Join the Socialist Party Join us today!

Printable version Printable version

Facebook   Twitter

Link to this page:

From The Socialist newspaper, 23 September 2008


New Labour flounders in face of economic crisis

The Trades Union Congress took place less than a month ago. Its leaders reflected their members' anger at New Labour, demanding that the government introduce a windfall tax on the utility companies in order to help those who cannot afford to heat their homes. As Tony Woodley, joint general secretary of the union Unite, vividly put it: "If we don't, we'll be insulating old people's coffins this winter". As a result of an amendment moved by railway union the RMT, the TUC also called for renationalisation of the gas and electricity companies.

At Labour Party conference the union vote meant that a resolution was also passed there calling for a windfall tax. Chancellor Alistair Darling, however, has made it clear it is not worth the paper it is written on. In his speech he categorically ruled out a windfall tax, never mind considering the TUC's demand for the utilities to be renationalised. The resolution will be sidelined to a 'policy forum' never to see the light of day again.

As a result of New Labour's policies, millions of people will be choosing whether to eat or to heat their homes this winter. Yet, disgracefully, at the Labour Party conference many of the same trade union leaders are singing the 'loyalty to Gordon Brown' hymn. Brendan Barber, secretary of the TUC, declared: "It is at times like these ... that our country most needs the wisdom and experience of this Labour government - led by Gordon."

Few trade unionists and working class people agree. On current opinion polls New Labour is facing disaster at the next general election as millions blame the government for failing to protect them against the looming economic crisis. The crisis is only starting to hit in Britain but it is clear that it will be severe. As The Socialist warned, the inherent contradictions within capitalism - a system based on production for profit rather than need - could not indefinitely be disguised by the phenomenal growth of credit and the finance system.

The OECD predicts that Britain will suffer the worst crisis of any of the G7 countries. Unemployment is now rising rapidly, with 40,000 jobs under threat from the HBOS banking merger alone. House prices have fallen by over 10% already and could drop by 30% or more. Brown's claim to have ended 'boom or bust' is in tatters.

Labour cheerleaders

New Labour is attempting to lay the blame for the crisis across the Atlantic, as far from its own doorstep as possible. It is true that this profound crisis of global capitalism began in the US. New Labour, however, has been among the most enthusiastic cheer leaders for 'unregulated' capitalism. Brown's vague promises to ensure greater regulation of the City come after a decade of lecturing other capitalist powers against having too much regulation.

While New Labour refuses to even consider nationalising the energy companies, over the last week in the US, the most powerful capitalist country on the planet, the government has been forced to carry out state intervention and nationalisation on a vast scale. This, of course, is not to assist US workers, but in order to try and prevent a 1929 style economic catastrophe.

As the Financial Times put it in an editorial on 18 September: "The nationalisation of AIG has caused problems for future policy makers, but future systemic moral hazard is of secondary importance when the system itself is at risk."

The latest desperate scheme of US Treasury Secretary Paulson to avoid economic catastrophe, is to create a state run 'bad bank' that would buy up all the bad mortgage related debt of financial institutions operating in the US. This would be an unprecedented level of state intervention costing up to a trillion dollars. The Democrats and Republicans are currently haggling over the plan, widely described in the US as 'welfare for the rich'. The Democrats are under pressure to get the plan linked to at least some minimal relief for the up to ten million Americans who face losing their homes.

If this plan is agreed it may act to temporarily stabilise the finance and banking sector. However, even this is not guaranteed. There are many problems, including the price at which the debts are bought and the issue of non-mortgage related bad debts. A glimpse of the completely opaque world of the finance sector today was given by the nationalisation of AIG. A team of government analysts and investment bank accountants could not work out how much cash would be needed to collateralise the bank's credit-default swaps. Estimates were from $20 billion to $85 billion!

Profound crisis

It is clear that even in the most favourable scenario, this plan will only ameliorate, rather than prevent, a profound economic crisis. It will leave the US with a hugely inflated state debt, which will undermine the economy further and probably lead to a severe weakening of the dollar. US workers will be expected to pay for this over the coming years.

Capitalist crisis has brought to an end the neo-liberal era of Margaret Thatcher, Ronald Reagan and Tony Blair. Yet New Labour is trying to continue as if nothing too profound has happened. Such is their fear of anything with a whiff of 'old Labour', it took them six months to nationalise Northern Rock, despite demands from a majority of the capitalist class that they do so in order to help the British banking system.

Further nationalisations by New Labour to avoid financial meltdown are possible, but it will resist tooth and nail any nationalisation in the interests of the working class, for example of the privatised utilities. Instead New Labour is trying to ensure that working class people are the ones who pay for this crisis.

Brown's conference speech concentrated on attacking the unemployed and immigrants, rather than the City financiers. David Milliband, the ultra-Blairite who is being touted as a possible replacement for Brown, used his speech to talk about what New Labour does well - top of his list was going to war!

At a time of capitalist economic turmoil, the three main parties remain staunch defenders of capitalism. The Liberal Democrats have chosen this moment to move further to the right! Working class people desperately need their own mass party to put forward a socialist alternative to capitalism.

