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International Socialism, Winter 1980


David Beecham

The ruling class offensive

(Winter 1980)


From International Socialism, 2:7, Winter 1980, pp. 1–17.
Transcribed by Marven James Scott.
Marked up by Einde O’Callaghan for ETOL.


‘If ever a nation stood poised between remorseless decline and real success, between poverty and prosperity, between disintegration and moral recovery, then it’s Britain on the eve of the 1980s. In the starkest terms, I’m saying to you that we are drinking in Last Chance saloon.’ (Sir John Methven, CBI director general. Closing speech at CBI national conference, November 6th 1979)

There can be no doubt that the class struggle is becoming harder. Trade union militants and revolutionaries alike are finding that the answers which stood them well in the early 1970s are not enough in the early days of a new and aggressive right-wing government. Arguing in the last issue of this journal against an earlier analysis by Steve Jefferys [1], Tony Cliff showed how there have been a series of major shifts in the balance of forces, the confidence and willingness to fight of crucial sectors of the industrial working class. [2] I want to extend Cliff’s analysis, focussing exclusively on one particular aspect of the changes that have occurred, namely the way in which employers and the ruling class in general have responded to the lull afforded them by the social contract years (for the purposes of this article, mid-1975 to early 1979). The British ruling class, I will argue, has responded in unprecedented ways to its ever-deepening economic decline; it is this new challenge – demonstrated conclusively in the latter part of last year – which is the decisively new feature of the class struggle in the late 1970s and which we must take on board if workers are, first, to defend their organisations and, secondly, take on the ruling class, in the next few years.

The argument goes broadly as follows:

  1. The politics of ‘national consensus’ which characterised Britain and several other major European countries in the 1960s and early 1970s have been widely questioned. In Britain (and elsewhere), there has been a clear rejection of consensus – in the British case predating the Thatcher government by a considerable period.
  2. Meanwhile, invigorated employers’ organisations have appeared, to play a key role on the British scene for the first time. A much harder, and more self-sufficient, mentality has replaced, or begun to replace, the ‘traditional’ approach which characterised management in the period up to 1974–75.
  3. At the same time the use of existing law in industrial disputes has become much more widespread, and employers have become much more aware of the use to which they can put the law in ‘shifting the balance of power’.
  4. The absolutely dominant need of British capitalism is a radical improvement in productivity – output per person employed. In contrast to the period of productivity bargaining which followed the Donovan Commission report in the sixties, the need is now for a complete erosion of shop-floor resistance to management control – the assertion of management’s absolute right to manage.

These developments have taken place against a very special background. Key areas of capitalism face intense world competition and are in real danger of collapse: car manufacture, ships, steel; or are doubtful about matching investment levels elsewhere: heavy engineering, specialised machinery and even the electrical/electronics industry.

Alone of post-war incomes policies, anywhere in Europe, the 1975–77 policies of the Labour government were solely and successfully policed by the trade union officials. The extraordinary result was a cut in real wages at the same time as the appearance of structural unemployment largely tolerated by both the official and unofficial trade union movement. The unions accepted consensus politics – social peace – just at the moment when the most aware sectors of the ruling class were beginning to question its value.

Thus at a critical moment for British capitalism there was a breathing space. A time for recuperation from historically high levels of inflation, tremendous wage militancy, the aftermath of the oil crisis, the deepest ever decline in profitability, the immediate impact of entry to the EEC and the very damaging psychological effects of the hammer blows suffered by the Heath government at the hands of the rank and file in 1972 and 1974. While the trade unions pulled their punches, the ruling class as a whole took stock and learned the lessons of 1969–1974.

The wind of change

Between 1974–75 and 1978–79 a major change took place in the stance of British employers. The change did not happen all at once, nor did it affect all the institutions of the ruling class in the same way at the same time. Nevertheless the wind of change blew ever more strongly in the years after the defeat of the Tories by the miners, and above all, over the past two years. The more specific aspects of this – the changing attitudes to incomes policy, the law, productivity and the labour market – will be dealt with below. First, however, a look at how the change took place and what its most obvious effects have been.

