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How safe is your job?

This has been a year of financial panic, but 2009 will be dominated by unemployment. In a flexible l

The poster that won the 1979 general election was a fake. The "Labour isn't working" dole queue was ac tually composed of 20 fully employed Hendon Conservatives, photo graphed by Saatchi & Saatchi. But there was nothing synthetic about the impact that the poster had on the Labour government of James Callaghan. Never again, Labour resolved, could the party afford to go to the country when the country was out of work. Yet that is what Gordon Brown risks doing, if you believe the spin about him delaying the next general election until 2010.

This was a year of financial panic as oil prices spiked, banks collapsed and stock markets tumbled. But it is likely that 2009 will be the year of the dole. Unemployment, already higher than at any time since Labour came to office in 1997, is expected to climb to almost three million by 2010, according to the Confederation of British Industry. The turnaround in the UK employment market has been astonishing. The pace of job losses, led by the shake-out in the banking sector, has astounded analysts: the Centre for Economic and Business Research (CEBR) has forecast that 300,000 private-sector jobs will have been lost in the six months to the end of this year alone. The CBI's forecast, made only a few days ago, is almost certainly an underestimate, because it is based on Britain's GDP declining by 1.7 per cent in 2009. The Bank of England is now talking about the economy shrinking by 2 per cent next year, as Britain enters the worst recession since the 1980s. Capital Economics has forecast that unemployment will peak at 3.3 million in 2010.

The situation is already worse than the formal statistics suggest. Stephen King, of HSBC, argues that the official International Labour Organisation unemployment figures exclude two million people who are economically inactive but would like a job.

What is undeniable is that British firms are taking advantage of the "flexible" labour market to fire first and think later. Unusually, the region hardest hit is likely to be the one most able to cope: the south-east. The London area alone could lose 650,000 jobs, according to the Local Government Association. This is one of the wealthiest areas on the planet thanks to the financial services sector based in the City. Redundant middle-class professionals might find life a little different on £60-a-week Jobseeker's Allowance, but most can probably look after themselves. The people who will have their lives destroyed first are the legion of temporary and casual workers, many of whom do not figure in the unemployment statistics because of their age or country of origin.

Many of the new redundancies are unavoidable, but there are signs, too, that some firms are reducing their workforce as a message to shareholders, hoping to bolster their equity prices. When BT announced 10,000 redundancies on 13 November it made no attempt to play down the human cost and, according to some analysts, even exaggerated the job losses for effect.

After three decades of losing industries, the UK desperately needs to protect the skills it has left, not allow them to dissipate in the lengthening dole queues

Firms such as Virgin Media, Rolls-Royce, Yell, Wolseley and Citigroup have all announced thousand-plus job cuts in the past few weeks alone. The flexible labour market, inspired by the Tories and realised by new Labour, has allowed contraction to be a first, rather than a last, resort. It is the quickest way for a management in trouble to show that it is doing something.

The problem is that these job losses, rather like the banks' refusal to lend to small business, are enormously destructive to the broader economy. After nearly three decades of losing productive in dustries, the UK desperately needs to protect those skills it has, not allow them to dissipate in the dole queues. But with trade unions weak, employment law liberal and the government compliant, firms are being allowed to throw out the seedcorn of the future.

Only the state would be able to counter the effects of this attrition. In the pre-Budget report, the Chancellor's measures on benefits, pensions and VAT were intended to boost pre-Christmas demand in the high streets. However, the government is severely limited in its ability directly to fill the jobs gap. Yes, the public sector is still hiring, and will have put on 50,000 jobs in the six months to the end of the year, according to the CEBR. But, with public borrowing likely to reach at least £118bn next year, there will have to be a retrenchment in the labour-intensive public sector to get the public finances into some kind of order in the medium term. Make no mistake - the price of this year's fiscal stimulus is likely to be public-sector job losses, even with the Chancellor's heroic, and unrealistic, assumptions about an economic recovery in 2010.

In this instance, the weakness of the pound is unlikely to boost employment in export industries. This is a global recession, perhaps a global depression, and Britain cannot rely on international markets to replace lost domestic demand. There is also likely to be a wave of protectionism, starting in the US, as countries seek to save their own core industries with state subsidies and other anti-competitive tools. The world market may be a tougher place in which to sell in future. Anyway, Britain has lost most of its manufacturing base - down to 14 per cent of GDP.

