Notes of the Month


[The New Labour Government]

(March 1974)

From International Socialism (1st series), No.67, March 1974, pp.3-8.
Transcribed & marked up by Einde O’Callaghan for the Marxists’ Internet Archive.

LABOUR GOVERNMENTS have always hoped to achieve two things: to run capitalism more efficiently than their opponents and, while doing so, to preserve their working class electoral base by doling out a few concessions.

Rarely have the possibilities of successfully combining these two goals been weaker than at present.

Some voices on the left can be heard suggesting that somehow this government can be different to that which ruled from 1964 to 1970. The Morning Star has written that ‘Labour supporters will hope that the policies ... will not be on the same lines as in the past.’ The paper has also indicated that

‘Mr Foot’s appointment [to the Department of Employment] will be widely approved, especially as there were fears that Mr Reg Prentice would get the post.’ (6 March 1974).

But in the months ahead the important thing is not going to be the individual attitude of one or other member of the Labour government. It is that the government is committed to running British capitalism, a task which will compel its ministers to assent to policies as bad as those of their Tory predecessors.

The main theme of Labour’s election campaign was ‘conciliation, not confrontation’. It was said that Heath had ‘divided the nation’ and that Labour would heal the wounds and produce ‘national unity’.

But the main features of Tory policy were not merely the result of Heath’s personal attitudes or of Tory philosophy. They flowed from the logic of trying to solve the problems of a crisis wracked economic system. This logic will influence the Labour ministers as much as their predecessors.

Superficially, there will be differences. Labour is committed to achieving the same goal as the Tories, but by using slightly different means. It wants the working class organisations to acquiesce in bearing the burden of rescuing British capitalism on a voluntary basis, rather than through statutory compulsion.

Wilson hopes to gain this acquiescence by exploiting the traditional allegiance of workers to the Labour Party. That is the rationale of putting Michael Foot in the employment ministry. It also explains the few, marginal reforms Labour will offer in its first weeks in office.

The Industrial Relations Act has not succeeded in its aim of reducing the ability of rank and file workers to exercise pressure through the unions. Scrapping it now will cost capital nothing, but will, Wilson hopes, buy the favour of union leaders.

Labour is justifying in the same light its commitment to increase pensions, to stop the council rent rises due next month and to subsidise food. As the Financial Times has put it,

‘Labour’s intention to restrain wage pressures by subsidising some foods, rents and public transport will create problems for the new Chancellor, but should certainly make it easier for the TUC to win support for restraint ...’

Yet even this programme will have to be carefully tailored. The minister responsible for prices, Shirley Williams, has indicated that there can only be subsidies for a ‘few items’ – otherwise the cost to the government would be too great There is already talk of ‘redistributive taxation’ to pay for the pension rises – in the past such taxation has usually redistributed income from the better off half of the working class to the worse off half. There is little reason to believe things will be any different this time.

The most obvious limitation on the room for manoeuvre of the Labour government is its dependence on Liberal votes. But other factors are present which would impose the same limitations, even if it had a massive majority.

A government committed to running capitalism efficiently is a government committed to building up the confidence of industrialists. Even for those who want to transform the system ‘gradually’, there is no other way to ensure that the system delivers the goods in terms of investment and jobs, whatever Michael Foot’s rhetoric when speaking to trade unionists. In Britain today that means bending over backwards to keep industry happy. For the effect of inflation, the balance of payments deficits and the three day working is that ‘there has been a huge decline in industry’s confidence about the economy and the general business situation’. (According to the Financial Times Survey of Business Opinion, taken just before the election).

‘The future prospects for output, employment, costs and profit margins are all deteriorating, and in general the level of confidence was lower than at any time in the seven year history of the Survey.’

The pressures applied by local big business – and accepted by the Labour government – will be reinforced by other pressures. The government is going to be forced by the balance of payments deficit to look very quickly for a massive loan from abroad, probably from the International Monetary Fund. The price for such a loan will, as in 1964-70, be close scrutiny of British economic policy by the IMF.

The Morning Star greeted the formation of the Labour government with a front page article which began:

‘Phase Three has been ended with the accession of the Labour government.’