In early 1974, the employers main organisation, the CBI, was in disarray. The product of an uncomfortable amalgamation in 1965 – a merger of the National Association of British Manufacturers, the British Employers’ Confederation and the Federation of British Industries – the CBI had never managed to act coherently. On the eve of the 1974 general election, CBI director general, Mr Campbell Adamson, expressed his doubts about the Tories Industrial Relations Act. The organisation plunged into its worst ever crisis. Thirty top companies – led by GKN – suspended their membership, and a major row ensued. The Financial Times (23.4.74) commented: ‘The trouble stems in part from a major ambiguity in ... the role of the CBI. It is obliged both to represent faithfully the wishes of its members, many of whom hanker for a return to unfettered capitalism, and to play a constructive part in the three-way dialogue with the Government and the TUC

In fact a statement by GKN at the time made it clear that the key issues for its President Sir Raymond Brookes (chairman of the Economic League) were the CBI's accountability to its members and making the organisation the unified voice for employers’ interests. Internal reappraisal followed fast. In July 1974 a President’s advisory committee was set up to re-establish control by the CBI’s members (or rather the giant firms) over the central bureaucracy. The new committee was largely composed of the very industrialists who had been most hostile to the way the CBI had developed between 1971 and 1974. Leading members of the Engineering Employers’ Federation – signatories of a letter denouncing the CBI’s stance some two months earlier – were drafted into the new ‘consultative committee’; Lord Robens (Vickers, Johnson Matthey, THF etc.), Lord Plowden (Tube Investments), Sir Arnold Hall (Hawker-Siddeley, ICI, Lloyds Bank, Phoenix Assurance), Sir John Clark (Plessey and, lately, ICL).

In addition to these key hardliners from the EEF the group contained the chairman of ICI, Unilever, Fisons, Cadbury-Schweppes, Delta Metal and the Burton group, as well as Derek Esra (NCB) and Richard Marsh (BRB). The detail is important – all these companies both before and since have been notable for their pursuit of the ‘hard’ management strategy. Five of them were directly responsible for last years lock out strategy in the engineering dispute. And the doyen of them all – Sir Raymond Brookes – also found himself asked to lead the reform of the organisation he had threatened to leave four months previously. Six of the members of the new committee had been members of the top industrialists Industry Policy Group (a Tory ‘think-tank’), disbanded shortly after the fall of the Heath government. [3]

For the next stage of the CBI’s development it is necessary to look at a much more recent event – in early 1978 in fact, shortly after the CBI had held its first annual conference. The Labour government was faced with a threatened breakthrough against pay policy – led by the electricians in the contracting industry. To avert the crisis it brought in a series of tough pay clauses which it insisted would be put into every future government contract. The proposed clauses would not only have covered pay settlements by firms contracting directly, but also firms sub-contracting from the main companies. [4] The implication was clear. Having got the TUC to do the dirty work on the enforcing the first two stages of pay restraint, and stage three up to and including the firemen’s strike, the government was now turning to the employers to do the job.

For the first time ever a rejuvenated CBI under Sir John Methven openly defied a government. A statement by Methven showed the remarkable turnaround in confidence just four years after the CBI had been on the point of falling apart:

‘The CBI, although it opposes statutory pay controls, has consistently supported the Government in its efforts ... But it is totally unreasonable to try to enforce a level of pay settlements by means of sanctions which have not been made public and which ... give the Government far wider powers than they can possibly need to support their pay guidelines. (The CBI’s counter-policy) could include approving a recommendation that members should strike the proposed pay restraint clauses out of all contracts which may be offered to them.’ [5]

For something like six weeks, CBI members held the line. The government came back with modified proposals, grudgingly accepted. It was a most important moment. It showed the employers were on the point of jettisoning support for consensus incomes policy (an approach confirmed and carried through at the end of 1978 – see below) and it showed the CBI – and its members – could deliver if there was an issue of common interest. Sir John Greenborough, then CBI President, wrote in his annual report for 1978: ‘When the Government introduced a totally unacceptable pay clause into its contracts with industry and commerce in February, employers stood firmly together in their opposition to it, and this cohesion can be seen as a most important milestone on the road to improved employer solidarity.’ [6]

The most recent manifestation of the wind of change was the CBI’s third annual conference in November 1979, where Sir John Methven delivered an extraordinary speech, laced with appeals for a strong line, from which the quote which opens this article is taken, and for which Methven received a standing ovation. The November 1979 conference is of course notable for something rather more profound in the developing theme of employer unity: the report of a steering group on a New Deal for Industrial Relations, chaired by Sir Alex Jarratt.

But if the wind of change in the CBI has blown remarkably swiftly, especially considering the historic irrelevance of any central employers’ organisation in Britain, the developments in that much more tightly-knit and militant organisation, the Engineering Employers’ Federation (EEF) must be at least as important. Indeed it is arguable, in view of the companies which campaigned for reform of the CBI, and in view of the fact that the EEF is the largest single corporate member of the CBI, that the engineering employers’ stance over the last five years has been decisive in shifting employer unity and self-reliance to the centre of the stage.

