Labour’s recession is far from over

The big story of the past week, along with the preceeding resignations by Blairite ministers trying to topple Brown?

Millions of Labour supporters stayed home; two fascists won seats in the European parliament on a reduced turnout. Yes, their vote fell, but they won seats because of the low turnout.

I won’t give you the obligatory post dedicated to how and why they made a breakthrough. Oxygen of publicity and whatnot.

So, Brown’s clinging on, having ceded more power to Lord Mandelson, who is now virtually deputy Prime Minister – and unelected, like many in the reshuffled Labour cabinet. Having faced down the parliamentary party in a stage-managed meeting, Brown’s hoping that an economic recovery will save his premiership.

Darling, in situ as Chancellor, despite rumours the PM wanted to replace him with Ed Balls, warns against complacency in seeing “green shoots” of recovery. As well he might, he knows how much government spending will have to be directed towards those made unemployed. Oh, and the banks – mostly owned by the public these days – they aren’t lending to our manufacturing base…

Mandelson, negotiating with the new owner of Vauxhall, is unable to guarantee jobs will stay in the UK. So much has been devoted to bailing out the banks, there’s not much room for manuoevre – not unless there’s another radical change in approach.

A senior Tory let slip that they intend to cut spending by 10% on all but health, education, and international aid, if they win the next election. To Labour’s cries of “Tory cuts!” – the nearest they get to a class analysis of Her Majesty’s Opposition – the reply comes, from both the Tories and the corporate press, that Labour is committed to 7% spending cuts across the board.

As Ann Pettifor has pointed out, to cut spending in the next few years will be a disaster for an economic recovery:

As things stand, any fragile signs of economic recovery will quickly be crushed by the failure of government to intervene and spend at an appropriate level. Instead, government cutbacks will impact with considerable force on the fragile economy, and will hurt the middle and working classes. As the year proceeds many will discover the true, and often pitiful value of their pensions, and will be hurt by cuts in services and job losses in the public sector. This will hamper recovery and deepen, if that is possible, the alienation of British voters from the Labour government.

And don’t forget, this is the woman who was writing about the debtonation before it began.

She continues in the same article to outline the blades which may slice through any “green shoots”:

Foreign direct investment could fall globally by 45% this year, according to the same report, and corporate profits will decline by 20-25%. Global trade is down 25%, and the EIU predicts trade will be down by 10-15% by year end – the worst figure since 1945.

In April this year, consumer prices turned negative in the US, the UK, Germany and Japan. This may be good news for consumers, and may help lower food prices for the poor, but it is not good for the economy as a whole. Businesses cannot profit from negative prices, so they are bankrupted and lay off employees. The rocketing numbers of unemployed (whose plight is seldom taken seriously by orthodox economists) will cut back on borrowing and shopping and may even default on loans. This is not good news for the productive sector of the economy, and it’s very bad news for the banking sector. Banks have still not fully de-leveraged the debts on their balance sheets. Now, thanks to rising unemployment, non-performing loans are “set to rise sharply around the world over the next 12-18 months” according to the EIU. This is very scary, if one considers that there are still $600tn of liabilities in the form of derivatives on balance sheets out there – backed up by a mere $38tn of so-called credit default swaps (in reality a form of insurance on derivatives).

More banking trouble, in other words…

Pettifor concludes:

Nothing has been done to restructure the global economy and limit financial imbalances – including Anglo-American deficits and the Chinese surplus. Indeed these matters were not even discussed at the last G20 summit. Big, reckless money continues to be made from currency speculation, just when the global economy requires currency stability.

We – employees, consumers, investors and borrowers – have been misled and fooled by the economics profession and finance sector for years before this crisis. As a result of our gullibility, we lost $60tn of wealth in the past year. We would be wise now to dismiss their vain efforts at confidence-boosting, and instead rest our judgments on the real world economic outlook.

Back to politics, word is that Balls and Darling are split on how to present the supposedly “inevitable” cuts in public spending.

Hardly confidence boosting!

As far as this modest blogger can tell, the debate isn’t on what to cut, but on when to admit the cuts are coming.

In the leadership challenge that never was, the unions didn’t bark – despite the looming cuts and failure to aid the car industry. For sure, a change of leader – even to someone more in touch with the needs of ordinary people – would bring forth a general election at the worst possible time. With MPs expenses hanging in the air, Labour voters are unlikely to show up at polling stations and register support for the party any time soon.

