The Gordon Brown government poured many billions into the banks to head-off a banking run and collapse but is now making cuts against the public services to replace the billions they gave to the banks. Brown and his government are pushing for pay freezes in the private and public sectors and are preparing further draconian measures against workers especially the unemployed and the poorest sections of the class who are receipt of welfare benefits.

The Gordon Brown government poured many billions into the banks to head-off a banking run and collapse but is now making cuts against the public services to replace the billions they gave to the banks. Brown and his government are pushing for pay freezes in the private and public sectors and are preparing further draconian measures against workers especially the unemployed and the poorest sections of the class who are receipt of welfare benefits. At the same time the long running parliamentary expenses scandal has deeply angered workers as MPs from all parties make what they can from the generous schemes they themselves introduced. There is opposition to British involvement in the Afghan war of occupation, with approximately 56% per cent in recent polls, however the government ignores public opinion, as it did when Iraq was invaded and occupied, and is preparing to become ever more entrenched in Afghanistan.


Today these are a few of the issues that have made the Brown government extremely unpopular. Cuts in funding from universities, privatising the National Health Service (NHS) and welfare services, attacks on the poor and youth, attacks on benefits, immigrants subject to increasingly harsh measures, welfare to the rich paid for by the poor – this is a picture of the Labour government today.


Under Blair's policies 1997-2005, 5 million voters abandoned Labour. Since 2005 Labour has lost overall control of the Welsh Assembly, lost to the Scottish Nationalists in Scottish Assembly, and have lost 800 Labour councillors. That trend in decline has continued under Brown's leadership as in 2009 Labour was heavily defeated in the local and European elections. Many workers did not vote as they feel politically alienated and disenfranchised. A further indication of the decline in popularity of the Labour Party is the huge decline in membership to 160,000.


Politicians and the capitalist press suggest that the economic crisis is coming to an end based on 'official' statistics of production returning, 'optimism' in the City of London and an 'increase' in consumer spending.  The reporting in the media is as volatile as the events they are reporting, as predictions swing wildly based on the latest crumbs of daily 'events'.  However a recent cartoon painted a more realistic picture, it posed the question, "is that a light at the end of the tunnel or is it a raging fire?"


The Government embraced big finance and allowed the City of London to write its own terms of reference for regulatory control of banking activities. Brown, heralded as an expert with years of experience, forecast the end of boom and bust for a generation. The banks, such as Northern Rock, that went bust had been labelled as 'best business practice' moments before they went bust!


But it is no accident that these events erupt and continue. The nature of the crises is completely bound up with the crises of British capitalism, its inner resources and its decline on the world stage which itself is suffering international financial and economic crises.


The collapse of capitalist relations seen in the financial crash is not due to intervention by the working class, which is yet to come. The main prop of the government, preventing an even deeper government crisis, is the trade union leadership. In order to prevent the class mobilisations against closures the trade union bureaucrats are making deals that freeze pay and introduce more precarious work practices. Resistance is developing but it has not yet achieved the level of previous post-war recessions, however the crisis today will have much deeper implications for the class than happened in 1930s.


The Weakening British Economy


Britain's economic weakness was exposed when property prices and household debt bubbles burst, which began with the run on Northern Rock in September 2007. The government took over Northern Rock because of fears of runs on other banks and financial institutions that could result in the collapse of the whole banking system. The government had to proceed with multi-billion pound bale outs to prevent the shocks reaching the streets.


The crashes came from the speculative frenzy that had been unleashed in the City of London where swindles and betting on everything became the order of the day. Huge profits were made but vast amounts of 'money' had imagined value only, although seemingly very real to the bankers and government, and hid other processes. The historic weakness of British capitalism did not just appear in 2007.


