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Fighting New Labour privatisation

Many things have changed since the events of 11 September and the start of the war against Afghanistan. But one thing remains constant: Tony Blair’s class war against public-sector workers. BILL MULLINS reports on the growing campaign against privatisation.

AT THE NEW Labour conference, Blair promised that, whatever happens in Afghanistan, he will not allow "ideological obstacles to stand in the way of reforming the public sector". Despite being forced to effectively re-nationalise Railtrack, the government is intent on privatising London Underground and introducing even more ‘private finance initiatives’ (PFI) in health and education. Labour councils continue to hand over large parts of their services to private contractors. Whole sections of central government services have been earmarked for sale.

Government spending as a proportion of total national income grew from 15% before the first world war to over 75% by the end of the second world war. It then fell back to about 35% in the 1950s and 1960s before climbing again to 40-45% in the 1970s and 1980s. As an employer (directly or indirectly) the government is the biggest in the economy. Its 5.1 million workers are concentrated in three or four big sectors as well as a myriad of smaller services. The National Health Service (NHS) employs one million people and is Europe’s biggest employer. Local government employs 2.7 million workers in 400 separate councils; central government has 893,000 employees; and the Post Office 200,000.

Twenty years ago the nationalised industries of water, gas, electricity, British Steel, post and rail accounted for 9.3% of national output, 6.7% of employment and 13.5% of investment. The privatisation of these industries took 959,000 workers out of the public sector. In 1995 alone, profits for the new private owners of the ‘natural monopolies’ – water, electricity and gas – increased by 40% to £7.7 billion.

Since its election in 1997, New Labour has pursued an orthodox capitalist finance policy to reduce the level of state spending. Gordon Brown promised to stick rigidly to the budgets set by the Tories for the first three years in office. The New Labour leaders were as good as their word.

New Labour’s insistence on this turned a deficit of £63 billion into a surplus of £20 billion by 2000. It was also helped by the sale of the 3G mobile phone airwaves which almost bankrupted British Telecom. Another ‘boost’ to government spending was the drive by New Labour to force people off welfare benefits and into low-paid service jobs through the ‘welfare to work’ programmes. Welfare spending as a proportion of government expenditure fell from 40% to 17%.

Blair and Brown’s first rule is that government spending must be kept low to minimise any adverse effects on bank interest rates and the level of the pound on the world currency markets. The PSBR (public sector borrowing requirement) has fallen below anything seen in the post-war period. This is due more to economic growth than anything else. With growth has come increased taxes and income for the treasury. But now, at the beginning of a recession, government income will begin to fall away and demand on government spending will increase as more and more workers are thrown on the dole and require some form of state support.

For 20 years, Britain’s governments have driven forward privatisation. Margaret Thatcher sold off British Telecom, British Gas, electricity, large parts of the publicly-owned defence industries and British Leyland. She began the process of privatising the NHS with the introduction of trusts and council services through compulsory competitive tendering.

John Major continued with the disastrous privatisation of British Rail into 100 separate companies and the creation of agencies in the civil service. New Labour has speeded up the process in local government with the introduction of ‘best value’ and has continued the inroads made by private contractors into the NHS.

Licence to print money

SINCE 1997 THE private sector has invested £16 billion in 400 PFI projects, including 22 new hospitals. Taxpayers, however, will pay the private investors £96 billion over 23 years in rent alone. The government wants the private sector to build another 64 hospitals, 600 schools and several hundred doctors’ surgeries and health centres. If the government built the hospitals and schools it would cost much less. The charges paid by the NHS to the private owners of these buildings include shareholders’ profits, interest charges and huge fees to management consultants. This leaves less money for the actual facilities like hospital beds or classrooms. On average, a PFI hospital costing the same as a publicly-financed hospital has 30% fewer beds.

The Observer (8 July) reported that the public-sector trade union, Unison, had commissioned reports into some of these projects. Durham’s new PFI hospital was due to cost £67 million. After extra charges this increased by 27% to £87 million. Staff budgets were cut leading to a 12% fall in qualified nurses who were replaced by lower-paid, less-qualified assistants. The hospital had no proper water supply and sewage was seeping through the ceiling.

New Labour justifies its programme by saying that it results in better public-service delivery! By going to the private sector, however, the costs do not appear on the balance sheet as borrowings and do not add to the PSBR. The fact that this results in worse public services and less value for money seems almost irrelevant to Blair & Co.

The ‘refinancing’ of PFI projects is another way the private sector is making a killing. Group 4 made £10.7 million by refinancing Fazerkeley prison. Norwich hospital made a staggering £70 million extra from a project with an initial outlay of £230 million. With the re-election of Labour in June 2001 private companies have lined up to join the ‘gold rush’. Some of the most lucrative areas to be exploited are the ‘white-collar providers’ in councils and education.

Local council contracts to the private sector have reached £4.6 billion a year and are set to grow exponentially. Education out-sourcing stands at £2.5 billion a year. Healthcare for the mentally ill is worth £1.5 billion a year to the private sector. Doctors’ surgeries are to be built and rented back to the NHS. Care for the mentally ill, social services and NHS IT systems are all up for sale.