For the Labour grassroots, there’s no difficulty in choosing between Trident, PFIs, the Afghan war, ID cards – or investing in a new generation of social housing, a Green New Deal, and helping workers to stay in their jobs. However, there’s no means by which the party’s grassroots can influence policy; even the parliamentary party has a tough time defeating unpopular measures, like Royal Mail privatisation, which hasn’t yet been ditched.

According to opinion polling, most voters agree Labour has abandoned its traditional supporters and believe that the Tories are most interested in helping out the rich. So what gives with the BNP victories, then? Well, it’s worth remembering that the Green vote was up – they campaigned on job creation through a Green New Deal to invest in energy efficiency and renewable energy industries, all very practical. But if your main themes are not echoed in the media, it’s difficult to get ahead. The upcoming by-election in Norwich could see the Greens win their first MP, should the support be forthcoming.

In the meantime, I’m wondering exactly where this announcement by John McDonnell will lead:

If we go beyond November without real change visibly under way, what hope is left of Labour not only remaining in government but also surviving as an effective political force at all?At that stage the only responsible act in the long-term interests of our movement would be to offer a real change in political direction by mounting a challenge to the political leadership of the party and letting the members of the party decide. Let me give notice now that this is the path I will take. If this route is blocked again by MPs failing to nominate, then the alternative is Labour MPs making it clear at the next election that they stand on a policy platform of real change as “change candidates”.

Of course, they will be standing as Labour candidates but binding together as a slate of candidates committed within Labour to advocating a change programme, setting out the policy programme they will be advocating as a group and supporting in parliament if elected. Only in this way can we demonstrate to the supporters that want to come home to Labour that there is the hope and prospect of change.

I can’t see a policy debate being tolerated, not without the capitalist media emptying another bucket of shit over the heads of New Labour and calling for a Cameron coronation. Hence the talk of the Blairites toppling Brown without recourse to either the PLP, the members, or the unions – with the Cabinet nominating one of its ranks to become party leader and PM.

So, the question is, will McDonnell and co. defect to form a new workers’ party? If not, will parties like the Greens back this new “change candidates”?

LDV: the bailout has failed, it’s time to nationalise

Hundreds of jobs are in jeopardy at van-maker LDV and its suppliers after the company went into administration yesterday.

The firm was going to be bought out by Westar, a company based in Malaysia, after being owned by a Russian oligarch who is a friend of the Business Secretary Lord Mandelson.

Mandelson had agreed a five million pound bridging loan, but Westar is unable to raise funds, and the deal has collapsed.

For the workers at the company and its suppliers in Birmingham, the last few months have been incredibly stressful – like thousands of workers at Vauxhall’s plants in Luton and Ellesmere Port, they fear unemployment and the heartache it brings to families.

As soon as I heard that the company would be taken over by an overseas firm, I feared that the result would be the outsourcing of production – in other words, factory closures here in England.

This cannot be allowed to happen, either at LDV or Vauxhall.

There’s no reason why the government can’t step in like it did with the banks – here there are sound economic and environmental reasons for acting. As I’ve said before, there will be a market for fuel efficient vehicles once demand picks up, and if the productive economy is not rebuilt we will suffer a decline in living standards.

Short of nationalisation, these auto firms could be converted to cooperative ownership, with the government providing a loan out of the billion set aside to help the car industry.

Workers at Visteon showed the way forward by occupying their plants to demand justice. This is the only effective course of action open to workers at LDV and Vauxhall.

Organise, occupy, nationalise!

Nationalise Vauxhall!

Car production in the UK is efficient, let no one fool you about this. Plants which produce cars are linked to plants which produce parts – there’s a supply chain to consider. Also, many work in other services which are dependent upon skilled workers spending their wages.

We need to have cars which are energy efficient – though effective demand has slumped globally, we all know this is due to our chaotic economic system, not to the car being made obsolete.

It’s not Rover!

Four years ago Rover went under – the government could have nationalised the company and set up a joint-venture with the Chinese, the company ended up in China selling to their domestic market.

Instead the government let Rover go, and now many of the skilled workers formerly employed by the company are in lower skilled and lower paid jobs.

The same mistake cannot be made again – the government has bailed out the banks which have failed to get lending again.

There’s no doubt that if Vauxhall is bailed out, we’ll see a return – with new energy efficient cars being made at UK plants for sale across the world as demand recovers.


Whilst other EU govts get their checquebooks out, the UK govt is nowhere to be seen. At the negotiations, there’s no one to represent car workers in Luton and Ellesmere Port – remember, UK workers are easiest for big businesses to sack in the EU.

It’s a sickening sight – “Lord” Peter Mandelson pretending he’s got a guarantee against mass lay-offs and blaming unions for scaring workers when he knows that’s what will happen.