"The gross value, in inflation-adjusted prices, of output from all production industries combined fell by 3% [between] 2000-2007. Their employment level dropped by nearly 1.1 million over the same period." Meanwhile "Real manufacturing output rose at an average annual rate of 2.2% in the U.S., 1.2% in Germany and 1.1% in France between 2000 and 2006, according to the World Bank."  (


Financial service and property and business service industries "soared by 48% and 33% respectively from 2000- 2007, compared with 19% for the overall economy. Their combined employment level reached nearly 6.7 million in 2007, an increase of more than one million." Keith Marsden, Wall Street Journal Europe.


The explosive expansion of consumer credit boosted demand for wholesale and retail products and services and the frenzy in the financial and property sectors generated by unsustainably rapid credit growth, also fed government revenues that allowed them to expand and prevented Labour's programme from collapsing.


"Thus, despite the decline in corporate and personal income and national insurance tax revenues from the production industries, he [Brown] was able to fulfil Labour's 1997 election promise of expanding public services. The output of health and social services increased by 26.3% from 2000 – 2007. Employment in the category "other service activities," which includes public administration and government services, grew by 1.3 million 2000-2007 and reaching almost 10 million — nearly a third of all British jobs."  Ibid.


In 1997 Brown transferred responsibility for bank regulation from the Bank of England to the Financial Services Authority (FSA). The basis of inflation statistics was changed when he removed housing costs from the price index. He aided finance capital in London build its international speculative frenzy into the biggest betting club in Europe. But beneath all the glitz they were on the verge of collapse that would create a deeper banking crisis than in 1930.


The banking and finance sector has been 'saved' by increasing state indebtedness. Government debt in the last financial year was £744billion which is equivalent to 52.4% of GDP, up from 36% in 2006-2007. The vast increase came from bailing out the finance sector, which amounts to nearly 10% of GDP. The increase in debt from 2006-07, excluding interventions, was approx £110billion including bailouts. Overall government debt rose by approximately £250billion.


Nationalisation' of the debt was not enough to 'save' the banking system and the economy, the government has had to 'print money', an extreme form of monetary policy called 'quantative easing', to attempt to stave off further crises. But someone has to pay and in the drive to extract value the attack will centre on wages, conditions, jobs and public services.  In May the IMF stated that Britain's public debt could destroy its economy and is extremely vulnerable to severe shocks because of the vast debt and the fractured banking system. In September the World Economic Forum report 2009-2010 on world economies showed that the UK dropped, for the second consecutive year, to 13th place of the most competitive capitalist nations. 


Empty Promises


After the World War II the Labour Party gained a resounding victory. The working class voted them in based on promises that there would be no return to mass unemployment and the degradation of the 1930s. Workers demanded health, education and employment, and capitalism was forced to concede to the demands of the class. At that time the Labour Party membership amounted to 1 million.


The standard of living of the working class in general is far higher today than it was then but expectations are today are far higher. The NHS, education and welfare services are perceived as rights and traditions and it should be remembered that they came out of mass working class movements.  There were mass struggles of the class such as the miners' strikes of 1943 which were tremendously important and which continued after the war. These struggles were perceived as a serious threat that whilst introducing the welfare state the Labour government also used more troops against striking workers than any other post-war government.


But sixty years later Labour have betrayed their promises. Workers are facing mass long term unemployment and unpopular capitalist wars continue to be waged. Despite their strength the position of the working class has not changed one iota with the ruling class and bourgeoisie continuing rule in the old way. Leaders of the working class movement the trade unions and Labour party have betrayed workers and seek only to be upstanding to finance capital. Today as Britain's productive power declines and faces increasing competition from Europe, China and other countries the crises that Britain faced after the World War II and during the 1930s are resurfacing. The reality is that nothing changed and could not be without a challenge to the capitalist relations of production. Also the crisis of Britain has to be seen in the context of a developing world crisis and solutions cannot be in the form of a British solution but necessarily require an international revolutionary perspective.


