Miliband, Blair, the Financial Sector and Labour’s Rejection of the Working Class

Private Eye’s satirical view of Labour leader Ed Miliband from the cover of their edition for 5th -18th October 2012.

There has been increased criticism of Ed Miliband this week after an open letter signed by 28 left-wing activists was published in the Guardian criticising Miliband’s electoral strategy. Many traditional Labour supporters and voters have been increasingly alienated by Labour’s move to the Right and its policy of adopting harsh Tory policies and attitudes towards the poor. Miliband has stated that he wants to reach out to the middle classes, and this week ordered the parliamentary Labour party to vote with the government for the imposition of an overall benefit cap. Although Labour would be better by far than another Tory government after 2015, Miliband’s leadership seems to demonstrate many of the problems and attitudes of the modern political elite: very middle class, with little awareness of or sympathy for the problems and hardship experienced by the poor, the working class, the disabled, and unemployed.

Tony Blair and the Neglect of the Working Class

Much of this attitude began under New Labour with Tony Blair. Own Jones in chavs describes how the political elite have played down the existence of class in order to ignore the working class to concentrate on gaining middle class votes, quoting the politicians Jon Cruddas and Matthew Taylor, one of Blair’s aides.

Jon Cruddas is in no doubt that politicians of all colours have a vested interest in denying the existence of class. It has proved an effective way of avoiding having to address working-class concerns in favour of a small, privileged layer of the middle classes. “They devise ever more scientific methods of camping out on a very small slice of the electorate … those who are constituted as marginal voters in marginal seats.’ Working class voters were taken for granted as the ‘core vote’ who had nowhere else to go, allowing New Labour politicians to tailor their policies to privileged voters.

No New Labour politician personified this attitude more than Tony Blair. Matthew Taylor offers an interesting insight into Blair’s political approach. ‘I worked for Tony Blair, and the point about Tony is that Tony would always say when I would say to him, or other people would say to him: “What about a bit more kind of leftism in all this? What about a bit more about poverty and justice and blah blah blah? …”‘ Blair’s response was blunt, to say the least:

Tony would always say, fine, but I don’t need to worry about that, because that’s what everybody else in the Labour Party wants, and that’s what everybody else in the Cabinet wants, and that’s what Gordon [Brown] wants, and that’s kind of fine. And I’ll leave them to do that, because I know that’s how they’ll spend all their time. They don’t want to do public service reform, they don’t want to wealth creation, they’re not interested in any of that, they’ll just kind of hammer away at that agenda. My job is to appeal to the great mass of people on issues that the Labour Party generally speaking is just not interested in.

The near-obsession with ignoring working-class voters meant inflating the importance of a very small tranche of wealthy voters who were misleadingly construed as Middle England. After all, an individual in the very middle of the nation’s income scale only earns around £21,000. ‘You’re probably right that we did misportray Middle England,’ admits Matthew Taylor, ‘But that again, I’m afraid, is not just a Labour characteristic. It’s characteristic of the middle classes as a whole.’

Chavs, 100-101.

Lobster on Kinnock and the Development of New Labour

The parapolitical magazine, Lobster, has printed a number of articles analysing and critiquing Blair, New Labour and their policies. One of the most important accounts of the origins of the New Labour project is the article, ‘Contamination, The Labour Party, Nationalism and the Blairites’ by the editor, Robin Ramsay, in no. 33, Summer 1997, pp. 2-9. Ramsay views the emergence of what later become known as New Labour in Neil Kinnock’s change of policies following their 1987 election defeat. Kinnock had previously been very left-wing. In his book Making Our Way, according to Ramsay ‘had come close to a radical, anti-finance capital, anti-overseas lobby, pro-domestic economic policy’. This changed after the election defeat, when Kinnock and his economic advisor, John Eatwell, enthusiastically embraced the free market and EEC. He notes that when a group under Bryan Gould produced the report, Meet the Challenge, Make the Change, Eatwell, Gordon Brown and Tony Blair objected to the sections recommending a return to national ownership.

An Economic Secretariat was created under John Smith, including advisors from the City of London. Kinnock and Smith became pro-EEC and were convinced that Britain should join the Exchange Rate Mechanism. At a Shadow Cabinet meeting on the 16th November 1989, the Labour leadership followed Smith’s advice that the state could not stimulate the economy, either through the nationalised industries or local councils, because this was prohibited under the rules of the ERM. The Labour Party thus launched the ‘prawn cocktail offensive’ to win over the City of London, in which John Smith and Mo Mowlam assured the bankers that they would not attempt to limit their profits any more than Thatcher had. This resulted in the establishment and expansion of a series of groups creating links between the Labour party and the financial sector. These included the Smithfield discussion group, the Labour Finance and Industry Group, and the Industry Forum. The Labour Finance and Industry group represented the interests of the domestic sector, while the Industry Forum and the Norton group presented the interests of the overseas lobby – the City of London and the multi-nationals.