In recent years, most of our "exports" have been in financial services - "invisibles", the demand for which will be slight for the duration of the credit crunch.

We can be thankful at least that the right man is in the White House at the right time. Alistair Darling has moved some way towards matching Barack Obama’s plan to create 2.5 million jobs over the next two years through public work projects and alternative energy investment. Yet this will not happen quickly and will do little to alter job losses already in train. And, in America, which is 12 to 18 months further advanced into the recession than Britain, life is already desperate for people on the margin.

The US department of agriculture reported on 17 November that the number of children who went hungry in 2007 - the first year of the credit crunch - jumped by 50 per cent to almost 700,000. It said that, overall, 12.2 per cent of Americans, 36.2 million people, "do not have the money or assistance to get enough food to maintain active, healthy lives". It could happen here.

At the very least Britain faces a return to a period of sustained joblessness, and to the destructive psychology that accompanied it. There will be dole queues, of course, but the social composition of the new jobless - led by financial services, property, retail - will be very different from what we saw in the early 1980s. As a recent report from the Chartered Institute of Personnel and Development argued, those at most risk in the coming "redundancy torrent" will be managers, professionals and skilled non-manual workers.

Tens of thousands of jobs are about to eva porate from British banks. Multiply that by all the professional jobs which depended on those middle-class incomes, such as estate agents and lawyers. Certainly, the first to be hit will be those at the bottom. But they are likely to be joined by large numbers of articulate, middle-class individuals shaken out of the financial, media and peripheral service occupations - from aroma therapy to management consultancy - which have grown up during the long boom.

Middle-class workers are not ready for this and it will be a shock to their self-confidence and self-esteem – a social and cultural transformation that could have profound political implications.

In the 1980s, the middle classes were still relatively secure in their career structures in management and the professions. They had homes, occupational pensions, clear employment paths. Certainly, they were a world away from the trade unionists fighting for their jobs in the old industrial heartlands of Britain. Margaret Thatcher relied on the middle classes to support her war on the militants with their braziers - and to blame them for the recession of the 1980s. The braziers are gone and the industrial working class has largely been dismantled. So, too, have the secure middle-class career structures.

Those who will suffer are the children of the baby boomers, who graduate with high debts and higher expectations

In the 1980s, professional and other white- collar jobs were, by and large, jobs for life, with annual pay increments, annual promotion, pension rights and a predictable future. Not any longer. The modern media, for example, are a shifting sea of freelance and contract workers for subcontractors to the large institutions. Even at the BBC, where I started out, there may be a crust of well-paid performers and anonymous executives who earn more than the Prime Minister, but below that is a huge army of irregulars, often on low salaries, coming in and out of the corporation's revolving doors. The commercial sector has been relying on large numbers of underpaid or unpaid "interns" desperate for work. This is the flexible labour market at its most pernicious. Such practices are widespread throughout the British economy.

Deregulation and leveraged buyouts by private equity over the past two decades have left many firms with flattened management structures, often relying on outside consultants to get them through busy periods. Occupational pensions have become a rarity. Promotion has become intensely meritocratic. Companies increasingly "offshore" white-collar functions to countries such as India, where an educated middle class is willing to work for much lower wages. Most of the job losses at BT are among self-employed contract workers in the UK; the firm has not cut any of the jobs it has outsourced to India.

The group hit hardest is the under-35s, sons and daughters of the postwar baby boomers, who have emerged from university with high debts and even higher expectations. These are the young people who have little experience of recession and none of mass unemployment. Neither have many of their parents, who lived through the 1970s and 1980s largely untouched by unemployment or debt. If there is to be a political response to the new depression, it is likely to emerge from this group of déclassé graduates, many of whom face a future without the security they have been brought up to expect. They will not be able to afford houses or establish careers. Indeed, the under-35s have so much personal debt that their net wealth is actually negative. Three-quarters of the under-35s are in the red, according to the Skipton Building Society, owing more than £9,000 on average. They will look to the state for security, but the state will not be able to deliver.