Allyson Pollock calculates that government plans could raise another £10 billion in health, £5 billion in local government and £5 billion in education annually. No wonder companies like Nord Anglia are bidding for these contracts, even when the same companies are losing existing contracts because of their incompetence. Big business wants to directly employ teachers, nurses and doctors.

It is also clear that the government is intent on privatising the Post Office. It has allowed the monopoly on delivering letters, held by the Post Office for 300 years, to be broken. It has announced the building of a sorting office in the East End of London which will be run by the private company, Hays X. Consignia, the new name for the Post Office, has announced that it is selling-off its fleet of 40,000 vehicles.

There have been many strikes, demos and lobbies by workers and service users, many of which have gone unreported. Nearly every Socialist Party branch has participated in or led struggles against the privatisation process. The local Socialist Party branch in Wakefield organised a campaign against the PFI of Pinderfields hospital for over five years with some success. The Socialist Party in Coventry has collected 120,000 signatures against a PFI project for the local hospital and has organised protests and other campaigning activity. In Waltham Forest, London, Socialist Party members in workplaces and the community led a fightback against the privatisation of education services.

Union leaders

OVER THE LAST 20 years, the union leaders have played a backseat role. In speeches they oppose privatisation and promise to support their members fighting against it. Union conference after union conference carries resolutions against privatisation on the basis that public ownership of the basic services – health, education and local government, the Post Office and public transport – is a principle that should be protected. Members know through bitter experience, however, that this support tends to be hedged with all sorts of conditions.

Strikes against privatisation are not allowed, we are told, because of the anti-union laws. Instead, the union leaders insist that industrial action must ‘only’ be in defence of conditions and jobs and not over the principle of privatisation itself. It is true that the employers have been more than willing to resort to the courts. They claim that industrial action against privatisation constitutes a ‘political strike’ and is therefore illegal under numerous employment laws.

There has been no attempt to link up the struggles, even when they are taking place simultaneously. In Dudley, 600 hospital workers took 80 days of strike action in opposition to a private-sector sell-off. It was not for the want of determination at local level that they did not succeed in the end. The unwillingness of the union leaders, however, to back wider, national action in defence of public ownership and against privatisation has meant that these strikes have often lost momentum.

The recent strikes on London Underground were called on health and safety standards which had not been guaranteed by the incoming private contractors. All the workers concerned knew that privatisation was the real battle. But once LUL had made a few concessions on this narrower though important issue the union leadership called off any further action.

Most union leaders still pay lip service to public ownership. Certainly, few have gone as far as Sir Ken Jackson, general secretary of the AEEU engineering union. He supports Blair’s privatisation programme and moved a resolution to that effect at Labour Party conference.

At the same conference, Dave Prentis, Unison general secretary, said he had done a deal with Blair to end the ‘two-tier workforce in the privatised sector’. He claimed that Blair promised a review of ‘best value’ regimes in local councils and three or four union-backed PFI pilot schemes would be speeded up.

The ‘two-tier workforce’ refers to the practice of private-sector companies taking over parts of the public sector and paying new workers a lower wage than the transferred former public-sector workers whose pay and conditions are protected under TUPE legislation. The PFI pilot schemes were promised by New Labour as an experiment. Hospital staff whose work is transferred to a private company will be able to stay in the public sector. They would continue to be employed by the hospital trust but would be contracted out to the private company.

Prentis argued for a new ‘fair wage resolution’ to become law. Employers would have to include in their bids the labour costs for all potential employees, not only the existing transferred workers, when they tendered for new contracts. Prentis believes this would make for a ‘level playing field’ for in-house bids and said that this would stop cowboy contractors who hoped to make most of their profits from cuts in wages and conditions. It is highly unlikely that Blair will introduce and enforce legislation.

Union leaders are increasingly accepting the New Labour view that it doesn’t matter who owns the service as long as it ‘delivers’. Ownership is not the principal issue for them. They are more concerned about the pay and conditions of their members. In reality, however, these two issues cannot be separated.

Leader of the GMB general workers’ union, John Edmonds, said the fight against privatisation is not an industrial matter but a political one. On this basis, Edmonds would rule out using the industrial muscle of his members to reverse government policy on privatisation. Defending the principle of public ownership goes to the very root of the capitalist system.

Socialists would argue that every retreat by the union leaders encourages the fat-cat privateers to take more of the public sector into their profit-grabbing hands. It is time for national action against privatisation. To bring this about will require the maximum effort by all socialists and trade union activists. Socialist Party members will initiate and help build campaigns to protect jobs and services by public-sector workers and in the communities they serve, at local and national levels. At the same time, we will pursue – through the rank-and-file broad left organisations and the official union structures – the central demand for national action to mobilise all those opposed to the privatisation of our public services.

The minimum national action has to be a one-day public-sector strike. Using the power in action of organised workers in the public sector would fire a tremendous shot across the bows of the government. There is no opposition to this demand from those involved in local struggles. It is up to us to show how it can be brought about.


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