Transatlantic Background of New Labour Leadership

Blair, Brown, Balls, David Miliband and the rest of ‘New Labour’ all had extensive links to America and American interests. Gordon Brown, for example, used to spend his summer holidays in the library of Harvard University. Blair went on a trip to America, which was part of a scheme sponsored by the US government to aspiring young British MPs. David Miliband, took an MA at MIT, Ed Balls studied at Harvard and, before he joined Brown, was about the join the World Bank. As for Mandelson, in his final year at Oxford University he became Chair of the British Youth Council, which had originally been set up in the 1950s by the CIA and SIS as the World Assembly of Youth in order to combat the Soviet youth fronts. Ramsay states

In short, the people round Blair are all linked to the United States, or the British foreign policy establishment, whose chief aim, since the end of the Second World War, has been to preserve the Anglo-American ‘special relationship’ to compensate for long-term economic decline. The Blair’ group’s orientation is overseas: this is the territory of the Foreign Office and its think tank satellites like the Royal Institute of International Affairs – the political and propaganda apparatus of the overseas lobby. (p.7).

New Labour and the City of London and Overseas Lobby

Blair himself also announced before the annual conference of Murdoch’s News Corp that the Americans had also insisted that Britain should adopt a more pro-European policy. Due to the massive expansion in overseas investment under Thatcher, Britain was second only to America in this regard and so looked to American political and military power and influence to protect those interests. The result was an increase in support for Labour over the Tories in the London establishment over the Conservatives. The result was a complete reversal of attitude towards the City of London. Whereas the Labour report, Meet the Challenge Make the Change: A New Agenda for Britain had been highly critical of the influence of City of London, the latter was held up as a great success seven years later by Mandelson and Roger Liddle, in their book, The Blair Revolution. Liddle, incidentally, now writes for the Spectator.

Under Bryan Gould, the Labour report had stated of the City’s destructive dominance over the British economy that

‘The concentration of power and wealth in the city of London is the major cause of Britain’s economic problems’… and that Britain’s economic policy had for too long been dominated by City values and run in the interests of those who have assets rather than those who produce.

The Blair Revolution, however, described the City of London and the new, de-industrialised British economy in glowing terms.

Britain can boast of some notable economic strengths – for example, the resilience and high internationalisation of our top companies, our strong industries like pharmaceuticals, aerospace, retailing and media; the pre-eminence of the City of London.

Consequence of City Influence: Everywhere else in Britain Suffers

Ramsay goes on to describe what this change of attitude actually means for everyone else in Britain outside the elite financial circle of the metropolis.

That the British economy policy is ‘outward-looking, internationalist and committed to free and open trade’, in Blair’s words, is precisely the problem from which non-metropolitan Britain has suffered. These are the values of the overseas lobby, the Home Counties financial elite, people for whom Bradford or Norwich, let alone Glasgow and Cardiff, are far away places about which they know nothing – and care about as much.

British politics has been stood on its head. The Conservative Party, traditionally the party of financial and overseas interests, has been replaced in that role by Labour. Instructed by its new friends in the City, Labour has become the party of financial- that is pre-Keynsian – orthodoxy. Gordon Brown looks determined to re-enact the role of Philip Snowden in 1931. The last three years of the Major regime saw Chancellor Kenneth Clarke running the kind of orthodox Keynesian policy – increasing government deficits in response to the recession – which Labour, under Wilson or Callaghan, would have run, but which is anathema to ‘Iron Chancellor’ Brown. (p. 8).

Miliband’s Apparent Lack of Interest in Poverty and Working Class due to New Labour

Ramsay notes the way Labour adopted the rhetoric of ‘One Nation’ Toryism and appeals to British patriotism. This was to disguise their promotion of the overseas economy at the expense of domestic industry. He concludes

The Blair faction will fail. ‘One nation’ rhetoric, continuing membership of the institutions of the New World Order – which is essentially the same old American post-war order minus the Soviet challenge – and leaving economic policy to the overseas sector won’t affect the real structural problems of the British economy. When it does finally dawn on the Parliamentary Labour Party that it won’t work, they will have to look elsewhere. The wrong turning was taken at the point when Bryan Gould was defeated by John Smith and the party leadership decided to surrender to the overseas lobby. To that disjunction it will have to return. (p. 9).

This is the origin of New Labour and the background to Miliband’s continuing attempts to appeal to the Middle Class and the financial elite at the expense of the poor and working class. And it needs to change urgently. Even so, a Labour government would be far preferable to another Tory government. If nothing else, Labour have said that they will stop the Tories’ privatisation of the NHS. But for Labour truly to start tackling poverty and unemployment in this country, it will have to jettison much of the New Labour project and start returning to its working class roots.