This time there is no trade union menace to blame for economic distress

A Ministry of Defence think tank has made a remarkable forecast about political militancy. The Development, Concepts and Doctrine Centre published a report in April 2007 in which it speculated that in coming years “the world’s middle classes might unite, using access to knowledge, resources and skills to shape transnational processes in their own class interest”. “The middle classes could become a revolutionary class taking the role envisaged for the proletariat by Marx . . . the growing gap between themselves and a small number of highly visible super-rich might fuel disillusion,” the report said.

The idea of a revolution sweeping suburbia is faintly risible, though it was a subject of a recent J G Ballard novel, Kingdom Come. But the MoD may have grasped an important truth about the nature of politics in the new global economy. It is beginning to erode class differentiation and has left many middle-income earners exposed to the kind of insecurities that formerly afflicted only lower-class workers. Clearly, the economic circumstances of management consultants cannot be compared directly with those of retail workers. But when they lose their jobs, they face very similar challenges: mortgage and credit-card debt, catastrophic loss of earnings and the need for retraining.

Part of the difficulty experienced by the Conservative leader, David Cameron, in developing a coherent political response to Gordon Brown's neo-Keynesianism, is that the party of capital has lost its "class enemy": the industrial working class. There is no trade union menace to blame for economic distress and the Conservatives have had to fall back on "fiscal conservatism" - or reduced public spending. This is simply not a priority for an electorate that is looking to the state to protect it from the predations of the market. Equally, new Labour under Brown has been forced almost against its will to become more critical of the plutocracy running the banks, to accept nationalisation and greatly increased government spending. Brown's government has even had to abandon one of the founding principles of new Labour by proposing higher taxes on the rich.

The Conservatives, who have not entirely lost their Thatcherite reflexes, are looking to the middle classes to react against the new profligacy - but they will find it difficult to do so. As un employment mounts among the middle classes, especially among the under-35s, there is going to be a much stronger demand for policies which promote jobs and growth even at the cost of public borrowing. The Tories cannot afford to be on the wrong side in this battle.

As Martin Hutchinson, author of Great Conservatives, has expressed it: "A world in which few if any have security in their livelihood is not conservative, it is anarchist. It is also deeply repugnant to the average voter."

If Labour isn't working, neither are the Conservatives.

This article first appeared in the 01 December 2008 issue of the New Statesman, How safe is your job?

Laura Hynd for New Statesman
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Having the last laugh

How Diane Abbott – overlooked, mocked and marginalised by her own party for three decades – ended up as the closest ally of a Labour leader

“I don’t think you’re up to it.” It is 1970, and Diane Julie Abbott, aged 17, is keen to apply to Cambridge University, but her history teacher has other ideas.

“I was an omnivorous reader,” she says now, sitting in her parliamentary office, in a prime spot overlooking the Thames, “and in all these books, particularly these novels between the wars, if you went to university, you went to Oxford or Cambridge.”

The teachers at Harrow County School for Girls, where Abbott was the only black girl in her class, were not supportive. Her memories are less happy than those of her contemporary Michael Portillo, who attended the affiliated boys’ grammar school, and who played Macduff to her Lady Macduff in a school play.

Even when Abbott succeeded, she was regarded with suspicion. She remembers getting an A-minus in an English class – a mark that disappointed her – and being asked to stay behind by the teacher. “She picked up my essay between her thumb and her forefinger and said: ‘Where did you copy this from?’ I was genuinely shocked.”

The story suggests that she acquired her ability to shrug off criticism early. It is also a reminder of how often she is underestimated. The Times journalist Matt Chorley once described a successful day for Labour as one in which “Diane Abbott was on TV a bit less”. Julie Burchill described her in the Spectator as a “preposterous creature” who “blotted the landscape of English politics, speaking power to truth in order to advance her career”. In the Guardian, Michael White dubbed her a “useful idiot”.

She has been endlessly dismissed as stupid, untalented and bad at politics – an obvious “diversity hire”. These criticisms are immune to evidence: her time at Cambridge, the only black British student from a state school in the entire university; her 12 years on the sofa with Portillo on BBC1’s This Week; her time in the shadow cabinet under Ed Miliband; her reliable ability to hold the line in television interviews; and now her status as Jeremy Corbyn’s closest political ally. She is largely ignored by lobby journalists, even as they lament their failure to secure a line into the Labour leader’s thinking. In 2017, Diane Abbott celebrates her 30th year in parliament. Should we take her seriously?