There could hardly be a more glaring misreading of Labour’s real intention, which is to keep big business at home and abroad happy by persuading the unions to accept wage increases at or below the Phase Three level. The fact that voluntary rather than statutory means are employed will make no difference as far as workers’ living standards are concerned.

As the Guardian‘s Financial Correspondent in Washington has reported,

‘While there is a general assumption that the new government must make substantial concessions to the miners, there can be no doubt that the IMF would throw all the weight of its authority to discourage the general wage explosion in Britain. The new government may in fact find a useful ally in the international monetary authorities when it comes to negotiating with the trade union movement.’

The Unions

THE INSTINCTIVE reaction of union leaders, ‘left’ as well as right, will be to accept with open arms the ‘compact’ which Wilson offers them. It will seem to them to provide an easy escape route from the pressures that have been worrying them in recent years.

They have witnessed with alarm the growth of industrial militancy during the life span of the Tory government, fearing that it will put at risk the stable functioning of the bureaucratic machine over which they preside. After all, the essence of trade unionism for them is the accumulation of funds and the erection of handsome buildings. What could be worse, from such a perspective, than a succession of disputes which drained the union’s resources away in strike pay and led to threats to its assets from the Industrial Relations Court. They rejoice in the idea of an agreement with the Labour government because they believe that it can remove threats to the stability of the machine-even if at the expense of the living standards of the members.

With a Tory government in power, the union leaders were prepared to go to the length of offering acceptance of Phase Three, if only the miners were made a ‘special case’. How much further will they be prepared to go with a Labour government that has repealed the Industrial Relations Act and conceded the miners increase.

For the next few months while the Act is being repealed, the rent rises withdrawn, pensions increased and food subsidies promised, the union leaders will do their utmost to win rank and file support for Wilson’s wage restraint. They will continually stress the need ‘not to rock the boat’ lest the minority government and its odd bits of legislation are endangered. And they will do their utmost to isolate any movement that develops from below.

But the union leaders also know there is a point beyond which they dare not go in their collaboration with the government. They remember only too well that their over-close relations with the last Labour governments led to mass unofficial action in 1969-70 often by precisely those sections of workers who had been most apathetic and ill-organised in the past. They were only able to resume their control over such sections by quick changes of line and adoption of new, apparently militant, styles of leadership. They do not want to run the risks of being caught off guard again. While desire for a peaceful life will push them close to the government, they will switch course if movements below gain a spontaneous momentum – if only to return to a policy of collaboration once they have re-consolidated their control.

The miners’ strike provided a graphic example of what such vacillation means. In the weeks before the strike, the left seemed to be making the running in the union nationally. The executive recommended strike action and campaigned for a ballot majority. The Yorkshire President spoke of ‘one hundred Saltleys’ and the national Vice-president of the union, the Communist Party member Mick McGahey, said that the union would call upon troops not to scab. The rank and file gave an 81 per cent vote for strike action and the executive turned down a request from the union president Gormley to call off the strike so as to help Labour’s electoral chances.

Yet, once the strike began, the militant stance was reversed. A few warnings from the authorities about the implications of the Industrial Relations Act for union funds, a few suggestions that a militant strike might endanger the return of a Labour government committed to repeal of the Act and instructions were issued that picketing should not be militant. Only six pickets at a time were to be permitted – and even these were discouraged by union bureaucrats anxious to preserve their funds and avoid embarrassing Labour.

The sudden switch from militant rhetoric to non-militant action may not have made a great deal of difference to the outcome of the miners’ own wage claim. What it did do, however, was make it much less likely that the miners’ success would create a climate of militancy in which other workers would challenge the sorts of norms embodied in Phase Three.

No doubt this has been particularly gratifying for leaders of unions like the transport workers and engineers, who were still urging their members to accept Phase Three deals even after the results of the election were known.

The Financial Times could report on the very day that Heath was resigning that ‘union negotiators representing 53,000 Ford Motor manual workers’ were recommending acceptance

‘... of a Phase Three package ... For their part the unions dropped their demand for an open ended deal which could have left them free to attempt to renegotiate if the government limitations on wage bargaining are reduced.’

The ruling class

THE MAIN organs of ruling class opinion accept the Labour government as the only real option for the time being. Most of them regarded Heath’s abortive attempts to form a minority government as a nuisance. And share prices actually rose a little when the formation of Wilson’s government was announced.

