Who are the lame ducks now? Unite’s Derek Simpson on banking bail-outs

This drive by Derek Simpson, general secretary of super-union Unite – the result of the merger of Amicus and the TGWU – was reported the other day in the Morning Star. A post by blogging comrade Ian reminded me of this, and since I thought it noteworthy, I include the press release from Unite here for your perusal…

This signals that there will be a bit of a struggle from the labour bureaucracy with the New Labour clique over the direction of the party funded by millions of workers (and a handful of capitalists). I’m not sure that anything good will come of it, though if the May local elections result in more Tory gains (God forbid Boris becomes mayor of London) it may be too late for any significant policy reversal, even if it were possible…

Who are the lame ducks now? says union boss
24/03/2008

The boss of Unite, Britain’s biggest union, will today brand private market dogma as a “Lame Duck” as central banks plough in billions to prop up failing money markets.

In a drive to politicise hundreds of thousands of union activists and gear them up to change Labour party policy, Derek Simpson, joint general secretary of Unite, warns that: “At the moment we are paying through our wallets and purses but if things get worse, a full blown recession could mean paying with our jobs.

“If the government can magic tens of billions out of thin air for its financier friends, so it can also afford proper pensions, rights for agency workers and a fully-funded public sector.”

In a letter e-mailed to hundreds of thousands of union activists, Derek Simpson will remind them of the 1970s, when the then Labour government was constantly hounded by right-wingers and free marketeers for propping up struggling public sector enterprises.

Fast forward 30 years and the much-vaunted fully-flexible free market economy is a reality. But the Bank of England has ploughed £11bn into UK banks to prop up the international money markets. This was on top of a similar figure in January. Last week the BofE bailed out the banks again with another £5bn in the wake of the Bear Stearns collapse. All this is on top of the £25bn now on loan to Northern Rock.

Mr Simpson added: “The freezing of the credit markets, the collapse of Northern Rock, fears over the property market and plunging share prices are all failures of the private market system. The private market system has never performed in the way its protagonists suggest. The more it is left to its own devices the more it exacerbates booms and slumps. This is exactly why other social forces – such as governments and, yes, unions – got involved in the first place.”

Unite is mobilising its activists across the regions to get involved in Labour to change Labour party policy. In the last general election Labour lost 4 million core voters. Labour is losing its core support because of its failure to deliver on core issues. Instead the government seems to focus on supporting the lifestyles of the wealthy and privileged rather than hardworking families who want affordable housing, fully funded public services, job security and a decent pension in retirement.

Plus, an insightful article on the struggle of Northern Rock workers from The Socialist:

Northern Rock: Workers ‘gutted’ at the scale of job losses
Northern Rock’s announcement of 2,000 job cuts – around one-third of its workforce – has numbed workers. Although Northern Rock workers we have spoken to were aware that job losses were imminent, they are gutted at the scale of cuts.

Elaine Brunskill, Newcastle Socialist Party

One worker told us: “All sorts of memos about redundancies are flying around. The sales department ceased trading on Friday and they’ve been told they have three months’ notice. An office full of between 250 and 300 people, the biggest department. Just to watch them go is demotivating. Everything is uncertain.”

Northern Rock had grown rapidly to become Britain’s fifth biggest mortgage lender and the biggest private-sector employer in the north east.

Most of the 2,000 job cuts will happen within a year, and will be primarily shared between the Gosforth HQ in Newcastle and the Sunderland call centre in Doxford Park.

Bleak future
One worker is reported in the Daily Mirror as saying staff morale was so low you could be “killed in the stampede” for voluntary redundancies. However, for the majority of Northern Rock’s young workforce there is a bleak future as the impact of the credit crunch takes hold across the financial sector.

Prior to the recent bank run, Northern Rock was regarded as a local success story. One reporter called it: “Globally successful, intrinsically Geordie”. Not only is Northern Rock’s logo on billboards across the north east, but it is also seen on thousands of Newcastle fans’ football tops (the bank is a sponsor of both the football and rugby team).

In July, just weeks before people were queuing to get hold of their savings, a local paper proclaimed: “It’s boom time for Northern Rock”.

The bank’s assets were valued at £113 billion and the deputy chair reported: “We are confident about the long-term future of the Northern Rock.” This was to be a win-win situation – for bosses, shareholders, staff, and the charities the Northern Rock foundation funded. However, behind this facade the future was dire.

According to the Mirror, Northern Rock directors ‘raked in’ £6.5 billion by selling shares just months before the bank crashed. Chief executive Adam Applegarth is reported to have gained nearly £2.7 million in his 18 months of trading. It would take an employee earning £15,000 a year 180 years to earn this much money.

Also according to the Mirror, Applegarth has: “A £2.5 million country pile in Northumberland, a £250,000 flat on Newcastle’s Quayside and a fleet of high performance cars.”

At the same time as Applegarth and other directors were offloading millions of pounds of shares, employees and small investors were being encouraged to buy.

One woman, whose daughter works at Northern Rock spoke to The Socialist, saying: “Applegarth’s off-loaded all those shares. He knew prices were about to plummet. He lives in a mansion – that should be confiscated!”

Whilst the bosses walk away whistling, ordinary workers whose jobs are being axed are facing an uncertain future. The worker we spoke to said: “The redundancy pay offered doesn’t seem much. People with 10-25 years service are being offered a derisory amount.”

Capitalism has had a deliberate policy of encouraging workers to take share options. This was started by Thatcher as an ideological tool and is now embraced by New Labour. While share prices were escalating, a section of workers were wooed into believing they had a stake in the company they worked for. Now this illusion is turning to dust.

The Socialist Party calls for compensation for Northern Rock’s 180,000 small shareholders, which includes Northern Rock’s workers and nothing for the fat cats who own 80% of shares, unless they can prove they need it.

For example, instead of the derisory sum the government will offer workers who gained shares when Northern Rock became a bank, they should be given the value of the shares at the time of demutualisation, plus the interest they would have gained if the money had been put in a Northern Rock saving account.

New Labour’s nationalisation of the bank isn’t about safeguarding jobs, or giving favourable deals to ordinary depositors and mortgage holders. Instead Brown and Darling see it as a temporary measure.

Unfortunately, Unite, the workers’ union, has no strategy to fight these cuts. Unite should be calling for action to defend workers in the stricken bank. If this were to include lunchtime rallies in Newcastle and Sunderland city centres it would gain an echo from workers across the region and give confidence to Northern Rock workers to take the struggle forward.

Pressure must also be put on Unite, which is the single largest donor to New Labour, to disaffiliate and campaign for a mass workers’ party. Imagine the difference if Northern Rock workers were backed by such a party, with elected MPs that used their position to put forward a fighting alternative.

New Labour’s appointment of Ron Sandler as chair, a non-domiciled taxpayer, who is being paid a staggering £90,000 a month, has angered workers in the north east.

Sandler intends the bank to be brutally downsized, then handed on a plate back to profiteers. Capitalism will also use the opportunity to throw mud at the idea of nationalisation.

The Socialist Party’s call for sacking Ron Sandler and our explanation of the need for workers’ control and management of Northern Rock is gaining an echo. This, alongside the nationalisation of all the major banks into democratic public ownership, would pave the way for job security, and mortgages and loans that would be provided at low interest rates.

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