This document is a statement on Britain, an analysis which was agreed
unanimously at the national conference of Socialist Appeal in April.
The statement constitutes an analysis of the deepening social,
political and economic crisis of British capitalism. This perspective
applies the method of Marxism to these developments, seeking to uncover
the trends and processes within, and serves as a guide to action for
all those workers and youth who want to struggle for a socialist
transformation of society.
Growth at the expense of working people
What growth has taken place in the
last period has mainly been at the cost of increased exploitation of the
workers. The savage attacks on the working class over the last 20 years are
continuing and intensifying. Using the whip of foreign competition, together
with the threat of closures, the bosses are looking for even greater
concessions. They are demanding further draconian measures of "flexibility" to
boost their profits. This is creating a mood of increasing anger and
frustration in the workplace, which must be reflected at a certain stage in an
increase of strikes and industrial militancy.
In a recent survey of more than
500 chief executives and directors, more than three-quarters of senior
executives would like to operate an annual quota of staff dismissals to weed
out "underperforming workers". In an article tucked away on the inside pages of
the Financial Times, entitled
"Directors want staff cull every year, says survey", it states some 17% of
executives believed that a company could "target up to 20% of its workforce for
dismissal per year without damaging productivity", according to management
consultants, Hudson, which conducted the study. Jack Welch, former chief
executive of General Electric, advocated firing the weakest 10% of staff every
year. "Many British executives appear to share these views", stated the FT
"Sometimes, the best career
direction for an employee is out of the company…" stated John Rose, chief
executive of Hudson UK. "Companies must take care, of course, that they do not
inculcate a culture of fear…" If this is the attitude of the British bosses
during a boom, what can the working class expect in a downturn, which is
inevitable in the next period?
As a consequence of the already
acute stress imposed on the workers, figures for long-term illness and
depression have soared. Recent figures showed that almost 1.1 million were on
income capacity benefit last year, unable to work due to mental health
problems. This was a sizeable increase, up from 730,000 in 1997. The number of
claimants suffering from severe stress has trebled to 49,000 while those who
have experienced episodes of depression have almost doubled to 501,000. This is
only a glimpse of the real situation, created by the collapse of manufacturing
jobs. According to the FT, "The rising number of claimants who suffer from
mental disorders is a reflection of a service-dominated economy. Many male
manual workers made redundant from heavy industries in the 1980s only to spend
the rest of their working lives on long-term sickness benefits." (1/2/07)
Unemployment stands at 1.7 million
and rising. However, the number actually claiming unemployment benefit in
January declined by 13,500 – the largest monthly fall for almost three years –
to 925,800. This is a further indication of the government’s drive to force
people off the unemployment register. Youth unemployment is on the increase,
despite the New Deal scheme, which subsidizes employers if they take youth
placements. After the New Deal period expires these youth are usually back on
the dole. This is illustrated by the fact that four out of every nine
placements on the New Deal are taken by those who have done placements before,
with many young people having been on what they now see as a treadmill four
times or more.
An additional two million
immigrant workers have entered the country over the last three years, many
forced into low-paid casual jobs, "assisted" by a plethora of rogue private
employment agencies. Big business has welcomed this influx of cheap skilled
labour, which it is keen to exploit. Some 80% of those who have entered Britain
live on the minimum wage. Given the massive decline of apprenticeships over the
last 20 years – again a reflection of the decline of British capitalism – there
exists a chronic skills shortage in Britain. The British capitalists prefer to
import skilled workers rather than pay for training. This situation also leads
to greater pressures on social housing, which private landlords are eager to
The numbers in employment rose to
29.04 million in December, 278,000 more than a year ago. In the last three
months of 2006, employment rose by 51,000. However, more than two-thirds of the
rise was due to a rise in self-employment. The number of full-time employees
fell by 57,000 during the quarter while temporary workers rose by 70,000,
suggesting "a marked degree of uncertainty on the part of employers when hiring
staff", said John Philipott, chief economist at the Chartered Institute of Personnel
and Development. Low pay and flexible part-time working is now the norm in
Britain, serving to cut wages, especially in the service and building
industries, and resulting in downward pressures on the working class.
This is an epoch of
counter-reforms (called in Orwellian language, "reforms") and attacks (called
"flexibility"). British and world capitalism can no longer afford lasting
reforms. They are attempting to dismantle those reforms won by the working
class in the past that created at least the elements of a civilized existence.
What it gives with one hand, it takes with the other. The illusion of an
uninterrupted "progress" of all classes is rapidly vanishing without a trace.