 

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Abbott’s mother, a nurse, and her father, a welder, were born in the same village in Jamaica, but met and married in London and lived in Notting Hill “before it was a fashionable place to live”. Abbott was born there in 1953, 12 years before the phrase “race relations” first made its way on to the statute books. “My father was very aspirational,” she recalls, “and so every weekend, he and my mother would drive round houses in Pinner, and every Monday they’d ring the estate agent, and the estate agent would say the house had gone. But, of course, the house wasn’t gone.”

Eventually, they did buy a house, not in Pinner but in Edgware, north London. “My brother – his best friend was Jewish,” she tells me, “and he’d attend the Jewish youth club with his friend, and one day his friend said in a really embarrassed way: ‘I’m really sorry, I’m afraid you can’t continue to attend the club, because they’re afraid it will encourage the girls to marry out.’

“The thing was,” she continues, “my brother was upset about this. We were all upset on his behalf but it was just part of life.” And in 1970, a black straight-A student being told that she wasn’t good enough to go to Cambridge was, again, part of life. It was her response that was out of the ordinary: “Well, I do think I’m up to it. And that’s what matters, isn’t it?”

At university, Abbott didn’t get involved in politics, and she found the Cambridge Union off-putting. Her hall tutor advised her to go into the civil service, and so she arrived at the Home Office in 1976, the lone black graduate trainee on what she now describes as “a quixotic quest to do good”.

In turn, that took her to the National Council for Civil Liberties, now Liberty. Believing it to be a hotbed of communist sympathisers, MI5 tapped the office phones, an action that was ruled unlawful in 1990. “One of the things that Diane still talks about,” a friend tells me, “is her experience not only of the Home Office, but of being the subject of official surveillance. She has a cynicism about the state that hasn’t gone away.”

Abbott also joined local campaigns on some of the issues that have defined her career, such as the abolition of the “sus laws”, the informal provision that allowed the police to stop and search anyone under the ­Vagrancy Act, which activists claim was used to target ethnic minorities in Britain. After joining the Labour Party, she became a councillor in Westminster in 1982.

In the 1970s and 1980s, as today, Labour took the lion’s share of the ethnic minority vote. But no one from an ethnic minority had ever sat as a Labour MP. In the 1983 election, just one person from a minority was selected as a parliamentary candidate, and in an ultra-safe Conservative seat. In response, Labour’s minority activists formed the Black Sections, a campaign to secure ethnic minority representation.

It was through these that Abbott met Linda Bellos, who was the leader of Lambeth Council, where Abbott worked as a press officer – her last job before entering parliament. “I was born here in 1950, one of 50,000 black people [living in the UK],” Bellos tells me. “We might have talked about going home but home for me was bleeding London, wasn’t it? Hence the need to make sure we were involved in all of the parts of the state. Someone like Diane had been to Cambridge, she’d been a councillor, she knew the democratic process, she was friends with a number of MPs, she knew the score. If someone like her couldn’t be selected, what was the point of any of us being here?”

The Black Sections wanted affiliated status, similar to that of the Fabians. But there were concerns that black candidates would not appeal to Labour’s presumed core white working-class vote. Some on the left saw “identity politics” as a distraction from the class struggle; and some on the right thought the Black Sections were too radical. At the 1984 conference, their plan was thrown out by a margin of ten to one.

Despite this setback, the fight had an important legacy. In the 1987 elections, four ethnic minority MPs entered the Commons for Labour: Paul Boateng in Brent South, Keith Vaz in Leicester East, Bernie Grant in Tottenham – and, in Hackney North and Stoke Newington, there was the 33-year-old Diane Abbott.

 

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She was the first black woman to be selected for a safe parliamentary seat. The Times marked the occasion with a leader denouncing her “rhetoric of class struggle and skin-colour consciousness”.

A few months later, the Sun profiled the “ten looniest Labour candidates” in Britain. “We were all there,” Abbott recalls. “Jeremy [Corbyn], the rest of us, and I was number eight.”