For the EEF, however, the firm line is not new. Founded well before any of the organisations which formed the CBI – in 1896 (the National Union of Manufacturers was formed in 1915) – the Federation, as it is widely known, has long been the toughest British employers’ organisation. The most obvious example is in its ability to fight strikes. Alone of major employer groups, the EEF has a strike fund, which it used to great effect in the 1972 Manchester sit-ins (though according to a recent Financial Times article the effect was psychological rather than of practical use in compensating companies hit by the strike). When the Commission on Industrial Relations inquired into employers’ organisations in 1972, [7] its questionnaire did not even include the issue of employer strike funds – an indication of how far the EEF was in front of most other employer groups at the time.

Nevertheless, even since then the Federation has shifted its ground, becoming more stridently militant, more coherent, putting its policies increasingly into practice. Almost as a symbol of the change inside the EEF, take the issue of the three-year strike at Fine Tubes. Fine Tubes boss, Tom Barclay, became a famous figure during the 36 months from 15th June 1970 to 15th June 1973 as he took on and smashed the AUEW and TGWU at the Plymouth factory. He did not succeed without considerable trouble and in spite of a massive blacking campaign, which involved 6,000 Rolls-Royce Bristol workers defying a management lockout threat from that key EEF member. Of most interest in the context of this article, however, was the attitude of the EEF to their member firm. Federation officials referred the strike to the DEP, and generally made it clear in public that they regarded Mr Barclay as a bit of a maverick. In the Court of Inquiry into the dispute the EEF spokesmen were embarrassed by Barclay’s stance. They were perhaps even thinking of ditching him. In a letter to EEF deputy director Peter Ball, John West of the West of England Association (local EEF) said: ‘I would not wish to stir the pudding since in my heart I feel that tough Tom will suffer considerably as things proceed.’ [8]

But the EEF did not desert him. And six years later ‘tough Tom’ could be found deliberating the EEF’s lockout policy as vice-president of the West of England Association and a member of the Federation’s management board.

The resistible rise of Tom Barclay coincided with the period when the EEF came out into the open. The now famous ‘guidelines’ on management attitudes to industrial relations and strikes, published in March 1979, are in effect mandatory for the EEF 6,000 members. [9] Their promulgation occurred on the occasion of the Federation’s first ever national ‘study’ conference, which was almost entirely a propaganda exercise for a tough line on productivity, discipline and disputes. And interestingly enough that ubiquitous company – GKN – was the major force behind the EEF drawing up its code of practice, this time with Sir Barrie Heath (Sir Raymond Brookes successor, and like him a council member of the Economic League) leading the way. The guidelines subsequently appeared verbatim in the report of the Jarratt group to the November 1979 CBI conference. And more significantly, the evidence of their use appeared frequently in engineering disputes throughout most of 1979. Most notably of course in the national dispute, but also in disputes at Hy Mac (in South Wales), GKN, Lucas, High Duty Alloys and BL. Above all the characteristic of the EEF guidelines is the open assertion of ‘management’s right to manage’, which in turn became the rallying cry of the CBI last November, and which was the employer’s objective during dispute after dispute in the latter months of last year.

It would be a great mistake to underestimate the particular psychological impact of the EEF’s overt statement of aims. The Federation’s leadership alone has a significant presence elsewhere in British capitalism – the Banks, the City, the boards of ICI, The Times. The EEF’s influence on CBI regional committees is also massive, particularly in key areas like the North West and the West Midlands. Even at the mundane (but fascinating!) level of membership of Gentlemen’s Clubs, it is worth observing in passing that the members of the Carlton Club include the current director general and president of the EEF as well as half the Conservative cabinet... [10]

The fundamental change of approach by employers and their organisations in the last few years is thus most obvious in the cases of the CBI and EEF – but is by no means confined to them. A similar evolution has been taking place in other circles: the Chemical Industries Association, the National Federation of Building Trades Employers, the Newspaper Society, the British Printing Industries Federation ... even in the most vulnerable groups of owners, such as the Road Haulage Association which held out for a month across the country last winter – the first time most of the employers concerned had lasted out a strike for more than a few days. The last RHA conference incidentally saw demands from employers for productivity concessions in return for pay rises which merely keep up with prices.

So much for the change in attitude – how has it shown up in practice, beyond the general statements of policy, the new language of employer unity and the specific open policies of the engineering employers?