There is a growing pessimism in what the future holds.
Growth in inequality
While GDP in Britain is supposed
to be the fifth largest in the world, the division of this wealth is extremely
unequal. While there are more than 11 million living in poverty, the
bourgeoisie are busy gorging and indulging themselves as never before. This
year, the bonuses for all 170,000 Goldman Sachs employees alone equalled the
annual national product of Vietnam, a country of nearly 80 million people. This
obscene wealth is confined to the tops of society. There is no "trickle-down"
effect, only a "trickle-up" effect.
In Britain, £9 billion was paid in
bonuses to City of London traders with one Goldman Sachs trader alone getting
£50 million. Under the mantle of New Labour, the inequalities of income and
wealth in the UK (just as in the US under Bush) have increased substantially.
On the day that Goldman Sachs announced its bumper bonuses for 2006, its
cleaners went on strike and demonstrated about the appallingly low rates of pay
(£5.35 an hour) their employer (part-owned by GS) gave them.
The more far-sighted strategists
of Capital understand that this situation is sowing the seeds of bitter class
conflict in Britain. A recent survey in The
Economist warned that "… a growing social malaise and lack of cohesion" is
affecting Britain. While, of course, it praises the anti-working class changes
to the British economy, such as deregulation, flexibility and greater
competition, it is forced to admit the serious social consequences of this
development. "Globalisation is undermining the old certainties in lots of ways:
employment is less secure, communities less rooted, the gaps between rich and
poor, skilled and unskilled, young and old, are wider, and immigration has
risen sharply in recent years. All this has created vibrancy and buzz [!], but
also dislocation and often a sense of grievance."
These words confirm completely the
prediction of Marx: "Accumulation of wealth at one pole," he wrote, "is,
therefore, at the same time accumulation of misery, agony of toil, slavery,
ignorance, brutality, mental degradation, at the opposite pole." This thesis of
Marx has been attacked for more than 150 years by liberals and bourgeois
apologists of capitalism, who believed that the system was gradually
eliminating class differences and bring increasing prosperity to all. Today the
division between rich and poor has never been greater. The concentration of
capital has never been so great. Mergers, acquisitions and takeovers have
reached record levels.
In practice, Blairism has been a
continuation of Thatcherism. With the collapse of the Tory Party, Blair came to
faithfully represent the outlook and interests of the British bourgeois. He is
their man. He has done their bidding without question. As Trotsky wrote about
Ramsay MacDonald, "there is something of the flunkey running all through him."
He very much suited the needs of the ruling class at this time – someone they
could fall back on while the Tory Party had time to recover its rightful role.
By 1997, the Conservative Party
had exhausted itself. It was time for the "second eleven" to take up the sticky
wicket. In due course, with the collapse of the left-reformists, Blair has
taken the Labour Party far to the right. As a result, under Blair, public
spending was initially less than under the Major government, anti-trade union
legislation was retained, privatisation continued, and the public services were
opened up to big business. After a long period of reactionary Tory governments,
the working class was prepared to tolerate these impositions, grudgingly and
for a time from the Labour government. But now their patience has been
exhausted. The stage is set for a big swing to the left, against Blairism and
all its works.
During the 1980s and large part of
the 1990s, the left reformists were routed in the Labour Party and in the trade
unions. The trade unions were in the hands of the "New Realists". Blair, the
Thatcherite, had a solid parliamentary majority and carried out the bidding of
big business. The Bank of England was made independent and Private Finance
Initiative projects were introduced. Under this scheme billions of pounds of
public money continue to be handed out to private companies to build schools
and hospitals, which after 30 years will have been paid over and over again.
Even then, the buildings will still not be owned by the government.
Market principles were introduced
into education and the health service. As a consequence, hospital trusts have
found themselves increasingly in debt, closing wards and sacking staff. The
Hillingdon primary care trust in London, for example, has been left with debts
of £54 million, to hand over nearly all its core functions to the private
sector. Anthony Sumara, Hillingdon’s PCT interim chief executive stated: "I
want to get rid of everything – outsource it".
In hospitals, which are
inadequately cleaned by private firms, MRSA and other diseases are rife.
