Notes of the Month


Danger Tory Crisis

(February 1974)

From International Socialism (1st series), No.66, February 1974, pp.3-6.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

THE BIGGEST industrial confrontation in the history of this government – indeed the biggest for nearly 50 years – seems virtually inevitable as we go to press. And even if a miners’ strike is avoided by the ballot failing to give a 55 per cent vote or by the government getting cold feet at the last minute, confrontation with another section of the class cannot be postponed for long.

The determination of the government not to increase its offer to the miners – a determination which has already caused massive losses in production with the two-day a week lockout – cannot be ascribed merely to personal stubbornness on the part of Heath. Much more is at stake than face-saving by a particular minister: the future viability and profitability of the whole of British capitalism is involved.

The defeats of 1972 at the hands of the miners, the railway men and the dockers taught Heath that it is very difficult to govern Britain without the help of the trade union leaders. Hence the repeated invitations to the TUC to Downing Street and Chequers. As late as October, the Economist was complaining that the Tories were soft on the wages question:

‘The government believes that the worst disaster this winter would be a near general strike that was successful because the strikers commanded a wide measure of public sympathy.’

Now, however, Heath has been re-learning a different lesson: the economic difficulties besetting British capitalism cannot be solved while rank and file feeling over living standards finds expression in union action over pay.

In his attempt to do something about this he has been supported by almost the whole of big business. The Confederation of British Industry has moaned about the effects of the three-day week; but it has also backed the government all the way in the fight against the miners. The Times, the Financial Times and the Economist have all said that the Tories must stand firm. They backed the rejection of the TUC’s offer of compromise, feeling that there was no alternative if British capitalism is going to ride the growing economic storm.

Phase Four?

OVER THE last month, the different economic advisors to the ruling class have been doing quick calculations as to the effects of the balance of payments deficit (now running at £3,000m a year) and the rise in oil prices. They have come to a single, unanimous conclusion: Phase Three is too expensive and must be replaced by something harsher.

As the Financial Times has put it,

‘The expectations of union leaders and their members need to be brought in line with what the country can afford in the short and medium term. It is obvious that this will be much less than the level of wage increases permitted under Stage Three.’

Heath himself has reiterated the view that

‘in the light of this change in circumstances, Stage Three of the counter-inflation policy now appears, if anything, too generous ... We could well have to be content with the living standards of a year ago and deny ourselves the improvements in living standards to which, only a few months ago, we have been looking forward.’

Not that Phases One, Two and Three have failed in their objective of holding wages back below the rise in the cost of living. The latest figures show that while the official price index (which underestimates the effect of price increases on the lower paid) had risen in December by 10.6 per cent in a year, wages before tax had risen by 12.3 per cent: so take home pay (after tax deductions) was clearly lagging behind the price index. Michael Meacher MP has calculated that ‘for most people, their real living standards declined by an average of 2.8 per cent’ last year. And the London and Cambridge Economic Bulletin has pointed out that under Phase Three ‘a substantial body of employees are likely, a year from now, to have suffered a large relative, and in many cases absolute, cut in their real net pay.’

But these cuts are now nothing like big enough for the government if it is to deal with the short, medium and long term problems of British capitalism. Last year it risked a massive balance of payments deficit in a gamble on the British economy breaking into a new period of high growth rates and high investment. But by the end of the year growth was down to a meagre one per cent per annum and investment was still on the low side. Within days of Peter Walker, Minister of Industry, talking of Britain being on the verge of a ‘new period of unprecedented prosperity’, the Cabinet were jamming the brakes on the economy. Now the governor of the Bank of England is talking of ‘10 years of austerity’, lasting until 1984 (no less).

The government has, somehow, to find a way to recoup the cost of last year’s gamble – and, ideally, to do so without last year’s record 25 per cent increase in profits suffering.

The ruling class faces three options. The first and least palatable from its point of view, would be to just let inflation rip. It fears that under such circumstances, profits would be hit and social tensions would increase.