Attacking welfare and jobs


A recent report commissioned by the government declared that 'efficiency' savings had to be made in the NHS of 20 billion pounds by 2014. That would mean a reduction in the work force of 10% and the NHS employs more than 1.3 million workers. This insight into what is coming was too public for Labour and they immediately distanced themselves from the report they commissioned. Despite fears of losing the 2010 election, the Labour leadership is going ahead with its 'modernisation' plans for the NHS, education and other public services including the Post Office where plans include as many as 40% job losses. In August 2009 there was a scramble for university places due the cuts in places and courses despite the increased demand, but many of those leaving education either school, college or university are facing jobless futures.


Unemployment is currently at 2.47 million (7.9% according to the Office for National Statistics, 12/8/09).  The figures show a 743,000 fall in the number of people in work, the biggest fall since records began in 1971, with 1 in 6 of those under-25 out of work (928,000).  Figures show a relatively small rise of 25,000 in the number of people claiming jobseeker's allowance (state welfare benefit for the unemployed) with only 1.58 million people claiming Job Seekers Allowance, that is, equivalent to 4.9% of the workforce, which is the highest rate since October 1997.  These figures do not represent the true situation because many unemployed people are unable to claim benefit. It shows a steady increase in the conditions that were imposed in the 1930s as the Government continually makes it more difficult to claim benefit.


The welfare 'reform' bill that is going through parliament in October will introduce an obligatory 'community service'/ welfare-to-work scheme which will target young people who have been out of work for 12 months. It will also impose tough sanction and penalties including having benefit cut or reduced for trivial breaches of 'obligations and duties' such as lateness or not having the correct identification documents.  The changes being introduced in this bill are the most pernicious since the introduction of the Welfare State in 1948.  


The Labour government plans to use attacks on the working class to reduce the national debt, which will drive many into poverty. Here we see the beginning of a repeat of the 1930s when unemployment reached 40 % and at the same time unemployment pay was cut.  In many ways the Government attacks against immigrants are a training ground for what they can do to the working class. In October, for example, single asylum seekers who are not allowed to work, will have their benefit cut from 42 to 35 pounds per week. In 2008 even the parliamentary committee on human rights proved that the Labour Government has a deliberate policy of driving asylum seekers into destitution.  The attacks on welfare and the rights of immigrants is a question that has to be faced by the trade unions as these attacks are used to divide workers and a preparation for further attacks on increasingly more sections of the class. 


Another arm of the attacks on workers is the continual and creeping erosion of rights which at the moment are being targeted against the Muslim communities nationally and internationally through so called' anti-terror' laws but which also serve to divide workers, increase racism and introduce right wing authoritarian policies. 


Sleeze and Corruption


The Tory government lost the 1994 election under a shadow of sleaze and corruption. Today that shadow hangs over the current Labour administration following Blair's cash for peerages affair and now the controversy over MPs expenses. Like a reflection of the bonus culture that permeates the City self enrichment has entered every corner of parliament. The scams and ruses that MPs manipulate in order to enjoy lavish life-styles and second homes have shocked and incensed workers and the middle class. The level of arrogance and distance from workers of many MPs, who are astounded that they should be held to account, was revealed in the following observations, "But just how far should scrutiny and the limits on a MPs ability to earn money, in addition to his or her salary of £64,766 go?

How far, MPs ask, should "people power" be allowed to erode party and parliamentary structures that have evolved over centuries?" (Observer 9th August). 


In a recent statement Denis Macshane, a Labour MP and former cabinet minister and member of the privy council, accused the British public of "going through one of its periodic fits of morality". It is currently forecast that 120 Labour MPs and total of 200 will resign before the next election as a consequence of the "expense scroungers". Furthermore many people perceive the parliamentary system and its MPs to be so morally bankrupt that they are expressing their intention not to vote and with some more backward workers turning to the nationalist and racist British Nationalist Party (BNP). 


Parliament, like its 18th century predecessor, has gorged itself openly on patronage and self seeking while at the same time attacking the public sector services and workers.   


Labour's historic crisis


The present Labour leadership has spent decades destroying the basis of old reformism which contained in a distorted way the struggles of the working class and has created a shell of a Labour Party. The party conference has been turned into a debating club whose resolutions are blatantly ignored by the labour leadership., for example, in 2004 conference voted to renationalise the railways however the leadership announced that they were simply going to ignore it.  Policy making has been transferred to the new National Policy Forums which meet in private.


