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International Socialism, June 1977


Notes of the Month

Labour on the Rocks


From International Socialism (1st series), No.99, June 1977, pp.3-5.
Transcribed & marked up by Einde O’Callaghan for ETOL.


THE PRESENT Labour government finds itself in the same position as its predecessors in the 1920s. Like Ramsay MacDonald, James Callaghan must rely for political survival on Liberal votes in the House of Commons.

The difference this makes in terms of policies is, perhaps, minor. It may well suit Callaghan in his dealings with the TUC and the Labour lefts to be told by Steel that ‘there is little chance of the Lib-Lab parliamentary pact being renewed in the autumn if Phase Three is merely a cosmetic exercise’ (Financial Times, May 19 1977).

But what it does mean is that the government’s margin of error is very small. A breach either with its allies or with some of its own supporters over an essentially peripheral issue, for example, the question of direct elections to the European parliament, which is agitating both the Liberals and the Tribune group, could bring the government down. A general election in the near future would almost certainly bring Margaret Thatcher to power on a massive landslide. It was possible to argue that the electoral setbacks the Labour Party suffered in the 1930s after the failure of the 1923-4 and 1929-31 minority governments were deviations in a trend that was working in Labour’s long-term favour. The terrible electoral defeat of 1931 when most of the parliamentary leadership lost their seats was followed by a gradual recovery of strength and then the great victory of 1945.

Today the picture is quite different. The prospect of a Tory victory takes shape against a background of steady electoral and organisational decline for Labour. The county council elections on May 5 were another sign of this trend. Voters switched massively to the Conservatives – a 16 per cent swing to the Tories compared to the October 1974 general election. Labour managed to hold on to the inner cities while seeing the Tories make inroads into traditional areas of support:

‘It is clear that Labour is in special trouble in mining strongholds, and that the recent parliamentary by-election in Ashfield (where the Tories wiped out a Labour majority of 22,000 in a solid mining constituency – Ed.) was no fluke ... The other worst results for Labour came in outer urban council estate areas (such as the GLC constituencies of Dagenham and Hayes and Harlington). The Callaghan government seems in special trouble with a certain social group: the better-off skilled worker.’ (Economist, May 14 1977)

Large number of traditional working-class Labour voters are either staying at home or switching their electoral support to the Tories or the National Front. The NF did not do as well as it had hoped in the county elections.

‘The National Front put up its overall votes by the simple device of putting up more candidates. Where it already fought on a broad front last year, its vote dropped – from 18.0 per cent to 13.5 per cent in Leicester and from 7.3 per cent to 4.4 per cent in Bradford.’ (ibid.)

However, the NF’s performance, especially in once solid Labour constituencies in inner London, establishes it as a significant electoral force.

The increasing volatility of Labour voters has a number of causes. Most obviously, many worker are disillusioned and embittered as a result of three years of Labour in power. Mass unemployment, cuts in real wages and a declining welfare state all encourage them to vote for other parties. There is also another, more long-term factor: the organisational decay of the Labour party at its roots in the constituencies and the wards. Across the country the picture is the same: dwindling membership, declining activity and Labour Town Hall machines whose corrupt bosses are regularly discovered with their fingers in the till. Finally, there is no doubt that the crisis of British capitalism over the last ten years or so has undermined traditional political loyalties so that people are far more prepared to switch allegiances and to try new options.

The main beneficiaries of this process are the Nationalist parties in Scotland and Wales. The Scottish district council elections on May 4 showed Labour fighting off, so far successfully, the Nationalist challenge in the central industrial belt that forms its stronghold in Scotland. Nonetheless, the Nationalist gains were considerable: in Glasgow Labour lost the control of the council while the Nationalists increased their seats from one to sixteen. Overall the Nationalists won 38.4 per cent of the popular vote in Scotland.