The second alternative would be to try and deal with the problems of inflation and the balance of payments by massive deflation, pushing up taxes, allowing substantial numbers of companies to go bankrupt and unemployment to shoot upwards. But the cost of this alternative in terms of lost production and increased class bitterness would be immense. One forecast (in the Sunday Times Business News) suggests that ‘to bring about equilibrium in the current account of the balance of payments in 1975 a further deflation of £3000m would be required, resulting in output by the end of 1975 running at eight per cent below the end of 1973, with an accompanying level of wholly unemployed of two million.’ What is more, there is no guarantee that such a policy would actually stop price inflation.

So powerful are the major industrial monopolies that they are able to react to cutbacks in production with increases in prices. And the organisations of the working class at the shop floor level are still strong enough to resist much of the impact of unemployment on their ability to fight for wages. Certainly, unemployment of around the million mark in 1971-2 did nothing to halt inflation. Nevertheless, this view, propounded above all by Enoch Powell, seems to be finding favour with a number of Tory MPs and could come to predominate if Heath fails in his confrontation with the unions.

The third alternative is the one for which Heath has opted: using the law to hammer wages, while borrowing abroad (probably from the International Monetary Fund) to cover the balance of payments deficit for the time being. He hopes that cutting real living standards will enable him to rescue something from the debacle for British capitalism, putting it in a relatively strong position for facing the international recession later in the year. But he cannot carry this alternative without both breaking the promises contained in Phase Three and deliberately stepping up the scale of class struggle in industry.

The Threat to the Threshold

WHEN THE scheme for threshold deals within Phase Three was first announced in October, we pointed out in this journal, that it would not nearly compensate workers for increases in the cost of living.

‘The government’s threshold payment of 40p would be cut by tax and increased graduated pension contributions ... So for a family earning about £30 a week, the 40p would mean an increase in purchasing power of only about 23p – rather less than one per cent for each one per cent increase in the Retail Price Index. And, to cap it all, the 40p threshold payment does not count for overtime or shift pay calculations.’

Now, however, it is precisely the threshold clause that the ruling class’ economic advisers are deciding cannot be afforded. They expect prices to have risen the six per cent necessary to bring it into effect by April or May, and are horrified at the prospect of wage increases of about 0.8 per cent for each one per cent increase in prices. They calculate that the annual rate of price increases would then rise from the 15 per cent expected at present to about 20 per cent.

A variety of remedies have been offered to this problem. The Times suggested before the strike call of the miners’ executive that the government was thinking of introducing a total wage freeze on 1 March, and the Economist is talking of a plan to impose ‘a six months pay pause in which no Stage Three increases were paid, even to those who have already got them, and then to extend Stage Three from a year to 18 months.’

The important point, however, is not the precise solution the government turns to. It is that no solution is possible without the Tories risking massive opposition from the organised working class.

That is why the government has been so resolute in its confrontation with the miners.

It believes that before a freeze can stick, it has somehow to cut the unions down to size. The miners capitulating to a Phase Three settlement without going for an all-out strike might achieve this. A defeat of the miners after a strike most certainly would. But if the government gives in to the miners, then it knows that it is going to have to fight later, against another group of workers.

Any surrender to the miners would have an even graver consequence for Heath himself. It would produce an immense loss of confidence with his policies and his government within the ruling class. The three-day week would have caused immense losses of production in industry to no purpose. Under such circumstances, it is difficult to see the IMF agreeing to help bail government out with a substantial loan. And so Heath finds himself rather in the position of someone crossing an immense chasm on a tightrope. He has gone so far that although he may not have much chance of getting to the other side, it can seem easier than trying to turn back.

Can the Government Win?

HOWEVER, if the miners strike, it will not be good enough for the government merely to want to win. It has to turn its desires into deeds. It wanted to defeat the miners two years ago and failed miserably. And its chances of winning do not really seem all that much greater this time.