The local party in Stoke Newington was delighted with this firebrand reputation. “They said: ‘Stick with us, and we’ll take you right to the top!’”

The voters of north London were less welcoming. A brick was thrown through the office window of her local party. With Abbott as the candidate, some traditional Labour voters switched to the SDP-Liberal Alliance, taking the Labour vote below 50 per cent for the first time in the seat’s history (the second occasion was in 2005, just after the invasion of Iraq).

In parliament, the intake of ethnic minority MPs was regarded with caution. Abbott recalls that the then speaker of the House of Commons, Bernard Weatherill, was “very anxious”. She adds: “He thought we’d be like the Fenians and disrupt and collapse parliamentary process. So he invited Bernie [Grant], who was regarded as our leader, for port. And Bernie came for port and the speaker was very nice to him. And I imagine the speaker thought this was what stopped us being like the Fenians.”

Those Labour MPs who were disruptive – such as Corbyn the serial rebel – were in low spirits for other reasons. The marginalisation of Abbott and her allies during the late 1980s and 1990s explains why they have so little sympathy for the party’s beleaguered centrists in the current power struggle.

At the Labour conference in Liverpool this year – where she spoke as shadow health secretary – Abbott told me: “I came to party conference every year for 20 years, and we would lose and lose and lose. These people have lost twice and they’re complaining!”

Her thick skin was toughened during the New Labour years – and it reaffirmed her close friendship with Corbyn. (The two had a short sexual relationship in the early 1980s, which ended amicably. Abbott was married for two years to a Ghanaian architect from 1991 to 1993; her son, James, was born in 1992.) “She’s always had an odd hold on Jeremy,” one Labour MP tells me. “You would see them having lunch together and her bossing him about. I think people underestimate how influential she
is on his thinking.”

When David Lammy, her neighbouring MP in Tottenham, entered parliament in 2000 following the death of Bernie Grant, he found her “vilified, ostracised and exiled by the Blairites”. There were several attempts to remove her as an MP – another reason why the Corbyn camp is unconcerned by complaints from MPs such as Stella Creasy and Peter Kyle about their local parties threatening to deselect them.

Abbott retains a network of friends from her time before politics, including from her stint as a television producer. They urged her to quit in the Blair years – or to end her association with the left-wing Socialist Campaign Group. “I never thought I was willing to trade what I thought was right for some position in the party,” she says.

Some allies see it differently. “I don’t think Diane is someone who can quit [politics],” a friend told me. “I see her tweeting at all hours. She has interests, books and so forth, but she couldn’t walk away.”

Abbott says that Keith Vaz convinced her to stay, telling her, “You have forgotten what it took for us to get here.” (Some of Corbyn’s allies believe that this is what made the leader so supportive of Vaz during his latest scandal.) This sense of solidarity with other ethnic minority MPs has led to the long-standing rumour that Abbott would have nominated Chuka Umunna had Corbyn not stood for the Labour leadership.

“Diane is absolutely loyal to Jeremy,” one MP who knows them both well tells me. “She’s loyal to the project, yes, but she’s also loyal to him, in a way I don’t think you could honestly say about John McDonnell or Clive Lewis.” During the coup attempt against Corbyn last summer, Abbott spoke forcefully in favour of Corbyn remaining in place, rather than striking a deal to put Lewis or McDonnell on the ballot. “Her position,” one insider recalls, “was that we’d got a candidate we knew could win, and that candidate was Jeremy.”

Not that they always agree. Abbott advocated a less conciliatory approach after Corbyn’s first victory in 2015. “The thing that can be infuriating about Jeremy is that he likes to think the best of everyone,” she says. “I’m always perfectly straight with him as to what I think, and even if he doesn’t believe me at the time, he always does come round to my point of view.”

Abbott is one of the few people in the Parliamentary Labour Party whom Corbyn trusts completely. In their relationship, it’s hard to see who is the senior partner.