The trade unions need to break with Labour and begin to build such a party. It is not a coincidence that Tory leader David Cameron returned from Germany, where the Left Party is at 15% in opinion polls, talking about the need to "defend capitalism" from the "danger of the left". The potential for the 'danger' he sees in Germany exists in Britain as well - as a growing number of people look at the crisis in capitalism, and the devastating effect it is having on their lives, and begin to draw socialist conclusions.

Donate to the Socialist Party

Coronavirus crisis - Finance appeal

The coronavirus crisis has laid bare the class character of society in numerous ways. It is making clear to many that it is the working class that keeps society running, not the CEOs of major corporations.

The results of austerity have been graphically demonstrated as public services strain to cope with the crisis.

The government has now ripped up its 'austerity' mantra and turned to policies that not long ago were denounced as socialist. But after the corona crisis, it will try to make the working class pay for it, by trying to claw back what has been given.

  • The Socialist Party's material is more vital than ever, so we can continue to report from workers who are fighting for better health and safety measures, against layoffs, for adequate staffing levels, etc.
  • Our 'fighting coronavirus workers' charter', outlines a programme to combat the virus and protect workers' living conditions.
  • When the health crisis subsides, we must be ready for the stormy events ahead and the need to arm workers' movements with a socialist programme - one which puts the health and needs of humanity before the profits of a few.
Inevitably, during the crisis we have not been able to sell the Socialist and raise funds in the ways we normally would.
We therefore urgently appeal to all our viewers to donate to our special coronavirus appeal.

Please donate here.

All payments are made through a secure server.

My donation


Your message: 


In The Socialist 23 September 2008:

Their failure, their system: make capitalists pay

Socialist Students

Scrap tuition fees!

Students seek out socialists!

Education a 'them and us' system

Socialist Party editorial

New Labour flounders in face of economic crisis

Socialist Party feature

Make the super-rich pay!

Merseyside CNWP calls for socialist policies

Socialist Party campaigns

Protesting against Bush and Brown's wars

LibDems aping the Tories

Them & us

Jamie's school dinner staff threatened with privatisation

Fighting the racist BNP in Stoke

We won't take the RAP on pollution

Health Trust concessions on Swansea casualty unit

Salford councillors play blame game

Socialist Party workplace news

Civil service strike ballot begins

Workers vow to fight Ford's closure plans

North Staffs NSSN launched

International socialist news and analysis

Revolution and counter-revolution in Bolivia

Socialist Party review

The Dark Knight: Batman's latest crime-buster

McMafia: Crime Without Borders


Home   |   The Socialist 23 September 2008   |   Join the Socialist Party

Subscribe   |   Donate  

Related links:


triangleCrisis in council services: Labour must fight or stand aside

triangleTrades council debates workers' political representation

triangleStarmer in full retreat over C-19 rents crisis

triangleSocial partnership is an attempt to shackle trade unions and prevent industrial action

triangleNo return to the 1930s: World War Two and 'a land fit for heroes'


triangleTrump, coronavirus, capitalism, and the presidential race

triangleA new world order - global reconstruction after World War Two

triangleCardiff West Socialist Party: Class struggle in the US in the crisis


triangleThe Jungle: capitalism's remorseless attack on workers' safety and conditions

triangleUniversal Basic Income: not a solution to insecurity and poverty under capitalism

triangleBristol North Socialist Party: Crisis, capitalism and class division - a discussion on perspectives for Britain


triangleLabour leadership contest and public ownership

triangleNo free ride for the airline bosses - nationalise Flybe now!


triangleUnion independence must be maintained - a reply to the TUC

News and socialist analysis

News and socialist analysis



Black and Asian Covid-19 deaths: an indictment of capitalist inequality



Johnson's reckless 'back to school' plans threaten everyone's safety



Confidence plummets in Tory strategy for Covid-19



Universal Basic Income: not a solution to insecurity and poverty under capitalism



Furlough cut-off could force millions back to unsafe workplaces



Crisis in council services: Labour must fight or stand aside



Rich get handouts - workers get pay cuts



Transport workers and passengers mustn't pay the price



Pandemic shortages caused by capitalist market - socialist planning is the alternative



Tories put profit before lives - unions must stand firm on workplace safety



Stay alert to bosses putting profit before safety



Furlough scheme extended - workers need 100% of wages



Dispatches from the front: bosses prepare fresh attacks on NHS


Welsh Government

Social partnership is an attempt to shackle trade unions and prevent industrial action



Homeless left on streets during pandemic

triangleMore News and socialist analysis articles...

Join the Socialist Party
Subscribe to Socialist Party publications
Donate to the Socialist Party
Socialist Party Facebook page
Socialist Party on Twitter
Visit us on Youtube



Phone our national office on 020 8988 8777


Locate your nearest Socialist Party branch Text your name and postcode to 07761 818 206

Regional Socialist Party organisers:

Eastern: 079 8202 1969

East Mids: 077 3797 8057

London: 07748 534 891

North East: 078 4114 4890

North West 079 5437 6096

South West: 077 5979 6478

Southern: 078 3368 1910

Wales: 079 3539 1947

West Mids: 024 7655 5620

Yorkshire: 077 0671 0041



Alphabetical listing

May 2020

April 2020

March 2020

February 2020

January 2020