Certainly, by imposing the two day a week lockout it has conserved coal stocks until it is likely to enter any strike with a million tons more of coal than in 1972, and the strike this time will be beginning a month nearer the end of the winter (when the demand for coal drops by a third or more). It is also true that the power stations have taken the precaution of stocking up with supplies of essential oil and hydrogen which often ran out because of picketing before coal did in 1972, and that the Polish government has made it clear that it is prepared to aid the government with imports to break the strike.

This has created among certain of the government’s supporters the belief that it can win. The Economist has even been able to suggest a comparison with 1926, when the government lasted out a miners’ strike for more than six months by accepting shut downs of some industries and massive coal imports. It argues that

‘Britain’s ports could, if pressed, handle sufficient imports of coal to supply 39 per cent of the country’s needs, or 1 million tons a week. There is also no shortage of foreign producers knocking on the doors of Britain’s big users trying to sell.’

However, this all seems like blind optimism from the ruling class’ point of view. The Sunday Times, on the basis of an examination of the situation of coal stocks has come to a much more reserved judgment.

‘There is just a chance that Britain could limp through to the summer, provided that the government imposes further cuts in electricity, putting the country on a 2½ day week; if oil supplies from the Middle East build up very quickly; if there is no effective picketing to stop oil getting into the power stations; if the weather continues warm.’

The 2½ day or even a two-day week is certainly a possibility. But no-one should underestimate the cost of it to the employers. The threat of recession in the autumn does not alter the fact that most industries still have full order books and fear that if they cannot make deliveries, foreign buyers will shop elsewhere. And the effects of even the present three-day working are cumulative. As a senior employers’ representative in the Midlands told The Times,

‘it only needs one relatively small but vital components firm either to go to the wall financially or to run out of steel and a whole chain of production processes can immediately collapse.’

Such fears have led the big motor firms, for instance, to question whether in fact they can keep going for long on the three-day week, let alone a 2½ day week. That does not mean that the government will not try to operate with a still shorter week. But it does mean that the problems it gives rise to will grow rapidly with time.


THIS STATE of affairs cannot last forever. The deteriorating position of industry and the fear of a sudden worsening of the weather faces more and more with the grim alternatives of giving in to the miners or using any means, however desperate, in an attempt to break the strike. He knows that the very people who are so adamant that he must stand firm at present, will blame him if industry grinds to a halt. As in 1972 industrialists would then be queueing up outside Downing Street urging acquiescence to the miners’ claim.

The decisive factor, in a miners’ strike this year, as two years ago, will be the effectiveness of picketing. The government is now indicating that it will be prepared to resort to crudely repressive measures if necessary in its attempt to make picketing ineffective. Newspapers which barely mentioned the Shrewsbury sentences or the House of Lords’ decision that makes it illegal to obstruct a lorry peacefully when they were announced before Christmas are now giving these front page prominence. The aim is clearly to intimidate potential pickets. At the same time, according to the Economist

‘Scotland Yard has breathed some new life into a central department to co-ordinate information on picketing.’

For more than 30 years, British governments have tried to control workers by relying upon the trade union leaders to keep them more or less in order. Direct repression has had a very subordinate role to play. This stratagem has had the great advantage for the ruling class that it has made much easier the perpetuation of the myth that the forces of the state stand above the hurly-burly of the class struggle.

The Tories have not yet abandoned reliance on the trade union leaders completely. They value the TUC’s presence at Downing Street as a means But the Tories are also keenly aware of the limits of what the trade union leaders alone can achieve. All the TUC rhetoric in the world is not going to persuade millions of trade unionists to accept cuts in real wages indefinitely – unless the union leaders can point to a much greater threat compared with which the cuts are a ‘lesser evil’. But that means the government making the threat and relying increasingly on direct repression as well as on the union leaders.