The Labour party obtains over 80% of party funding from the trade unions and the majority of unions do not challenge the government, quite the opposite they prop it up. Brendan Barber, general secretary of the Trades Union Congress wants a Labour Government after the next general election and does all he can to boost their prospects. In a recent struggle of workers who were occupying a wind-farm factory (Vestas), Barber wrote to Ed Miliband, secretary of state for energy and climate change, and praised "the considerable efforts you have already made to intervene in respect of the planned closure of the Vestas plant, to secure investment and to tackle the barriers to renewable energy market growth". He went on to say that he hopes that Milliband has left "no stone unturned in our bid to find an alternative that would protect green manufacturing skills and jobs on the island and elsewhere".


But support for Labour is not unanimous within the British trade union movement. The Rail, Maritime and Transport union (RMT) are outside of the Labour Party and stood candidates in the European elections. In September they announced that informal talks with pensioners' groups and students' organizations were being held in order to draw up a joint manifesto for a 'workers' alliance' to contest some seats in the 2010 general election. RMT branches and leaders are also holding meetings to discuss the future of political representation for the working class.

At the Public and Commercial Services Union (PCS) conference in May they voted to begin discussions within the union on standing of union candidates and supporting alternative candidates in future elections. PCS's 'Make Your Vote Count' campaign asked candidates in the European and local elections in June where they stood on civil and public service cuts, privatisations and pay.   The general secretary, Mark Serwotka said that, "It is a sign of how phoney some elections are that this frequently happens with candidates offering no alternative, even when public opinion and polling overwhelmingly reject policies, such as the part privatisation of Royal Mail and increasing the role of the private sector in welfare delivery."

The underlying situation for Britain is very acute with a deepening crisis and at the same time Britain's place in the world is in historic decline. During the 1930s crisis Britain had colonies in Asia and Africa, many of which they retained into the 1940s and even gained new ones. A major part of the fight back for British capitalism is going on behind the closed doors of Labour offices where plans are underway to sell off the remainder of the public sector, cut jobs and erode democratic rights.


Trotsky said in an unfinished article in 1940, Trade Unions in the Epoch of Imperialist Decay,

"It is necessary to adapt ourselves to the concrete conditions existing in the trade unions of every given country in order to mobilize the masses not only against the bourgeoisie but also against the totalitarian regime within the trade unions themselves and against the leaders enforcing this regime. The primary slogan for this struggle is: complete and unconditional independence of the trade unions in relation to the capitalist state. This means a struggle to turn the trade unions into the organs of the broad exploited masses and not the organs of a labour aristocracy."


The last sentence makes the connection with the fight for the unconditional independence of the trade union movement but it is yet to be grasped in Britain. The most oppressed section of the class today is the immigrant working class yet the issues related to their struggles are not addressed by the trade union movement in general. The lack of a right to work, extremely low financial support, the linking of rights and services to immigration status and many other unacceptable controls – none of these issues are being taken up by the trade unions. The cutting of payment from 42 to 35 pounds a week for asylum seekers was not even raised in the September TUC Congress.  The same applies to the main revolutionary groups in Britain they ignore and intentionally avoid these issues.

The potential for revolutionary organisation today is there and needs to be grasped for we face, in the words of Rosa Luxemburg, an even starker choice today between Socialism or Barbarism, "We stand today … before the awful proposition: either the triumph of imperialism and the destruction of all culture, and, as in ancient Rome, depopulation, desolation, degeneration, a vast cemetery; or, the victory of socialism." The tremendous fighting capacity that was seen in the history of the British working class can be unleashed by uniting the struggles through the unions but that has to be based on the 'broad exploited masses', for nothing less will do, and a first step is for unions to break from the Labour Party, for Labour is the party of capitalism not workers and capitalism will always seek to get out of its crises at the expense of the masses.