It is generally accepted by those examining strikes in the past decade or so, that the average length of dispute – especially at plant level – has increased. While short stoppages have remained characteristic – above all when it is recognised that official statistics systematically under-record the typical dispute in companies such as Ford – longer strikes have become endemic since the period of the last Tory government.

The analysis of strikes [11] cited by Tony Cliff – carried out from February 1977 to January 1979 – confirms this development. This analysis is of course just as prone to error as the Department of Employment’s – it does however contain more detail. On long strikes, it shows 103 over the two years (exactly 10%); almost all lasting more than a month, most over two months. The vast majority of these stoppages resulted in little or no gain for the workers concerned. Another part of the analysis reveals 80 lock outs in the period. What do these figures suggest?

They seem to bear out the experience of most of last year – an increasing number of disputes are either brought about directly by management, or are prolonged by employer determination. The blatant examples of the Chrysler and Vauxhall disputes last autumn are the most prominent cases at plant level: together with the engineering dispute at national level. The latter, which accounted for more ‘strike days’ than any other dispute since the miners’ lock out of 1926, was prolonged almost entirely by the EEF’s desire to break union militancy. The employers themselves recognised that had Lord Scanlon still been in control of the troops a couple of one-day strikes might have been all that ensued. Once the dispute was escalated, however, it became a trial of strength the EEF wanted to win: the fact it did not win this sort of victory was a result of the tenacity of most of the AUEW’s membership, the failure of the lock out tactic and the engineering employers own uncertainty in their first great national battle since the 1922 lock out.

Looking at the other major elements in the apparent wave of workers’ militancy which swept Britain last year, we can again and again see the same pattern. Stern resistance by the Newspaper Society and the RHA at the start of the year; the fragmented offensive of the public sector workers going down to defeat in the face of the obduracy of local and national government alike; the adamant resistance of the motor industry bosses already referred to and so on.

If the pattern of strikes is to be used as a measure of the period – at least since 1977 – it demonstrates growing resistance by employers, rather than any continuity or change in workers’ militancy.

Incomes Policy

As the examination of the changing policies of the CBI has already revealed, the welcome which the employers gave the £6 policy devised by Jack Jones in 1975 was transformed into very grudging support by early 1978. By the end of that year, prominent employers had decided to ignore Callaghan’s attempt to hold the rate of wage increases at 5%. The CBI’s backing for any kind of tripartite control of wages had all along been under strain. But the £6 policy came as rank and file pay demands threatened to sweep all before them and was generally welcomed. Nevertheless, the CBI made it clear that ‘it considers monitoring to be the Government’s task and that a duty should be placed on employers to furnish the necessary information’ [12] – and a policy run by the TUC was not popular with those members who staged the 1974 revolt against CBI ‘incorporation’.

A detailed analysis of the employers growing disenchantment with the social contract as a system for pacifying the unions and managing the economy would take far too long for the purposes of this essay. It merits an article in its own right. But there were several crucial themes in the process. One was the philosophy of worker-directors as espoused in the Bullock Report, which appeared in January 1977. [13] From the word go, the Bullock formula – trade unionists on the Board – was bitterly opposed by employers. The three employers on the committee issued a minority report condemning the Bullock proposals (which, incidentally, were supported by a certain John Methven – plain Mr. at the time!). Once again, GKN was to the fore in the person of Barrie Heath; and the minority report was also written by Sir Jack Callard, former ICI chairman, and one of the dissidents co-opted to reform the CBI in 1974. The strongest subsequent opposition to Bullock came from the EEF, which has undertaken what amounts to a major propaganda campaign in employer and business circles to ensure Bullock never got off the ground. [14]

The second major element in the withdrawal of employer support for social contract-type policies was Labour’s prices policy. The Price Commission had been started by Heath and the rules under which it operated remained the same till 1977. Then the commission, by this time staffed with Labour ‘lefts’ – John Hughes for example – became more interventionist and more political. The CBI began a campaign against it, notable for its mounting hysteria and its capacity for telling half-truths. The real reason for the employers’ opposition was almost certainly entirely political itself. The CBI’s own figures, published in June last year, showed the commission had more effect on prices under the old (Heath) rules than the later (Callaghan) ones. [15] The Commission was however prone to descend on companies in its later days and produce embarrassing reports. By 1977-78 of course it had also lost any credibility it may have had with trade unionists and their families, and thus any ideological point for the CBI.

A third element in the employers shift away from Labour’s consensus was the self same opposition to tripartite management of the economy which occurred under the Heath government. But more important in the long-run was the failure of such a policy to achieve in Britain what it achieved in West Germany, Scandinavia and – partially – in Italy and Spain; namely, the control of the militants and an opportunity for the permanent redistribution of GNP from wages in favour of profit.