The miners’ strike brought home, as nothing else could, the difficulties facing any government that did not have the support, or at least the acquiescence, of the union leaders. Confrontation could only work so long as the most powerful groups of workers were sufficiently intimidated as not to fight back. In this respect, Heath was fairly successful for the first 12 months of his Phase One and Two policies. But once the miners began to move, it was the beginning of the end. The desperate gamble of imposing three-day working did nothing to end the miners’ action – it merely ensured that the real cost of the final settlement was boosted by an enormous amount of lost industrial production.

Had the Tories achieved the large electoral majority they wanted, then Heath could perhaps have saved his policy. He would still have had to give in to the miners, but he could then have had the authority to resist other sections of workers. That is why most of the ruling class backed up his pleas for ‘firm government’. But the failure of the Tory government to get the mandate it asked for left little choice but to go along with Wilson’s slightly different approach.

The ruling class’s attempts to hold down wages by means of crude physical pressure have been massively defeated. They now have to hold them down employing the instruments of persuasion and ideological confusion. Wilson is much more suited to that task than was Heath.

That is why the Liberals will be under pressure to keep Labour in office, and the Tories to be ‘moderate’ in their opposition to the government. The task demanded of the main bourgeois parties will not be to pull the government down as soon as possible – the ruling class will not want Wilson out of office while the chance of ‘voluntary’ wage restraint remains. Instead, the pressure of the opposition parties on the government will be intended to ensure that the price paid for an agreement with the unions is no more than British capitalism can afford.

None of this signifies that the ruling class has abandoned for good the method of physical confrontation with the unions. When agreements with trade union leaders stop being effective in holding wages back below the increase in the cost of living, then the ruling class opinion will once more swing in favour of a stand-up fight with one or other major union. Wilson himself may be the man to carry through such policy, particularly if he can persuade other union leaders to give their tacit support to the government’s efforts, as they did with the seamen’s strike of 1966. Alternatively, there is always the possibility of a parliamentary vote to remove Labour from office at an opportune moment when its popular support is weakest.

The Financial Times has summed up the main ruling class attitude. The Labour Party, it has said, is ‘on probation’.

‘The condition for any future for Mr Wilson and his administration is the handling of the inflation problem.’

The Labour vote

A KEY factor determining how long Labour can keep the support both of the ruling class and of the trade unions will be the attitude of the mass of workers, particularly of trade union activists in the better organised sections of industry. It was acceptance by many of these of the idea that Wilson was on their side and that his incomes policy was ‘fair’ that enabled the union leaders to collaborate with his last government for so long. It was when these began to take unofficial action in 1969 and 1970 that the union leaders really clashed with Labour.

Election results never give a real picture of political consciousness: they static and one dimensional, while consciousness by its very nature is dynamic and multi-faceted. Yet there are some obvious conclusions to be drawn from the General Election. The most important is that although Labour ‘won’ in parliamentary terms, it did so more because of popular rejection of the Tory message than because of any massive identification with the Labour alternative. Labour actually polled fewer votes than at any election since 1935 and a smaller percentage of the poll than since 1931.






































The figures are all the more surprising when it is remembered that the extension of the vote to 18 year olds means that the total poll at the last two elections has been greater than ever before and that a remarkably high percentage of people voted this time.

Some of the loss of Labour votes may have been due to people voting Liberal ‘to get the Tories out’ in rural constituencies. But there was also a decline in support for Labour in many urban areas: the percentage Labour vote fell, for instance, in the Salford seats of Stan Orme and Frank Allaun and in Michael Foot’s Ebbw Vale.

It is clear that much of the disillusion with Labour that prevented many of its former supporters from voting in 1970 is still there. The Labour leaders did little themselves to rebuild traditional loyalties during the election campaign. They gave no real indication that they would be able to tackle the problems that have been producing anger and frustration among whole sections of workers. On the questions of prices and mortgage rates, for instance, they admitted their reformist impotence in advance, pointing to world prices and making the same noises about ‘austerity’ as their opponents. It was hardly surprising that voters who broke with Tories moved towards the Liberals or the Nationalists.

