the result of the balance of class forces being so tilted against the working class at present. Should this change so that the bosses feel that their profits may be threatened and that it is time to give some ground in order to avoid much worse, we would see Blair and his colleagues falling over themselves on TV to use a very different language with regard to the situation of the working class.

In the meantime, of course, a whole generation of Labour party politicians have been trained to deal with the working class using the methods and language of personnel managers. And maybe a section among them would rather join the Tories than go back to Labour's old language. But for most, it is more a question of packaging than a question of content. As a famous revolutionary socialist of the last century used to say about contemporary equivalents of Labour politicians: "they are like radishes - peel the red skin and it's all white inside." This is still an adequate description of the Labour politicians of the past sixty years - except that Labour's skin had already faded to a light pink a long while ago...

The end of reformist illusions?

What are the consequences of today's disillusionment with Labour among the working class?

Many people on the Left argue that Blair's "New Labour" means the "death toll of labourism." Having no crystal ball, we cannot know this. However, there is every reason to believe that such an obituary is premature.

Of course, there is the ever increasing voter abstention in working class areas. But is this something to rejoice about? It is one thing to say that as a result of Labour's reactionary policy in government, a growing section of the working class no longer believes in elections to bring about change - which is what this increasing abstention clearly shows. But it is quite another thing to draw from this the conclusion that this section of the working class is looking for means to fight the attacks to which it is subjected. If this was the case, we would see signs of an increased militancy emerging here and there. Unfortunately, there are no such signs. In this respect, one should bear in mind the example of the USA, where a large section of the working class has kept away from the ballot box for decades, because the existing political parties all looked the same to them, without this being translated into any kind of radicalisation.

As to labourism, it shows no real signs of weakness. The trade-union and municipal machineries from which the Labour party draws its social weight have hardly been affected by the course taken by the Labour leadership. On the contrary, the bureaucrats at the top of these machineries have proved quite happy to follow Labour's shift.

Trade-union leaders who had always aspired to be treated as equals by employers are now able to boast openly of how useful they can be to help companies to improve their profits. "New Labour" can even offer them new career prospects as was shown by the meteoric rise of Tom Sawyer, a former deputy general secretary of NUPE (one of the local government unions which formed UNISON) and former president of the Labour party: Blair made him a Lord and Blair's friend, the union-busting chief executive of Reed Personnel Service PLC, made him a non-executive director. No doubt the many temps subjected to lousy conditions by Reed appreciate the irony of this situation!

As to Labour local council leaders, who had always been split between their budgetary constraints and the pressure of the electorate, they are now officially encouraged to adopt a "tough business-like line" against both their constituents and their employees. And they have shown no reluctance in putting on the clothes of "public managers" in setting up partnerships with private companies at the expense of local services and council workers' conditions.

Of course, tens of thousands of members have left the Labour party since the 1997 election and millions of trade- union members probably feel that they have been left high and dry by their leaders' "partnership" with the bosses. Nevertheless most of them are part of the millions of working class voters, including many who are deeply hostile to Blair's policies, who still believe that this Labour government is the "lesser of two evils." More importantly they do not believe that there can be any choice other than to wait for some party to come to power through the ballot box in order to sort out this mess for them.

In other words, regardless of the discontent generated by Blair's policy, reformism - i.e. the illusion that things can get better for the working class without a major confrontation with the capitalist class - is still overwhelmingly dominant in the working class. And it is this illusion which is the real problem and the main obstacle to any real change in society, not the future of the Labour party itself.

Rebuilding our strength

This does not mean that nothing can be done, nor that the present situation does not offer new possibilities for the working class. Far from it. But it does mean that the road to changing the course of events is still long.

For over two decades the balance of social forces has been drastically tilted against the working class. This has created a sense of impotence which does not reflect, by far, the reality of its strength. Whatever Blair and his accomplices may say, the working class is not a spent force. It still produces all the wealth in this country and across the world - while the enormous profits made on financial markets are only diverted from the flow of material wealth created by the working class. On paper, manufacturing employment may be down to less than five million, but this is ignoring the millions working in industrial services and related industries. Besides the barrier between production and service workers, including office workers, has become so thin that in low-paid jobs workers often go back and forth from one sector to the other. So that, all in all, the strength of the working class today is comparable to (if not larger than) what it was two decades ago.

