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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?

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Can Jeremy Corbyn and Labour MPs learn to get along?

The leadership candidate has the declared support of just 15 MPs. Both sides are preparing to enter what feels like an alternate universe.  

On the morning of 12 September at the QEII Centre in Westminster, Jeremy Corbyn will be declared the new leader of the Labour Party. This is the outcome that almost all MPs now expect. A result that scriptwriters would have rejected as too outlandish before the contest began is regarded as near inevitable. Given the number of ballots returned in the first week of voting, the game may already be over. “It’s like a bad dream” and “It’s like a bad film”, shadow cabinet ministers told me.

All sides are struggling to adapt to the strange new world in which Corbyn – lifelong backbencher, serial rebel – becomes leader of Her Majesty’s Opposition. When his candidacy was announced in four short paragraphs in his local paper, the Islington Tribune, on 3 June, most believed that he would struggle to avoid finishing last. No one believed that he would reduce two former cabinet ministers, Andy Burnham and Yvette Cooper, to an unseemly squabble over which of them is in second place.

Several weeks before the result is announced, blame is already being cast around the party. Labour staff are furious with MPs for allowing Corbyn on to the ballot. Some are preparing their CVs, either having decided they will not serve under Corbyn out of principle or out of fear of being “liquidated by the new regime”.

When MPs lost their “golden share”, which gave them a third of the votes in Labour’s abolished electoral college, the nominations threshold was raised from 12.5 per cent to 15 per cent of MPs as a firewall against maverick candidates. Several of those who helped Corbyn over the barriers are now repentant. But others are not. “I can’t tell you how pleased I am that I nominated Jeremy,” Frank Field, the chair of the work and pensions select committee, told me. “The longer it goes on, the thinner the post-Blair gruel that the other candidates offer us appears. It is going to change the debate and, at the end of the day, we’ll owe Jeremy a huge thanks.”

When Denis Healey defeated Tony Benn by 0.8 percentage points in the 1981 deputy leadership contest, it was the moderate trade unions (with their 40 per cent share) and MPs (with their 30 per cent share) that saw off the hard-left constituency parties. This time, there is no such cavalry available. The two largest unions, Unite and Unison, have endorsed Corbyn, and an MP’s vote is worth no more than that of a registered supporter. Ben Bradshaw, a deputy leadership candidate, whose Exeter constituency party has the second-highest contact rate of any in the country, told me that 10 per cent of “supporters” in his area had consistently voted for other parties. Labour, however, has ruled that individuals cannot be excluded on this basis alone.

“The party’s processes were never set up to cope with this situation and nor was it foreseen that you would have a potential infiltration issue of this scale,” a shadow cabinet minister told me. “We don’t have copies of the TUSC [Trade Union and Socialist Coalition] membership list, or the Green Party list, or the Left Unity list, or the Alliance for Workers’ Liberty list. You can’t know how in-depth this has become.”

Yet Corbyn’s success owes less to entryism than thought. There are Labour voters who departed under Blair and now feel liberated to return; left-wing members who joined under Ed Miliband (and regard Corbyn as his successor); and young voters who are losing their political virginity. On the party’s right, there is self-reproach at their failure to sign up moderate supporters to counter the radicals. “We were hideously complacent,” one MP said.

Others attribute Corbyn’s rise to the ­unattractiveness of his opponents. “Andy, Yvette and Liz have a lot to answer for,” a senior MP told me. “If you can’t beat Jeremy Corbyn, how you can beat George Osborne, Boris Johnson or Theresa May?” Some of the other three’s own backers are stunned by how few new ideas they have offered. The decision of all three to position themselves to the right of Miliband following Labour’s defeat is regarded by Corbyn’s supporters as central to his success.

“They trusted Ed’s instincts,” an ally of the former leader said of Labour left-wingers. “They knew how he’d react in a crisis. They don’t feel like that about any of the others.” Burnham, who many expected would occupy this space, alienated the left by beginning his campaign with a pro-business speech at EY (Ernst & Young) and warned of the perception that Labour is “soft on people who want something for nothing”.

However, the Corbyn and Kendall campaigns say that Burnham remains ahead of Cooper in their internal data. Kendall’s chief lieutenants, such as John Woodcock and Toby Perkins, have endorsed Burnham out of fear that his supporters’ second preferences would transfer to Corbyn. But it is the title of leader-in-waiting, rather than leader, that most believe Burnham and Cooper are now fighting for.

The tens of thousands who have signed up explicitly to vote for Corbyn will not be dissuaded by apocalyptic warnings from Labour grandees. The shadow cabinet minister Jon Trickett, one of the left-winger’s most senior allies and a former adviser to Miliband, told me: “It’s become an article of almost blind faith for the anti-Corbyn camps that he can’t win an election. But nobody’s actually bothered to set out the case in detail to show he can’t win.”