In this respect the events of last winter were decisive. Admittedly, major employers – Ford, BOC, Vauxhall for example – had already decided that Jim could not fix it and that they would not sacrifice themselves for his sake. But others still held to the 5% rule. What worried the CBI (and the Tories) was the developing possibility of a new stage of price control, drawn up by John Hughes, which proposed union involvement in companies’ pricing policy in return for which ‘unions should be prepared to take full account of the information disclosed when considering a proper level of settlement.’ [16] The TUC General Council reached a deadlock on the proposal on 14th November 1978.

It was thus with the blessing of the CBI and most of private industry that the Tories and Liberals voted down the government’s pay-curb sanctions in the Commons on 14th December. The social contract had served them well for some three years. It was time to cut loose. Any vestiges of employer support for consensus policies – and there were some – were then swept away by the subsequent strike wave. The CBI quite deliberately stood back from the conflict – particularly the drivers’ strike – and pointed a finger at the government as the blameworthy party. There was an orchestrated campaign to show that the policy of social partnership with the TUC did not lead anywhere, which provided the perfect background to the Thatcher election campaign.

In Europe too the situation was repeated. Walther Muller-Jentsch describes how the German employers moved to frustrate the policy of ‘Concerted Action’ in 1977, in the wake of the 1976 law on co-determination, which led the German unions to withdraw from the tripartite policy-making body. The whole period saw an intensification of employer militancy, with a law suit against the co-determination law and two huge lock outs (there was one national lock out in Germany in the 1960s; there were five in the 1970s). [17]

A similar approach can be discerned in Italy. The period of the historic compromise proper – with the Italian CP lending its active support to the ruling Christian Democrat coalition – saw a dramatic fall-off in strikes (a 75% decline in strikes for ‘structural reforms’ according to one recent study). [18] The ruling class’s deal with the CP lasted just as long as the Christian Democrats were regrouping: the subsequent shift to the right, the CP’s electoral setback and most recently the first unilateral sackings by a major Italian employer (Fiat) for more than two decades all are fascinating parallels with developments in Britain over the past couple of years. [19]

What this indicates is that notions of a semi-permanent ‘corporatism’ in the post-war period are very wrong. The turn to class conflict and away from consensus is very marked in several European countries now that the immediate crisis which followed the 1973–75 inflation and recession has passed. Long-term consensus policies are no longer possible – or desirable – for a number of very diverse segments of world capitalism. This does not of course mean such policies cannot make short-term comebacks.

The Law

Cliff has made several observations about employers’ increasing use of the existing framework of law in collective bargaining. [20] An article in last September’s Socialist Review [21] also demonstrated the growing enthusiasm in the courts for major incursions into union liberties. The Tory government is now taking this process further with some well-defined and specific changes to the law which have the combined effect of making it much easier for companies to use the law; much easier for ‘responsible’ union officials to frighten their members off certain tactics; and above all much easier for companies to pick and choose about when they invoke the law against particular shop stewards and unions.

Alongside this process go the renewed attempts to weaken strikes by limiting social security payments to families or to alter the rules by which workers on strike get tax rebates. And there is the further move to abolish several of the Employment Protection Act’s more ‘union-oriented’ clauses and limit the power of ACAS to recommend union recognition. Lastly we have the evidence of two extraordinary decisions – against platform ‘wishes’ – by the CBI's conference in November – a narrow vote in favour of outlawing the closed shop (opposed by the larger firms) and an overwhelming vote in support of making collective agreements legally binding. [22]

All these developments add up to a major reversal of ‘accepted’ employer policies since at least 1974. It would be a mistake to seek a single force behind the change, but one substantial influence must have been the judiciary’s handling of the various Grunwick test cases on ‘secondary’ action and ACAS powers in 1977, and the union bureaucracy’s inability to do anything about them.

The stealthy approach to changing the rules of the game has become paramount, with full-scale criminal trials against union officials for ‘extortion’ in the January 1979 lorry drivers’ strike. When one T&G official was fined £750, the Scottish assistant-director of the CBI commented that the judgement would encourage other firms who had been holding back.

We are yet to see where the employers’ legal offensive will lead. It is highly unlikely the government will want to try the mechanism of compulsory legally-binding agreements again after the experience of 1972–74. But what was, however, virtually universal in the day-to-day employers’ reaction to the Industrial Relations Act [23] – reluctance to use legal provisions – is now once again in question. It is possible that individual employers may seek to include legal clauses in agreements if union grovelling at judges’ feet continues.