Most (although not all) of the huge factories of the past may have gone. But there are still huge industrial concentrations of large and smaller factories in most large towns across the country. This only means that, unlike so many times in the past period, workers who want to fight back will have to break from their isolation in their respective companies in order to join forces with those of other companies in a joint fight for common objectives against different employers, at first, and ultimately against the capitalist class as a whole.

Indeed, we are faced with a well-coordinated enemy. Companies may have different names, they may even be rivals in a commercial sense, but when it comes to exploiting workers, they have a common purpose and, above all, a common war machinery - the state, its government and parliamentary institutions, its conciliation bodies and tribunals, not to mention the bosses' organisations which tend to be much more pro-active in coordinating the bosses' attacks than the TUC has ever been in coordinating the fightbacks of the working class. The sectional straightjacket which the bosses, its government and its tribunals collude with the union machineries to impose on workers has been allowed to disarm the working class for too long.

Breaking from this sectional straightjacket in order to build up a fightback will inevitably come up against a determined opposition on the part of the union leadership. But there is no other way.

Workers will have to face the determination of the union leaders not to damage their cosy relationship with the bosses. For much too long the union machineries have paralysed workers with fairy tales of "partnerships" which tell how their fate depends on helping their employers to increase their profits. But as the hundreds of thousands who were made redundant in large profitable companies over the past four years discovered bitterly, higher profit does not make the bosses less vicious - it only makes them even more greedy!

It is not the "market" that generates profit, as the bosses' lies maintain. Since overall they hardly invest, except to replace the most worn out equipment, higher profits can only result from exploiting fewer workers. Isn't it high time that this vicious circle is stopped and that the bosses are made to pay for the damage they have caused over the past decades?

And when it comes to really forcing the bosses to foot the bill out of their profits, this is a fight that cannot be fought effectively in just one factory. Workers will not prevent multinationals like Ford, Vauxhall, etc.., whose headquarters are in the USA and whose production is already scattered all over the world, from moving production elsewhere. At best, they can make it more expensive for these companies to cut jobs and close factories - and even then, only by creating mayhem much beyond the gates of their own plants. But stopping General Motors' production worldwide was beyond the reach of the Luton plant workers.

Nor can workers in tiny companies hope to force their employers to provide decent wages and conditions, as many of these tiny employers can only survive by over-exploiting their workforces.

Yet there is a solution for the working class as a whole, but it can only be a solution at the scale of society as a whole.

Indeed, there is, in this country, a capitalist class which is bursting at the seams with profits and enormous stockpiles of wealth that could be put to use for the benefit of the population as a whole. Who cares if those made to pay for the job cuts in one company are the big shareholders of another company? The capitalists have a collective responsibility in forcing millions of us in unemployment and casual jobs. They could and should be made to pay collectively, whether it is to stop job cuts, provide the unemployed and casual workers with decent jobs, rebuild public services or provide safe and cheap transport and housing for all.

Collectively, the working class has the strength to force the capitalist class and its government to do all this. It will require a large-scale and determined struggle, in the streets and the workplaces, using the weapons of the class struggle. It will require a programme of clear objectives including, in particular: that the state should ban job cuts in profitable companies under threat of confiscation of these companies' assets; that all privatised public services should be brought back into public ownership without compensation (the shareholders have already paid themselves back several times over anyway); that capitalists' profits and wealth should be taxed heavily; that the resources of the state should no longer be used to line the pockets of the rich through all kinds of disguised subsidies to companies, but should be used instead to create real jobs to carry out useful work under the control of the public; that all wages should be increased and casualisation brought to an end by giving all workers the same rights from day one of employment.

This is not an electoral platform that any party can be trusted to carry out once in office. It is a programme for a general fightback of the working class, the fightback that has to be built if workers are ever to regain the ground lost over the past period and even to stop further attacks on the part of the bosses and their governments - whether under Blair or not.

But the working class will also need a political party of its own to articulate this programme and promote the need to fight for it. It will need a party that will not allow itself to be integrated in the parliamentary institutions of the capitalist class - these so-called "democratic" institutions which are only democratic for those who defend the interests of the rich but allow no real say to working people. The working class will need a party on which it can rely to unfurl its banner in the future struggles and take the lead of these struggles resolutely, because it will not be afraid of rocking the boat of any government nor of confronting the vested interests of the rich in the City. And it is the tasks of today's revolutionaries to prepare the ground for tomorrow's emergence of such of a workers' party.

April 2001