Thousands die each year from these diseases as a direct consequence of
privatisation. In education, a two-tier system is being created. As well-off
schools choose to apply for "specialist" school status, failing schools in poor
areas are being replaced by "academies", sponsored and part-financed by
businesses, faith groups or charities. This is a throwback to the nineteenth
century. Following legislation last year, all schools will be encouraged to bid
for "trust" status, linking with other schools or businesses to create schools
with a distinctive "ethos" and considerable autonomy from the control of local
education authorities. This is going further than the hated Thatcher
Despite the promises and extra
cash, more than one-third of British students leave school with no formal
qualifications. About one-sixth are functionally illiterate and one-fifth
innumerate, meaning they cannot read and write or deal with numbers as well as
an average 11-year-old. Consequently, according to the OECD,
Britain ranks only 13th among the 30 richest countries for the share of people
aged 55-64 who have completed secondary school. In younger age groups, Britain
does even worse: for those aged 25-34 it ranks at 23rd position.
Although more young people are staying on at school, Britain is being
outclassed by countries such as Ireland and South Korea.
Tuition fees of £1,000 a year were
introduced in 1998. Five years later, the maximum fee was increased to £3,000 from
2006, and is likely to increase even further. Students were offered loans and
have sunken deeper into debt as a result.
There are elements of social
disintegration and the demoralization of some layers of youth. In many inner
cities there is talk of a "gun culture", street gangs, drugs and violence,
reflecting a breakdown of society. This affects a layer of youth, especially
black and immigrant youth, who experience poor education, exclusion from
school, no proper jobs and no real prospects. There is low self-esteem. They
become ghettoized and alienated from society. It is a total contrast to the
life-style of the wealthy upper class.
The whole situation reflects the
impasse of capitalism. The only response of New Labour is to ape the language
of the most reactionary sections of the Tory Party, talking about "tough"
measures and "law and order". In reality, the wave of crime and violence
reflects the lack of opportunities, deprivation and alienation on poor working
class estates. It is a social blight caused by a sharply divided class society.
This is precisely what Marx meant when he spoke of an accumulation of "misery,
agony of toil, slavery, ignorance, brutality, mental degradation" at the lower
end of society.
The main victims are children and
young people, who represent the future of society. According to the recent
UNICEF study of the United Nations, British children suffer greater
deprivation, worse relationships with their parents and are exposed to more
risks from alcohol, drugs and unsafe sex than those in any other developed
country in the world. 3.4 million children, or more than one in four, live
in poverty in the UK today. The number of children admitted to hospital with
alcohol-related conditions has risen by 20% in the past five years. Twenty
youngsters are diagnosed each day with conditions such as alcohol poisoning and
problem disorders due to excessive drinking, according to NHS figures. In the
UNICEF survey of 21 of the richest countries, as far as children’s health is
concerned, Britain comes bottom.
Throughout these years of Labour
government, Gordon Brown has maintained his image as the "Iron Chancellor". In
2004, he announced to cheers from the New Labour benches in the House of
Commons that over 100,000 civil servants’ jobs are to be axed. At the same time
public sector wages are going to be held down to a 2% increase – which after
inflation represents a wage cut. At the same time record City bonuses are
announced, and New Labour Ministers congratulate the City for its success.
These attacks have forced the
civil service union PCS into calling industrial action – the most recent in
January being the biggest strike of civil servants in British history. A third
of PCS members earn less than £15,400 a year and cannot accept what amounts to pay
cuts over the next three years. "My members can’t stand by when the government
is spending £2.2bn a year on consultants, and employing consultants in the
Revenue and Customs on salaries at 10 times the rate of civil servants,"
explained Serwotka, the general secretary of the PCS. The attempt by the
government to impose wage cuts is a clear recipe for future class battles.
Life has become very hard for many
people. Utility bills, rents, mortgages and council tax keep on rising. The
only thing that is keeping people afloat is the historically high levels of
personal debt. Personal debt in Britain stands at £1.2 trillion, greater than
the GDP of the country. High Street banks are preparing to write off an
unprecedented £6.6 billion for 2006, as people default on a record amount of
personal loans and credit card debt. For 2007, the estimate is £7.2 billion.
Lloyds TSB revealed that its
customers defaulted on £1.24 billion last year, including £740 million of
personal loans and £490 million of credit card debt. The write-offs were up by
16% on 2005 and would continue to rise this year. In February Barclays were
forced to write off a record £1.7 billion due to bad debts, an increase of 36%
on 2005. The Royal Bank of Scotland, HBOS and HSBC are expected to announce
write-offs of £1.35 million, £943 million, and £1.24 billion respectively in
the coming weeks because of defaults.