At least he’s the sense to stop wittering on about protectionism – we all know that when the rich cry poverty the money flows from the government to protect their corrupt system.

But when thousands of skilled workers face uncertainty, New Labour are too spineless to step up to defend them, fearful of a backlash from the super-rich. Mandelson and co. are so eager to please them that they will allow no concessions to working people – look at his actions over Royal Mail where most people oppose privatisation, even within New Labour.

The threat of a good example!

Car workers at Luton and Ellesmere Port can follow the example of the Visteon workers who occupied their plants to demand justice.

There would be no shortage of support, no limit to the solidarity that others would demonstrate.

We own the banks now – we can get them to invest in the car industry.

Don’t despair – organise, occupy, nationalise!

Visteon workers fight Ford liars

An inspiring response to economic destruction:

Occupy! Fighting for jobs at Visteon plants

The leader of the attempted occupation of the Visteon plant at Basildon (component supplier to Ford) speaks to Socialist Appeal. After the ending of the occupation, the workers have maintained a twenty-four hour picket on the factory. Belfast and Enfield remain occupied.
I was the former deputy convenor at Basildon up to 2003. I am affected personally by the threatened closure. I, like other pension holders, find my pension is in receivership with the government. It was our duty to come here in solidarity with the present workforce and with the former workers and pension holders.  We arrived here at 10am on the day after closure was announced. There was divided opinion as to whether to occupy. The advice from the union (Unite) was that occupation would be illegal.
We then took a vote on whether to ignore that advice. Two dozen of us voted to ignore the advice and occupy. I led the occupation through a back gate. We got in completely unhindered. We occupied the plant from 10 onwards, conducting radio interviews and generating publicity for the occupation.  When we were discussing at the gates at 10am against the argument that occupation would be illegal, I argued that if the Chartists hadn’t committed illegal acts we wouldn’t have universal suffrage; that if the Tolpuddle Martyrs hadn’t broken the law and been transported, then we wouldn’t have a trade union movement; and if the suffragettes hadn’t fought the law, women wouldn’t have the vote.  It is better to break the law than break the poor, as the slogan from Poplar Council in the 1920s reminds us.
With the smallness of our numbers, there was a build up of police during the course of the day. There were about 120 police in riot gear, with police dogs barking and a lot of intimidation. They were walking through the factory and peering into the board room, which we had occupied. A police negotiator turned up and told us we’d all be arrested. Five of the 24 decided to go up on the roof, as had happened at Enfield, where they had 80 on the roof. The roof here was unsafe and that didn’t give us confidence, and what with the smallness of our numbers and concern about being arrested, we voted to end the occupation. So we walked out in a dignified manner to tremendous applause.
Although the occupation didn’t succeed, it gave our cause tremendous publicity. We were having discussions throughout the day with the workers while we were occupying. We were discussing the reasons for the collapse and the question of the whole capitalist system, which has caused the crisis.  Waterford
In Belfast the police hadn’t been near the plant. The factory is in the Falls Road and they’d made no attempt to interfere. At Enfield they got a court order, an injunction, against the occupation. However the injunction had a technical mistake in it, so the occupation continued. The whole question of the occupation was inspired by the occupation of Waterford Glass in the South of Ireland. There have been massive demonstrations in Dublin, and movement in unprecedented numbers throughout Ireland. The idea of occupation spread to Belfast and from there to Enfield and to Basildon, where we have had a partial success. The occupations have been an inspiration to all workers.
The whole idea of occupation came from tactics used by the labour movement in France and also in the USA. General Motors at Flint, Michigan was occupied in the 1930s. There were sit-down protests to establish trade unions at Flint. Workers draw inspiration from other movements. This could be repeated on a large scale. The lessons have been carried from Waterford to Belfast and then to Enfield and Basildon. The tradition of occupation has started in Britain and will  be firmly established.
The closure is not just because of the crisis but because of management taking advantage of the crisis. They are doing what they are doing to make a profit. They have deliberately run the company into the ground, and moved jobs to Slovakia where the wage differential with British wages is 7:1. This is a prime example of capitalists squeezing workers and trying to squeeze, cajole and drive down conditions.
A document has been retrieved from Companies House by the local MP. Visteon management set up a new company on January 28th.They have the deliberate aim to bankrupt us and then reopen as Visteon Automative Products, as a new company with the same machinery and a new workforce with lower wages and conditions. This is the ugly face of capitalism. There is only one way to end this profiteering. We have to occupy and take production of goods into our own hands. The solution is nationalisation under workers’ control and management. There must be production for need, not profit. In other words get rid of the capitalist system, which is rotten to the core.