This article has argued that the drive to raise productivity – above all output per person employed – is at the heart of the ruling class attack. So it is hardly surprising that the productivity offensive both at the level of the plant and nationally is one of the dominant features of pay bargaining since the summer of 1977. Unlike the previous period when productivity deals became the norm – 1967–72 – the present offensive falls into two sharply defined periods: first the softening-up, then the offensive. The earlier period, around 1970, when big pay rises were conceded often in response to minimal shop-floor concessions and mutuality was retained, saw stewards operating the ‘fallback’ positions epitomised in Cliffs book on productivity bargaining as ‘fighting the deal from within’. [24] The latest round of bargaining, as befits the much bleaker prospects for British capitalism, is aimed precisely at destroying that mutuality, custom and practice, protective practice and element of shop-floor limitation on management control that was successively defended – and sometimes won – in the late 1960s.

The first phase of the new offensive came about entirely as a result of Labour’s stage three pay policy – August 1977–78 – which allowed ‘self-financing productivity deals’ on top of 10% basic increases. Over 1,500 deals were signed in the year to August 1978 (DE figures); mainly seen as devices to get round pay controls, both by workers and management. But even in that early period there were – alongside phoney bonus deals and relatively harmless value added schemes – penalty clauses of a new type. A lot of them were in-attendance bonus schemes that turned out to be anti-strike agreements as well; for example at GEC, Caterpillar Tractor, Honeywell, Perkins Engines and, notoriously, Ford. The second time round, in the latter part of 1978, management began looking for real concessions. The trick was described in The Charter (October 1978) where details of the punitive conditions attached to productivity deals at Leyland Vehicles, Rolls-Royce, Duple Coach-builders and Perkins Engines were given.

In 1979 the offensive gathered pace. Perhaps most significant of all were the productivity clauses inserted in the engineering agreement which specify that the complete cost of reductions in working time should be offset by extra productivity. This gives a carte blanche to engineering management – theoretically till November 1983!

The car industry is the other crucial sector where a massive attack on mutuality and traditional work practices is under way. (It should be noted, however, that at Vauxhall’s Ellesmere Port plant part of the management demands is the removal of ‘unofficial entertainment areas’ – areas in the plant evidently outside management control – an illustration of the way car industry bosses are having to fight the battles of the 1960s all over again, in the infinitely worse economic climate of the 1980s). BL, Ford, Peugeot-Talbot, Vauxhall have all gone on the offensive in a big way during 1979 – primarily against indiscipline, mutuality, unauthorised absences, unconstitutional action etc. Similar drives are under way in the shipyards, aerospace factories, steel, the chemical industry etc.

The problems for these decisive sections of British capitalism are immense. Just taking the simple question of absenteeism, it appears that most of the attendance payments schemes have been ineffective in getting more people to turn up for work. There are also some phenomenal rates of absence: up to 39% in some shipyards and parts of Rolls-Royce. And some companies seems prone to special problems. Absence levels in Cadbury-Typhoo factories in 1977 for example ranged between 0.2% and 8.6%; in United Biscuits (home of Mr James Prior) between 7% and 30%; in Birmid between 5% and 9%; Leyland Vehicles, about 11%; Lucas 6% to 12.7% etc. [25]

Labour market

The annual average of unemployment – excluding school leavers – has more or less doubled since 1974. There is permanent structural unemployment on Merseyside, Tyneside, Clydeside and also in such ‘lesser’ areas as Falmouth (12.6%), Wrexham (12.5%), West Cumberland (8.6%), Rotherham (9.2%), Plymouth (9.0%), Oakengates (9.2%). Traditional ‘safe’ areas of manufacturing industry have constant historically-high unemployment figures: Coventry – 7.4%, Wolverhampton – 7.6%, Doncaster – 8.1%, Bradford – 7.1% etc. [26]

At the same time figures for unemployed skilled workers compared to vacancies show about an average three to four jobs for every unemployed skilled worker – and the official vacancies figures are estimated to contain about a third of actual skilled jobs available. [27]

The imbalance in the labour market, represents a huge problem for British capitalism, both in terms of finding and keeping skilled workers and in terms of disciplining labour. We are light years away from the world J.T. Murphy described in 1923: ‘How can you build factory organisation in empty and depleted workshops, while you have a great reservoir of unemployed workers.’ [28]

The situation is such that, for example, Pegler Hettersley in Stroud searches Liverpool for skilled workers; Johnson Matthey in Wembley runs a bus service of its own to bring workers from Luton. Firms in Kings Lynn advertise for toolmakers in ... North London, while North London firms can’t find toolmakers. The Electrical Contracting industry is forced to lift its pay rates for large sites to the same rate as electricians get in the oil-related industry. And so it goes on.