Crisis of Leadership

THE GOVERNMENT is trapped in a corner, with its escape routes blocked by the crisis of the system on the one hand and the strength of the working class on the other. With so little room for manoeuvre, it can do little more than hit out wildly in the hope that something will give. But Tory ministers themselves know that things will not be easy for them. They stand the very grave risk of getting the worst of both worlds – arousing working class hatred to the system by their vicious behaviour and then proving their real weakness by giving in to the miners.

However, the government does still have one great advantage. The organisation and leadership of the working class does not yet measure up to the level of the struggle.

The established TUC leadership has been doing everything it can in order to avoid battle, even though with little effort it could really get the government on the run. However clever as an electoral ploy, the TUC peace offer could only weaken the fighting spirit of rank and file activists: militants who had been arguing with their fellow workers day in day out, for action against Phase Three to open a second front against the government, were suddenly told from on high that claims going beyond Phase Three were not on.

The attitude of the other union leaders was summed up in a statement by Scanlon after the government had rejected the ‘peace’ plan. ‘It is an absolute tragedy,’ he said, ‘that the TUC offer was not accepted. It can only result in a hardening of attitudes.’ In other words, the point is not to intensify the struggle against the Tories with the aim of destroying Phase Three and forcing them from office. Rather the aim as the ‘left’ union leaders see it should be to work out some way of collaborating with the Tories to prevent any real development of class feeling.

The TUC leadership has effectively dropped any idea of opposing the government’s plans to cut living standards. Instead, it has reduced itself ‘ to merely haggling as to exactly how large the cuts should be.

The lack of adequate leadership is not only felt at the national level. It percolates right down to the base. Too many district committees, union branches and shop stewards’ committees are out of touch with the membership, or are only able to organise the members in a routine manner during peaceful times. This was shown in many mining areas during the last strike. Lodge officials who did a quite competent job all year round, did not know how to respond in mobilising the membership for mass picketing. In engineering, the same sort of inadequacy has revealed itself during the two-day-a-week lockout, with many stewards not even knowing how to contact other stewards when they were not in the factory.

The increased temper of the struggle if the miners strike is going to demand that these faults be dealt with. In the mines will militants need to push for elected strike committees or action committees, involving the younger, more mobile miners as well as the older lodge officials. In engineering, organisation has to be tightened up if management are going to be prevented from pulling a fast one on the men and if stewards are going to be able to get the more militant sections to back the miners’ pickets – including during the locked-out days.

The state will try to undermine the pickets through its ability to move large numbers of police or troops from one place to another at short notice. The working-class movement in the localities has to be able to respond quickly to such manoeuvres. It can only do so if it ensures that links already exist between the organisations in the most militant factories and the miners.

Building the Party

THE PRESENT struggle represents a massive heightening of the class struggle. But it is not going to be the last such struggle by any means, whoever wins. If the miners win, then other workers with wage claims pending, such as the provincial printers or the Ford workers, can rapidly follow them into battle. If the miners lose, even then we can expect a whole series of bitter fights over short time working, redundancy and factory closures when the recession hits this country in the autumn.

The consciousness of workers has so far lagged behind the tempo of the struggle. The vast majority have not yet woken up to the fact that their established living standards are under threat. A centuries old tradition still befogs their minds with the notion that ‘it could never happen here’, with the idea that even if things are bad, they are bound to get better. In the short term this complacency has been reinforced by the lack of bite of the lockout when it comes to wages.

But it is precisely at historical moments when consciousness lags behind reality on such a massive scale that revolutionary ideas can begin to influence substantial numbers of workers. People are suddenly catapulted into political discussion and action in a way they would not before have thought possible. At such points it is essential that revolutionaries redouble their efforts, arguing their political ideas and showing the link between these ideas and the sort of activity that is necessary if battles are to be won.

The present crisis offers an unprecedented opportunity for the revolutionary movement in Britain to build a real workers’ party. That means taking advantage of every opportunity to put across our ideas, showing how the present attacks on living standards follow from the logic of capitalism itself, recruiting on as wide a scale as possible into the revolutionary organisation, and building up the circulation of the revolutionary press. It also means proving in practice that we alone know how to fight, by stepping up the activity of factory branches of the organisation.