In the late 1990s and early 2000s, Corbyn and Abbott settled into a pattern of dissent, followed by defeat. Corbyn spent the time attending to foreign and human rights campaigns and signing thousands of early day motions. Abbott carved out a niche as a reliable critic of the Labour government under Tony Blair, with a month-long slot at the launch of the BBC’s This Week in 2003 blossoming into a regular gig alongside Michael Portillo. But away from Westminster, Abbott was making a decision that she knew could destroy her political career.

 

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The London borough of Hackney is today a national leader in schooling, but in 2002, just a third of students received five or more A*-C grades. That prompted Abbott to send her ten-year-old son, James, to City of London, a leading private school.

“I knew I could lose the seat over it,” she told me. “I was a single parent, and time after time, I had not been there for things at school, or I was too tired to take him out somewhere . . . I just thought, just this once, I should be prepared to make a sacrifice for him. If I lost the seat, then I lost the seat.”

She kept the seat. “Other things do annoy Diane – reporters saying things about her that aren’t true, people talking down to her,” one friend tells me. “But with [the schooling] I think she was very happy with that deal and to take that blow.”

Then, in 2010, Abbott’s career began a surprising second act: a bid for the party leadership. Activists and commentators felt uninspired by the choice in front of them – Ed Miliband, David Miliband, Andy Burnham and Ed Balls, four former special advisers from the New Labour era. Abbott called them “geeky men in suits”. Harriet Harman, in particular, was keen that the contest should not be an all-male field. Her support swayed Abbott. “If you had to pick one person, it was her,” she says, “because she was more mainstream.”

David Lammy set up a meeting between Abbott and David Miliband. The front-runner told her that, if she were a vote short in the nominations from MPs, he would vote for her. “But because it was David Miliband, I didn’t believe him.”

The elder Miliband had his own reasons for backing her. He believed that having her on the ballot would deprive his brother, Ed, of valuable support from the left. This was also the calculation that allies of Yvette Cooper made about Corbyn in 2015. “David’s legacy,” the Wakefield MP, Mary Creagh, wrote five years later, “made it normal – Blairite, even – to put a left-winger on the ballot to ‘have a broad debate’.’’

Of Corbyn’s campaign, Abbott says now: “I knew he’d do well, because what people missed is that had it been one person, one vote [in 2010], I’d have come third.”

Had the unions and the MPs not had a disproportionate influence on the result, she says, “I’d have beaten Andy Burnham, I’d have beaten Ed Balls. I’d been to 53 hustings – most Labour people are where Jeremy and I were. I knew there was much more left-wing sentiment in the Labour Party than the lobby thought.”

As a result of Corbyn’s victory in 2015, she is shadowing one of the great offices of state in what once looked like her final term in parliament. Her policy priorities as shadow home secretary are broad but include her favoured subjects of police reform and anti-racism. “I want to help shape the debate on migration,” she tells me. “I think we’ve had a very vacuous debate.”

That has put her at odds with the shadow chancellor, John McDonnell. Though both are long-time friends of Corbyn, their relationship is not warm. Allies believe that the division stretches back to the late 1980s, when McDonnell – then outside parliament – gloried in not going “soft” in the manner of Neil Kinnock. Abbott attracted suspicion, in part because of her early conversion to a pro-European position. Many believe that McDonnell never embraced the European project. He has ruled out opposition to Brexit and is behind the toughening of the party’s line on immigration. Abbott, privately and publicly, is determined to hold Labour to a more open and pro-immigration position. She has said that Labour cannot win as “Ukip-lite”, a coded rebuke to McDonnell.

The shadow chancellor is the only MP with a comparable influence to Abbott’s on Jeremy Corbyn and, thus far, the Labour leader has struck a middle path on migration, supporting Abbott’s line that the single market cannot be traded away for restrictions on the free movement of people but stopping short of a full-throated defence of free movement in principle.

As well as winning that internal battle, Abbott faces the task of landing more blows on Amber Rudd than her predecessors – Andy Burnham, Yvette Cooper and Ed Balls – managed against Theresa May when she was the longest-serving home secretary in a century, transforming the reputation of a department once regarded as a political graveyard. Not many give Abbott much chance of success but, as always, she believes in herself and thinks that she’s up to it.

Stephen Bush is special correspondent of the New Statesman

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.

This article first appeared in the 12 January 2017 issue of the New Statesman, Putin's revenge