Under the Labour government, a special feature of the social contract – employment subsidies – became a permanent feature. So much so that Sir Richard O’Brien (head of the Manpower Services Commission) actively canvassed in favour of ‘twilight employment areas’ – the acceptance of zones with nothing but a service economy and phoney, temporary, jobs. The central thrust of employment policies advocated by the employers is to halt such policies, continue with regional aid, and above all secure a greater supply of skilled labour. The problem is the infrastructure of British capitalism – housing transport etc. – is totally inadequate. Low pay levels even mean slight drift of craftsmen and technicians to the continental labour market.

Meanwhile, none of the employers’ efforts to threaten employed workers with the dole, or replacement by a ‘reserve army’, is working. In fact even the employers have been embarrassed by workers taking voluntary redundancy; in some cases skilled workers have taken the money, those without skills have stayed put. Outside the normal employment market new mechanisms have been at work – what the Italians call the ‘submerged economy’ and the Inland Revenue calls the ‘black economy’. Just one example is sufficient to show the impact in certain areas. Birmingham engineering firms found a much tougher attitude from many skilled workers in the national dispute than they anticipated. The reason was the craftsmen found it easy to get one or two days’ work a week doing central heating installation or even working like day labourers for small sub-contract shops, cash in hand.

In this situation we can no doubt expect further attempts to cut employment subsidies, to dilute and make more mobile the labour force.

Conclusions – the way forward

There is a fundamental change that has taken place during the period of Labour’s social contract. The emerging crises specific to British capitalism, but forced on it by the world system, are making employers take an offensive profoundly different in character from other post-war developments. You have to go back to the 1920s to find language of the sort common in employers’ circles nowadays, and even then the tradition was only rarely one of ‘employer unity’. Unlike the most recent previous attempt by the ruling class to crush union militancy – the 1971 Industrial Relations Act – the offensive take place in predominantly favourable conditions. It follows the morale-sapping experience of the social contract, the post-Donovan move towards formalisation of plant procedures and shop steward power, the disciplining effects of the rapid increase in unemployment of 1976–77, the utter collapse of the union broad left into inertia or right-wing policies in its traditional bases – engineering, cars, shipbuilding, docks.

All these latter tendencies have been outlined in considerable detail by Jefferys and Cliff. Yet they in themselves do not provide any sort of answer as to why the struggle is becoming much harder. The answer is – crudely – that there are two sides to the class struggle, and the other side is beginning to realise it is fighting for survival.

The strategic needs of the employers in the current period are thus: i) management’s right to manage; ii) development – and protection of – the core group in the workforce: multi-skilled workers in the major industries; iii) concentration of new manufacturing industry in new areas – a withdrawal from traditional industries in traditional areas; iv) reallocation of resources from the state sector: an attack on the social wage, the ‘functionalisation’ of welfare, education; and v) massive increases in productivity to enable continued competition in world markets.

One key element in this is the renewed assault in the workplace: both on actual conditions and an ideological offensive – in favour of capitalism, profitability the viability of the firm etc. A central part of revolutionaries’ response to this has been and must continue to be the factory bulletin [29], the building of an articulate minority to take up the arguments wherever possible.

A further point is that arguments about unemployment and campaigns against it run the risk of being confined to ‘marginal’ areas or ‘marginal’ groups – the argument against unemployment has to be taken into the very heart of the working class, the strongest areas and in some cases the most craft-ridden areas. Alongside this the question of the very survival of communities will be at stake: defence of the community’s right to exist, in the context of bankruptcies or public sector cuts, may become the key to creating a mass movement centred on the strong sections rather than the weak.

This last point is probably vital if the assault on the social wage and public sector employment is to be met with any hope of success. Revolutionaries will have to learn how to conduct holding operations and even how to retrench in the public sector in order to be able to build up real support against the cuts in the private sector: strike action in manufacturing industry or transport and communications is the crucial factor in resisting cuts.

The extent of the ruling class attack and the harsh reality of how it can be fought present the revolutionary left with distinct opportunities for organisation. The left Labour approach, however articulated, cannot come to grips with the depth of change British capitalism needs to survive, above all because the forces driving British employers to more overt class conflict are forces on the world scale, insoluble in isolation. But for us, as for Sir John Methven and his friends, time is getting short.