New Labour and the Abandonment of Socialism and the Working Class

Yesterday Ed Milliband announced that he was ending the automatic contribution to the Labour party from the subscriptions of individual members of the trade unions. It marks a continuation of the New Labour policy of distancing the party from its origins in the unions. Way back in the 1990s, Tony Blair threatened to end the party’s ties to the unions altogether if they did not toe his line. It’s also part of the New Labour campaign of presenting itself as more middle class party. This process began under Neil Kinnock. The satirical British magazine, Private Eye, satirised Kinnock’s new middle class direction for the party by showing him shouting ‘Ich bin ein shareholder!’ Other spoof photographs on the same theme showed Kinnock shouting declaring, ‘I am an estate agent, and the son of estate agents’. Later Tony Blair was shown next to John Prescott saying, ‘We’re all middle class now’, to which Prescott replied ”appen I am, you middle class ponce’. Or words to that effect. We’ve come a long way since the Fabian Society published the pamphlet Natural Allies: Labour and the Unions, by Martin Upham and Tom Wilson in the 1980s.

New Labour and its Pursuit of the Middle Class and Increasing Alienation of the Working Class

The British conspiracy magazine, Lobster, has published a series of pieces charting and strongly criticising the rise of New labour and its abandonment of socialism and the working class. Simon Matthews in his review of Anthony Selden’s biography, Blair notes that the core of New Labour was a group of ‘modernising’ Labour MPs, the Project, consisting of Blair himself, Peter Mandelson, Margaret Hodge, John Carr, Jack Dromney and Sally Morgan, amongst others. It was essentially a response, shared by many other demoralised Leftists in Britain, the US and Australia, to Reagan and Thatcher’s electoral triumphs and the apparent victory of Neo-Liberal economics. Matthews considers that at the heart of New Labour’s political philosophy are the following ideas:

1. Middle class support is absolutely critical at every level. They must not be alienated through raising direct personal taxation.

2. The immense power of the media means that it is impossible to challenge them. They are therefore to be flattered and given good stories. The press are to be allowed to work in a deregulated market place.

3. If extra money is needed to pay for domestic projects, this may only be raised through the importation of cheap foreign labour. This increases the working population and lowers labour costs, so allowing an increase in tax revenue. This last policy has led to the increasing alienation of the White working class, that feels that Labour and the other mainstream political parties has abandoned them. The result is a resurgence in right-wing parties with anti-immigration policies, such as UKIP, or the English Defence League, which campaigns against radical Islam. This alienation has been noted by the BBC. A few years ago the BBC ran a series of programmes devoted to the issue of race in contemporary Britain. The trailer for this showed a White, working class man standing in front of a black background, slowly having his face covered in black ink until he became invisible. A gravelly voice then asked if the White working-class were being written out of Britain today. American critics of Neo-Conservatism have noted much the same attitudes in both the Democrat and Republican parties. The middle-class White members of these parties support affirmative action programmes, so long as they do not affect their children. See the volume, Confronting the New Conservatism.

American Commercial and Political Interests

Critical to the New Labour project has been collaboration with the Democrats in America, and the Australian Labour Party, but not with the Centre-Left European socialist parties. In the summer of 1993 Blair and Brown visited America, a trip arranged by the British embassy. There they met Alan Greenspan, the chairman of the Federal Reserved, who recommended that the Bank of England should set the interest rates in the UK. This was put into practice four years later when they gained power. Blair, and many of the other leading figures of New Labour – Gordon Brown, Ed Balls, David Miliband, Mo Mowlam, Patricia Hewitt and Tessa Blackstone, amongst others, had extensive transatlantic connections. They studied at American Universities, and/or worked for American companies.
Robin Ramsay, Lobster’s editor, has noted that New Labour represent American interests, and those of the British Foreign Office, determined to preserve both the ‘special relationship’ with the US and British commercial interests overseas. Blair himself stated as much in a speech he gave to Rupert Murdoch’s News International.

‘The Americans have made it clear they want a special relationship with Europe, not with Britain alone. If we are to be listened to seriously in Washington or Tokyo, or the Pacific, we will often be acting with the rest of Europe … The real patriotic case, therefore, for those who want Britain to maintain its traditional global role, is for leadership in Europe … the Labour government I hope to lead will be outward-looking, internationalist and committed to free and open trade, not an outdate and misguided narrow nationalism’.