Ford Liars!

Documents leaked to the Belfast Telegraph reveal that Ford made cast iron guarantees to Visteon workers that they would not lose out when the new components supplier was spun off in 2000.
“Accrued seniority and all existing terms and conditions, in particular pension entitlements, will be transferred to the new employment contracts,” the documents state.
“For the duration of their employment, terms and conditions will mirror Ford conditions (including discretionary pension in payment increases) in the respective countries (lifetime protection).”
The agreement also noted that before the full spinoff Ford employees working in Visteon activities were eligible to volunteer to be reassigned to Ford and that all collective agreements, including investment and employment security agreements, would be fully adopted by the new company.
Davy McMurray from Unite said the documents are proof Ford has ongoing responsibilities for its former employees.
“How they can say there were no guarantees is beyond me,” he said.
Ford asserts it is under no “legal or moral” obligation to help Visteon UK employees.

How to get credit flowing? Nationalise the banking sector, say Tories

(Only kidding about the Tories bit! The rest of it is true, but please, stay with me…)

Wonko, for one, is not happy. No wonder: Paul Mason noted that on Friday

Wrekin Construction – a business with £50m of orders reportedly on its books – went into administration. It told the press that RBS had refused to extend an overdraft: it needed £3m. Now 600 civil engineering and railway construction jobs are at risk – and we’re supposed to be in the middle of a government-driven civil engineering boom.

It was partly Paul Mason’s insightful post that made me pen the following comment atDuncan’s Economic blog

Arguably the best way to get credit flowing again is for the banks to be nationalised. I think this worked in Sweden quite well and here’s why:

Commercial decisions will still be made on who to lend to and at what cost to the lender – but public ownership will get around the one big obstacle, which is that the people running banks are looking to provide returns to the owners and so make decisions on lending in a different way. Instead of being cautious about lending because they are mindful that their job is to give a return to investors, they will be more eager to lend, but nonetheless mindful of risks, etc. We can see the government has reversed its previous policy with Northern Rock.

With public ownership it’s not about the sectional interest of shareholders (or even, the government as shareholder) but about the interest of the whole of our economy in the long term – ensuring that productive enterprises get the financing they need.

The big problem with all of this will be the EU’s rules on these matters. Sweden’s banking crisis and it’s recovery happened prior to the country becoming a member of the European Union. The political right likes to paint the EU as some kind of warmed-up Soviet Union, but in fact EU institutions would probably oppose nationalisation of the private banking sector on several grounds (competition rules, the rights of shareholders, etc.).

Now, it’s the kind of measure that might need EU approval, and might take a damaging length of time (look at the govt assistance to our car manufacturers – it was held up while the European Commission vetted it). But the government will have to be tough and say it will take the consequences from the Commission.

As to the future ownership in the banking sector, I think we would be wise to learn the lessons of this crisis: the shareholder-as-owner has proven dangerous.

Which financial institutions have been responsible and have not needed public money to bail them out? The building societies, owned by their customers: no one expects from building societies anything other than boring banking – no financial wizardry. Indeed, many of the failed institutions were once owned by their customers – Bradford and Bingley, Halifax, Northern Rock, etc.

As a customer and member of a building society, I don’t ask much more than a good service, either as a lender or saver; I certainly don’t demand of the people running it that they come up with more ways of making money. Now it might be argued that this kind of old-fashioned high-street banking doesn’t apply to the financing of bigger businesses – but my question would be, why not?

TUC calls for Green New Deal

Printing more money to give to banks isn’t going to save our economy – wealth is created by workers, not bankers…

Only Government can create the green jobs we need, says TUC

In advance of the Government’s low carbon economy summit later today (Friday), the TUC has called for bold government action to create green jobs and secure a transition to a low-carbon economy.

At the summit, the TUC will call on the Government to:

* Set demanding targets across the economy. While the overall target set in the Climate Change Act is welcome, the Government must follow up with detailed targets for individual sectors if behaviour is to change.
* Accept a central role for the state in creating demand for green products and services, using public procurement, providing green information to consumers and intervening in markets that are failing to encourage green behaviour.
* Invest in innovation, research and development at levels that allow us to catch up with those European economies.
* Invest in the skills needed in a green economy, and ensuring that skills shortages are not a block on future green developments.

TUC Deputy General Secretary Frances O’Grady said: ‘Even without recession we would need decisive action to drive down carbon emissions. Preventing climate chaos can give added purpose to government action to tackle the downturn. Moving to a low carbon economy provides an opportunity to create jobs across the country from high-tech industry to public services.