1. International Socialism, 2:5 Striking into the 1980s – modern British trade unionism: its limit and potential.

2. International Socialism, 2:6, The balance of class forces in Britain today.

3. The Times, 25th July 1974.

4. Incomes Data Report, No. 275, February 1978.

5. The Times, 8th February 1978.

6. CBI Annual Report, 1978, p. 3.

7. CIR Study, No. 1. The Donovan Committee did not consider the question either.

8. Quote in Tony Beck, The Fine Tubes Strike, Stage 1, (1974), p. 90.

9. Cliff, op. cit. and Socialist Review, No. 15, October 1979. The full text was given in an engineers Charter special in April 1979.

10. The members of the Carlton Club, for example, include Anthony Frodsham, Sir Geoffrey Hawkings and Lord Nelson of Stafford (of GEC) – three key EEF leaders – alongside such famous names as Carrington, Whitelaw, Joseph, Heath, Macmillan, McAlpine etc. At the Athenaeum we find Vincent de Ferranti and Sir Arnold Hall (EEF stalwarts) rubbing shoulders with Sir Paul Chambers, Lord Kearton, Laurence Cadbury, Sir Maurice Oldfield and Lord Denning. It’s rather surprising no one seems to have looked at this set up before.

11. Cliff, op. cit., pp. 15–18.

12. Incomes Data Report, No. 215, August 1975.

13. Report of the Committee of Inquiry on Industrial Democracy, HMSO, Cmnd. 6706.

14. EEF opposition predates the Bullock report: “The Federation’s concept of ‘participation’ shares no common ground with theories such as that which advocates the two-tier board with its associated concept of union-appointed board members ... the theory is advanced by interests ... less concerned ... with private industry ... than with the reinforcement of institutional union and socialist power.” Employee Participation, EEF policy paper, November 1974.

15. Price Controls and the Price Commission, A Business View.

16. Incomes Data Report, No. 293, November 1978. John Hughes was also partially responsible for the ‘Jones Plan’ in 1975 (see note 3). Where does this leave him with his friends on the Labour left?

17. Industrial Relations in the Federal Republic of Germany during the 1970s, by Walther Muller-Jentsch, Institut fur Sozialforschung, Frankfurt.

18. The Italian Experience, by G. Carlo Mazzocchi, Universita Cattolica del Sacro Cuore, Milan. These two essays are shortly to appear under the imprint of the European University in Florence.

19. In France however, the Giscard government never conceded any place to the unions or opposition parties in policymaking, and the French employers have steered clear of any consensus politics at national or at plant level. Giscard is, of course, one of a two-person admiration society with Thatcher.

20. Cliff, op. cit.

21. The Legal Offensive, Socialist Review, No. 14.

22. A New Deal For Industrial Relations, background paper, CBI Conference, November 1979.

23. A very detailed analysis of this generalised attitude can be found in Brian Weekes et al., Industrial Relations and the Limits of Law, Warwick Studies in Industrial Relations, SSRC (1975). Also see Cliff, op. cit.

24. T. Cliff, The Employers’ Offensive – Productivity Deals and How to Fight Them, Pluto Press (1970), esp. pp. 220–231.

25. Incomes Data Services, Study No. 169, May 1978. It is also worth noting that the sometimes huge turnover rates that exist – even in areas of very high unemployment. Estimated turnover of maintenance workers at Govan Shipbuilders for 1979 was 20.4%, and for engineering workers 23.2% (an average 17% for the whole yard). Birds Eye had an average 19.9% turnover rate during 1978. Vosper Thorneycroft had a turnover rate of 28.7% (skilled) and 33.4% (unskilled) in the year to June 1979. some companies hold on to their workers much much better – ICI, for example, where the 1978 turnover rate was 8.5% for manual workers. It certainly doesn’t look as though chronic high unemployment is scaring workers from leaving when they are fed up with the job or need to move for personal reasons. Meanwhile, what the Govan figures mean for the Communist Party’s strategy in the Clyde yards is anyone’s guess. (Figures from IDS Study, No. 201, September 1979).

26. DE Gazette, September 1979. The figures are for August.

27. DE Gazette, May 1979, p.433.

28. Speech to the 4th Congress of the Communist International.

29. Whichever SWP branches it is that have been leafleting STC factories, they are certainly getting up management’s nose. Mr Kenneth Corfield. STC managing director, complained to the EEF conference (February 1979): ‘My wish is to see the means of communication which are available to us all used to put fairly and squarely to our employees, the people, some other points of view than those so persistently laboured by workplace demagogues and the crude but insidious bulletins and news sheets circulated by our less scrupulous competitors for the attention of our employees.’

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