Marx explained long ago the role
of credit as a means whereby the capitalists can artificially expand the market
beyond its natural limits. The massive expansion of credit has been a major
factor in prolonging the present consumer boom in Britain and the USA. But
sooner or later this must change into its opposite. Rising interest rates serve
to increase the burden of debt and undermine consumer spending. At a certain
point, this "credit bubble" will burst, causing a contraction of the economy
and economic recession.
This debt-propelled consumer boom
is sustained by house prices that have almost trebled in a decade. How far
house prices will continue to rise is another question, when mortgage rates are
heading upwards throughout this year. Higher borrowing costs will curb the
ability of the average working family to spend more. Household debt has leapt
from around 100% of disposable income in 1997 to 160% in 2006. With three
separate interest rate hikes by the Bank of England in six months, the housing
bubble is also bound to burst at some point. It is a similar picture
everywhere. Interest rates have been going up in the US, the eurozone, the UK
and even Japan.
At the lowest point of the last
recession in 1991, personal insolvencies barely topped 25,000. The latest
figures bring the total for last year to 107,288 – the first time the figure
has exceeded 100,000. At the same time the banks are making record profits.
Barclays just made £7.1 billion and Lloyds made £4.2 billion.
Yet despite more than a decade of
growth, British capitalism’s share of world exports has continually decreased.
Britain imports far more than it exports. This fact, which expresses Britain’s
decline vis-à-vis other
capitalist nations, manifests itself in a stubborn deficit in its current
account, reflecting an inability to compete. This deficit has worsened although
Britain grew faster than its main trading partners in Europe. Exports began to
pick up last year along with growth in Europe, but imports grew faster, and the
deficit in goods topped £82 billion in the year to September 2006, a record 6%
The deficit has been sustained by
foreign investors who have been investing in Britain in order to take advantage
of high interest rates. The surplus on services filled more than a third of the
deficit, and net investment income from abroad about another third. "The
question is whether this bonanza can continue", states The Economist. "Britain’s liabilities abroad officially exceed its
assets, to the tune of 18% of GDP in the 12 months to
September, and the gap was bigger than the year before."
These figures expose the weakness
of the British economy. It only survives because of its rentier base: services, finance, insurance, private equity, bonds
and banking. However, any serious financial crisis or downturn internationally
will have major repercussions here in terms of jobs and living standards.
In the last analysis, economic
factors play a fundamental role. However, there are many other factors, which
can also affect changes in consciousness: imperialist wars military defeats,
government crisis, political crisis, terrorist acts, electoral defeats, rail
crashes, hospital deaths, environmental changes, resignations, scandals, and so
The "war on terrorism"
Even without an economic crisis,
consciousness in Britain is changing. The war and occupations of Iraq and
Afghanistan have brought terrorism to the shores of Britain. The July bombing
in London brought this home to millions of people. The mayhem wrought by
imperialism in the Middle East is now impacting on the consciousness of the
people of Britain and the USA.
The "war on terrorism" has
provided a convenient cover for a massive attack on civil liberties, which we
have dealt with in previous documents. The shooting of Jean Charles and the
ham-fisted police raids into Muslim areas in London and Birmingham have only
served to reinforce perceptions that Britain is becoming a "police state for
Muslims". Despite the numerous arrests, hardly anyone has been charged with
terrorism offences. Out of over 22,000 stop-and-search incidents last year,
only 27 resulted in arrests associated with counter-terrorism issues, or less
The actions of police, who have
new extensive powers of stop-and-search without reason, are viewed as
deliberate intimidation and an attempt to stigmatise Muslims as terrorists.
Youth, especially young Muslims, have become radicalised by what is happening
in Iraq and are vehemently opposed to the actions of US and British
imperialism. Young Asians are being criminalized by the state and portrayed in
the media as potential terrorists, in the same way as the miners were portrayed
as the "enemies within". With a revolutionary approach, and to the degree that
they can be reached by our forces, sections of these youth can be won to
Marxism and the revolutionary movement.
democratic rights won by the working class through generations of struggle are
under threat. The reformist leaders, the faithful servants of capitalism, are
in the forefront of these attacks. The repressive legislation measures brought
onto the statute books supposedly to fight terrorism today will be used against
a radicalised working class in the future. This is extremely dangerous from the
point of view of the interests of the working class. They will be used by the
capitalist state against trade unionists, strikers, demonstrators and anyone
considered a threat to state security. The right to strike has been undermined
over the years. The right to assembly and free speech is being challenged. The
right to a fair trial by jury is also being weakened. This is not a reflection
of a stable situation, but of the underlying crisis facing British society.