The Scottsh Nationalist Party represents the most serious threat that has yet emerged to the dominance of the Labour and Tory parties. Labour depends for any chance it has of winning a general election of its safe seats in Scotland. If the SNP succeeds in capturing Labour’s Scottish stronghold, then Labour seems condemned to permanent minority status.

It is this danger, of course, which provides the rationale for Labour’s attempts at devolving some power to Assembles in Scotland and Wales and thus undercutting the Nationalists’ base. So far these attempts have been unsuccessful. The Tories, concerned at the threat to the integrity of the British state that devolution represents, have effectively abandoned their commitment to a Scottish Assembly. They have found ready allies among the chauvinist Little Englanders and defenders of the sovereignty of Westminster among the Tribune group. This alliance has succeeded in blocking Labour’s Devolution Bill, perhaps permanently.

The result is a highly unstable political system. In the short term the ruling class almost certainly sees a Callaghan/Healey government as the best bets in dealing with the trade union bureaucracy. But there seems to be little chance of another majority Labour government in the near future. The next general election may well be the making of Margaret Thatcher and the SNP. Big business doubts about Thatcher’s ability to handle the TUC are fairly openly stated. The SNP will also require sensitive handling. In principle, an accomodation would be reached with the SNP that does not harm British capital. The SNP leadership have gone out of their way to emphasise their moderation and their hopes that British and American multinationals will continue to play their dominant role in the Scottish economy after independence. But whether the Thatcher team could pull off such a deal is open to question.

These trends have led some bourgeois commentators to predict the break-up of the British state and the collapse of the two-party system. Whether these predictions are fulfilled will depend on developments in the next few years. In the short term – the next six months – the fate of the Labour government depends upon its ability to sell another round of wage restraint. We will now turn to its efforts to save the Social Contract.

Conference Shadow-Boxing

Prospects for Phase Three of Labour’s incomes policy have dimmed since the AUEW National Committee voted it down in May. The Financial Times recently noted:

‘The voting at trade union conferences is running at more than two-to-one against the principle of a Stage Three incomes policy after July 31.

‘With the union conference season half over, unions representing 2.8 million have come out for an immediate return to free collective bargaining. On the other side, about 1.3 million are ready to see a Stage Three.’ (May 25 1977)

But even where the conferences have thrown out Phase Three, union leaders have often been careful to leave themselves an escape route. Thus the AUEW National Committee passed a resolution calling for a return to free collective bargaining by a massive 50 to 2 majority. Once the right wing on the NC saw that they were in a minority, they swung themselves behind a resolution which provided for the recall of the Committee once the government and the TUC had finished their negotiations. They thus gave themselves the chance to try and swing the NC (which is very delicately balanced between ‘broad left’ and right) behind a Phase Three deal once it had been agreed.

And when NUPE’s biennial conference rejected’any form of wage control’, Alan Fisher explained that by this the conference had meant ‘an arbitrary wage control imposed by the Government where there is not voluntary agreement’ and claimed that he was therefore free to take part in the negotiations over Phase Three.

Moreover, Healey has been hinting a reflationary budget later in the year. The government has overfulfilled the targets set it by the IMF for controlling the money supply and could introduce further income tax cuts and perhaps other measures aimed at reflating the economy without breaching the guidelines laid down by its American and West German creditors. If Healey introduced such a budget, supporters of wage restraint like Murray, Jones and Scanlon could use it as a sign of a change in government policy to justify support for Phase Three.

Already moves for a pit-based productivity deal in the mines are gaining momentum. Healey has already declared his support for ‘self-financing’ productivity deals outside the overall limit of 10 per cent on earnings that he has laid down as the Phase Three target. If some such formula is used to buy off the engineers and the miners, then the brunt of the 10 per cent norm would be felt by Fisher’s members in the hospitals and local government, as well as other public sector workers.

It would, therefore, be a mistake to take the conference resolutions as the announcement of the Social Contract’s death knell. Whether wage controls really are killed off will depend how many workers are prepared to strike for across the board claims of £15 or over after Phase Two expires on July 31.

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