We have to be absolutely honest. At present the International Socialists are still far too weak to lead the class as a whole in the struggles ahead: three thousand militants cannot by themselves lead 20 million workers. But we also have to insist that a Party can be built out of the current militancy, gradually gathering strength from the struggles of the next two or three years until it is capable of going on to the offensive against the system. If such a Party is not built, it will not just be a case of revolutionaries missing unique opportunities. It will also be to leave the whole future of the working class movement at the mercy of reformist leaders who have proven themselves incapable of even the most basic defence of living standards.

An Election?

ONE POSSIBLE Tory reaction to this present situation may be to call a snap election. Heath has already backed away from this once: partly because he feared he would lose it, partly because the economic problems of British capitalism have been growing so rapidly that the Tories just do not know what might actually happen during the three weeks of the election campaign itself. Now, however, some sections of the ruling class are again urging the election tactic. They see it as the only means of producing the strong government they think they need to crack down on picketing in earnest and to persuade the union leaders to capitulate.

There can be no doubt what the attitude of revolutionaries should be in such an election. A Tory victory would serve to shift the balance of class forces, if only marginally, to the advantage of the ruling class. Those sections of workers fighting the government’s wages policy would feel more isolated, while the most backward elements in the class – the non-unionists, the scabs, the racialists – would feel much more self-confident. By contrast, a massive Labour victory would represent a serious rebuff for the ruling class attempt to blame workers’ organisations for the crisis.

So we are in favour of a Labour victory and would urge working class organisations to campaign to this end. But that does not in any way mean spreading illusions in the Labour leadership or backing the policies which they are pushing. The Labour leaders have no magic remedy for solving the problems of British capitalism and if returned to power would be forced, very quickly, to follow policies as bad as, if not worse, than the Tories’. In 1964 the most minimal of election promises were abandoned by Wilson when faced with a balance of payments deficit only about a third of the one he would inherit now. The Labour leaders themselves are already hinting at the sort of policy they would follow if elected when they attack the Tories for not deflating (and increasing unemployment) sufficiently. There is no justification for believing that Labour’s policies would be any ‘better’ than Heath’s.

It is wrong to argue, as do the Labour lefts and the Communist Party, that it is possible somehow to ‘push the Labour government left’. The commitment of all sections of the Labour Party to trying to run capitalism efficiently – even if they want to reform it at the same time – will compel them to try to boost profits and curtail the balance of payments deficit in much the same way as the Tories. They may be helped by a brief honeymoon with the unions (as in the earlier part of Harold Wilson’s last government). But the working class has few deep illusions, in the Labour Party and any honeymoon will be very short-lived. At the end of it, the government would be forced, as it was in 1969 with In Place of Strife, to begin direct attacks on the working class organisations.

However it would be in a much weaker position than the Tories for carrying out the attacks, precisely because it would have come to power through an election in which large numbers of workers had voted to reject such methods. Because Labour depends on working class votes and union money, it will be more inclined to vacillate when it comes to carrying through such attacks, hitting out viciously and then weakly surrendering positions, before hitting out viciously again, perhaps splitting in the process. Such antics would certainly lead more workers to turn, in disgust, towards the revolutionary left.

This perspective means that revolutionaries must be in favour of a Labour victory. But it also means that there can be no question of campaigning on the terms laid down by the Labour leaders – that would be to strengthen the few illusions which the working class has in them. Instead, we should use the occasion of any electoral campaign to intensify socialist agitation and propaganda, while urging trade union bodies, locally and nationally, to organise their own campaigns against the Tories, not based on electoral speeches by Labour politicians, but on the need to vote against the Tories’ anti-union policies, preparing to keep up the fight even if Labour is returned to power.

Last updated on 18 November 2009