‘But pre-recession tools and techniques will not work. Regulation, government grants and direct government activity may have been unfashionable in the boom years, but they are the only way we can green the economy in the midst of bust.

‘This will be a key demand for the trade unionists attending the Put People First march for Jobs, Justice and Climate on 28 March in the run up to the G20 summit.

‘Germany has half a million jobs in renewable energy, while the UK has just 7,000. One and half million work in the wider green economy in Germany compared to a paltry 400,000 in the UK. That must change with investment in taking the carbon out of energy generation and reducing energy use in the workplace, the home and transport.’

The TUC will draw on the research in its Touchstone pamphlet Unlocking Green Enterprise: A Low Carbon Strategy for the UK Economy which says that to push the UK in a greener direction, the Government must first convince business that it is serious about the environment and that green issues will be at the top of the political agenda even after the economy recovers. Ministers should be promoting the environmental message to the public, and where necessary introducing financial incentives to encourage both consumers and business to go greener.

The Touchstone pamphlet also urges the Government to assess the kind of workforce and skills that will be needed in the green economy. The UK will need more designers and engineers, and also workers qualified to install and maintain the new renewable energy technologies. Ministers need to act to ensure suitable degree courses and training schemes are in place, says the TUC.

One of the current barriers to unlocking green enterprise in the UK, says the TUC, is down to the current cost of goods and services not reflecting their actual impact on the environment, leaving companies with little incentive to introduce costlier, greener alternatives. This in turn makes it less likely than firms will invest in new green products and keeps consumer demand low.

Productivity or profitability – why are UK construction workers excluded from new projects?

I’ve just seen Pat McFadden, the New Labour employment minister, argue that “productivity” might be a reason why UK-based engineering construction contractors can’t win new contracts.

This is bollocks, frankly.

The EU Posting of Workers Directive, following decisions made by the European Court of (in)Justice, allows foreign firms that win contracts to import workers on the minimum wage, undercutting the going rate. Even if a similar rate is paid, the employers can claw this money back by deductions for accommodation and transport.

Construction workers based in the UK are being excluded not because they are lazy and lack skills – but because they would have to be paid the going rate. It’s known as “social dumping” and it’s all about squeezing profits out of workers.

The dispute at Lindsay oil refinery has been won – by both the strikers there and those across the UK who walked out in solidarity, defying the anti-union laws – but the practice continues in the sector. And so, protests continue at Staythorpe power station, and at other sites where UK workers are excluded for applying for new jobs.

As the Morning Star reports, the Lindsay strikers have been pledging their support:

Lindsey workers join Staythorpe strikers
(Friday 06 February 2009)
by PAUL HASTE Industrial Reporter

CONSTRUCTION workers on strike at Staythorpe power station near Nottingham were joined on Friday by hundreds of flying pickets from the Lindsey oil refinery.

The 300 Staythorpe workers walked out on unofficial strike last Monday after months of protests against construction firm Alstom’s decision to contract out work to non-union companies.

Alstom is building a gas-fired power station that engineering union Unite estimates needs 850 workers to complete. The union accused the huge corporation, which raked in more than £462 million in profits last year, of trying to undercut employees’ wages by bringing in two subcontractors.

Unite branch secretary David Smeeton explained that the subcontractors “planned to bring in 800 foreign workers and refuse to even consider local workers for the job.

“Yet there are hundreds of local people who could work. We built the last two power stations here,” he said.

The flying pickets from Lindsey, in nearby Lincolnshire, had walked out on unofficial strike in their own dispute over a contractor’s unfair hiring practices last week.

The 400 workers are set to return to work on Monday after winning the creation of more than 100 new jobs at the oil refinery, but many of them descended on Staythorpe on Friday, braving freezing weather conditions to show solidarity with the power station workers.

Joining the solidarity picket, Unite shop steward Kenny Ward, who was one of the leading protestors in the Lindsey dispute, pointed out that “these problems at Staythorpe and at Lindsey are caused by judges and bosses, not foreign workers.”

He added that the government’s acceptance of European laws that allow employers to use workers from one country to undercut the wages of workers in another was a “disgrace.

“If the Labour Party doesn’t want to fight for workers anymore, then workers will have to fight for themselves,” he stressed.

“Our wildcat strike at the refinery and the solidarity that workers all over Britain gave us has shown that it is possible to fight back,” he insisted.

Lindsey strike committee member Tony Ryan added that the Staythorpe workers could count on the same solidarity that had helped win the fight for the refinery workers.

“This will continue. This is only the start of the fight for us lads,” he declared.