The Primacy of the Financial Sector over Manufacturing

The privatisation and deregulation of the economy under Mrs Thatcher resulted in British companies having the largest overseas investments after the United States. The Blairites supported continued American power and international hegemony because it offered the best global protection to British commercial interests. Manufacturing industry and the public sector became merely special interest groups, which were simply taken for granted and ignored. Gavyn Davies in his comments supporting an independent Bank of England stated that the ‘one quarter of the economy that is affected by the exchange rate’ – in other words, manufacturing, could not be allowed to ‘take precedence over the inflation target’. In others, it should not prevent interest rates being kept high to attract capital to London.

A major part of the New Labour programme was the promotion of the interests of the City of London. The first draft of the Labour Party policy document, Meet the Challenge Make the Change: A New Agenda for Britain by a committee chaired by Bryan Gould stated in its section on finance:

‘The concentration of power and wealth in the City of London is the major cause of Britain’s economic problems’. It further argued that Britain’s economic policies had been for too long ‘dominated by City values and run in the interests of those who hold assets rather than those who produce’.

Seven years later, however, when New Labour had become dominant, the power of the City was seen as a source of economic strength. Peter Mandelson and Roger Liddle, in their book The Blair Revolution, published in 1996, claimed that

‘Britain can boast of some notable economic strengths – for example, the resilience and high internationalisation of our top companies, our strong industries like pharmaceuticals, aerospace, retaining and media; the pre-eminence of the City of London.’

The Blind Trusts, Labour Finance and Industry Group and Commercial Donors as Alternative Funding Sources to Traditional Membership Fees and Union Contributions

Tim Pendry, another contributor to Lobster, has described his experience with the Labour Finance and Industry Group and its use by Labour to construct an alternative source of funding from the trade unions and constituency activists. He considers that the party deliberately constructed an opaque and highly centralised funding system. The idea was that this would remove the party’s reliance on its traditional supporters, who as a demographic were considered to be aging and declining. The constituency system was believed to be costly and impossible to police. Moreover, it was vulnerable to being captured by the activists, who would make the party once more unelectable. The funds raised could be used by the Party to fund the kind of mass marketing that the Tories had achieved with Saatch and Saatchi. This policy was to result in the scandalous creation of a series of blind trusts. Pendry notes that the scandals surrounding New Labour and business came from their complete ignorance of the Puritanical ethics of the business community. He considered that many business leaders were horrified by the type of conduct that was considered acceptable in politics. Pendry wrote this in 2006. After the near collapse of western Capitalism under Goldman Sachs, Lehmann Brothers and the other major banks, these comments now seem somewhat ironic. Pendry himself has strong affection for the members of the Labour Finance and Industry Group. He describes them as decent, clubbable people, and notes that they themselves tended to be very much Old Labour – Gordon Brown, rather than Tony Blair. The result of the current parties’ reliance on funding from rich donors has resulted in the membership of both Labour and Tories plummeting. He estimated that Labour had about 200,000 members, while the Conservatives are around 300,000. The Conservative parliamentary leadership has also had problems recently with the apparent contempt with which it holds its members. Yesterday Cameron delivered a speech stating that grassroots Conservatives were highly valued by the party. This followed previous comments by senior party figures describing them as ‘swivel-eyed loons’.

Conclusion: Labour as Centre-Right Pary; Alienation of Working Class

The result of all this is that the Labour party has been transformed from a Centre-Left to Centre-Right party, keen to promote Neo-Liberal economic policies and distance itself from its roots in the 19th and early 20th century trade union movement. The result has been the gradual erosion under Labour of worker’s rights and the encroachment of the market through the Private Finance Initiative. Apart from the continued legacy of Mrs. Thatcher’s destruction of Britain’s manufacturing economy, the British working class has felt disenfranchised and alienated. A minority of its White members have been turning to more extreme nationalist organisations, such as UKIP, which are perceived as far more receptive to their interests.

Sources

Simon Matthews, ‘Our Leader’, in Lobster 48, Winter 2004, 34-5.

Tim Pendry, ‘The Labour Finance and Industry Group: A Memoir’, Lobster 51, Summer 2006, 3-9.

Robin Ramsey, ‘Contamination, the Labour Party, Nationalism and the Blairites’, Lobster 33, Summer 1997, 2-9.

A Note on Lobster

I’ve described Lobster as a conspiracy magazine, which makes it sound like one of those magazines devoted to insane, and frequently dangerous theories about secret governing elites like the Freemasons, Jews and now Reptoid aliens from the Pleiades. It’s not. It’s devoted to what its founder and editor, Robin Ramsey, describes as ‘parapolitics’. This is the study of politics as affected and influenced by genuine covert groups, such as funding lobbies, think tanks and the intelligence and security services. It bases its material on published studies and memoirs from the various groups involved, newspaper articles, and the personal experience of its contributors. It’s also on the web, and has an archives of some articles on-line.