The same hesitations about Labour exist with the solid core of Labour voters and union activists. But that does not mean that the new government will not be able to rely upon residual illusions to provide it with a breathing space. Indeed, the first months in office can see a marginal strengthening of these illusions. Among those whose political interest has been newly awakened, the few crumbs which Labour hands out in its first weeks in office may seem like manna from heaven after the years in the Tory desert.

Prospects for Labour

TWO IMAGES will dominate Wilson’s thinking in the months ahead. One will be of the fall of Heath’s government through taking on a powerful group of workers and losing. The other will be of the events of 1969, when Labour’s failure to carry through its In Place of Strife plans for attacks on the unions led to it losing the confidence of the ruling class.

The present Labour government cannot avoid one or other of these fates indefinitely. If it attacks the unions too vigorously, it will lose its working class base. If it does not, it loses the confidence of big business and its precarious parliamentary position.

What makes its situation still more difficult is the present unstable state of capitalism internationally. Even the strongest government cannot avoid being blown off course by sudden and unexpected economic storms. The experience of the Heath government at the end of last year was witness to that: it had to move within days from talk of ‘an unprecedented period of prosperity’ to dire warnings of ‘years of austerity’. Yet Wilson starts life with a government much weaker than Heath’s was then.

Labour may be able to enjoy its honeymoon with the unions for a few weeks or even months, without unduly upsetting big business. But a breakdown in the arrangement is inevitable at some point. Inflation at 15 per cent a year is going to make the sugar on the pill of ‘voluntary wage restraint’ within Phase Three limits look very thin indeed to most workers in a fairly short time.

Yet much of big business opinion already regard Phase Three as ‘grossly inflationary’. Above all there is worry about the implications of the threshold clauses due to come into effect when the Retail Price Index rises seven per cent above last October’s figure – an event likely in the next month or so. The additions to wages will not be nearly enough to keep up with the cost of living (they work out at around 0.8 per cent on take home pay for every 1 per cent increase in the price index) but they are far more than most employers feel they can afford – particularly as they have somehow to recoup the losses incurred by three day working.

Labour will not want to attack the threshold. To do so will put its honeymoon with the unions in grave peril. But the alternative may be alienating the affections of big business – and with them the friendship of the IMF and the votes of Liberal MPs.

The revolutionary left

THERE CAN be no doubt that the presence of the Labour government will aid the revolutionary left in the long term. The residual illusions which many workers still have in Labour and in the possibilities of reformism will be put to the test and will be proved to be mistake: in an even more decisive manner than in 1964-70.

What is more, the success of the miners in defeating the Tory government will not be forgotten. It can inspire further massive struggles under Labour. And in such struggles the political lessons will be drawn much more sharply than was possible while the Labour Party was in opposition.

But in the short term, in the first few months of the government, things can be rather different The honeymoon can be an all too tangible fact. Not only the trade union leaders, but many rank and file activists as well, are likely to feel that ‘we have to give Labour a chance’. This feeling will be reinforced by the precariousness of Labour’s position in parliament and by a desire to see its reforms, however minimal, on the statute book.

The feeling will not be all-powerful. Workers do not put the faith in Labour that they used to (as the willingness of the miners to keep up the strike during the election campaign showed). But the feeling will be present.

In such circumstances, revolutionaries have to be prepared to change their tactics. It is not a question of giving way, in any degree, to the reformist illusions of other workers or of pretending that the government can ‘move to the left’. What is necessary is to recognise that it might be some time before the illusions lose their stifling effect on the industrial struggle. In the interim, what will be needed will be patient argument, particularly within the trade union movement, about the realities of the situation, pressing the case for continued militancy, campaigning for rejection of the manoeuvres of the union leaders with the government, building up support for those sections of workers who do go on strike. Of key importance will be raising within the movement issues like that of the continued imprisonment of the Shrewsbury pickets, which shows more clearly than anything else how little Labour has really broken with Tory methods.

The honeymoon atmosphere may mean that revolutionaries are isolated within the movement for a period, with everyone else from the right wing through to the Communist Party trying to keep things quiet, in deeds if not in words. That should not worry us too much. It provides us with an opportunity to argue our positions clearly and patiently to other workers and to prepare to reap the benefits when the honeymoon ends. Whether that will be sooner or later, we just cannot know. It depends on the changes that are taking place in the consciousness of millions of workers. But end it must.

Last updated on 18 November 2009