If Gordon Brown’s intervention on 16 August was regarded as insufficient, those of Tony Blair and Peter Mandelson (who suggested that the three other leadership candidates try to halt the race by withdrawing) were regarded as actively helpful to Corbyn. “Mandelson and Blair are making it look as though the three other candidates are interchangeable, as if there are personality differences but no real political differences,” Trickett said. “There are clearly some differences – but essentially the effect of the these grandees’ interventions is to make the three look as though they are all a part of the same political establishment while Jeremy’s in a different camp. The consequence is that all those members who want to use their vote to achieve real change will clearly go to the only candidate who apparently represents something different.”

Conversation in Labour circles is increasingly turning to what the party would look like under Corbyn. Would he be ousted by MPs? Would he be able to form a shadow cabinet? To form a front-bench team? And how would he perform in a general election?

“The idea there’ll be some kind of coup – that’s total nonsense, it won’t happen,” John Mann, the Labour MP and Treasury select committee member, told me. Under Labour’s rulebook, rival candidates are required to attain the support of 20 per cent of MPs (46) in advance of the party’s annual conference. But in these circumstances, there would be nothing to stop Corbyn, or a left-wing successor, standing in the subsequent contest. Clive Lewis, the MP for Norwich South, a former BBC journalist and army reservist, is already being identified by some Corbyn supporters as a possible heir. “Personally, I think it’s the political kiss of death,” Lewis told me. “I know Owen [Jones] and others mean well but I’ve seen what this accolade has done to other MPs in the party who’ve had similar prophecies made about them.”

If Corbyn wins he will do so with the declared support of just 15 MPs – 6.5 per cent of Labour’s Commons membership. “I’ll show him as much loyalty as he showed other leaders,” Mike Gapes MP told me. Those senior figures who have publicly pledged not to serve in a Corbyn shadow cabinet, such as Cooper, Kendall, Chuka Umunna and Chris Leslie, intend to keep their word. The view is that he deserves “maximum room for manoeuvre to implement his prospectus”. Shadow cabinet members are alive to the danger of a backlash if they appear to obstruct him. In time, they hope, not merely Corbyn, but his policies, will be discredited.

There will be no SDP-style split but the energetic Umunna is already preparing for life on the back benches. He has formed a new group, Labour for the Common Good, led by himself and Tristram Hunt and open to MPs from “the right to the soft left of the party”.

In spite of “the resistance” (as it has come to be known), most believe Corbyn would be able to form a shadow ministerial team. “The party always comes first,” a senior MP said. Contrary to reports, Corbyn does not intend to bring back shadow cabinet elections, and so could unite MPs from Labour’s old left and from the new intake (13 of whom nominated him). In addition, Clive Lewis told me: “A number of MPs I’ve spoken to who supported both Yvette and Andy are quietly very excited at this turn of events.” He also predicted that “many others, sensing an opportunity to move from virtual political obscurity to front-line politics, an option that wasn’t there three months ago, will do so with guarded enthusiasm”.

Corbyn’s supporters cite his genial manner and modesty as crucial advantages. “He’s one of life’s co-operators and will work with people,” Cat Smith, the newly elected Labour MP for Lancaster and Fleetwood, who worked for Corbyn for six years, told me. “He’s not seeking to exclude anybody, that’s not his way of doing things. When I was a member of his [constituency party], Islington North CLP, we had people who were very active and prominent in Progress, people who were in the LRC [Labour Representation Committee] and all the spectrum in the middle. Those CLP meetings were some of the nicest meetings I ever went to because it felt like people left a lot of that baggage at the door. Jeremy’s not going to hold any grudges.”

But MPs question whether Corbyn’s co-ideologues would be similarly ecumenical. “He has said all the way through this that he doesn’t want to do personal politics, he wants it all to be about policies, he’s not going to attack anyone and so on,” Pat McFadden, the shadow minister for Europe, said when we spoke. “And yet some of his supporters are saying some pretty nasty things on social media about other candidates.

“Will his supporters refrain from doing personal things? Jeremy rebelled 500 times against the whip. If other people were to do that would they be afforded the same tolerance that he has been afforded for the past 30 years, or would it be different?”

MPs who plan to oppose Corbyn’s stances fear deselection by their local parties. His team told me that he did not favour the reinstatement of mandatory reselection (abolished under Neil Kinnock in 1990) and would not endorse moves to “depose sitting MPs”. But grass-roots members would still have the power to initiate “trigger ballots” against recalcitrant Blairites.

Corbyn has announced that, if elected, he will review Labour’s membership fee (currently £46.56 a year) with the aim of attracting registered supporters (who paid £3) into the fold. Should he succeed, the party’s centre of gravity will move sharply leftwards. Labour faces a split not just between moderates and radicals but between MPs and members.

There are three early tests that senior figures believe Corbyn would face: Prime Minister’s Questions (his first appearance would be 16 September), relations with the media and next May’s elections in Scotland, Wales and England. John Mann told me that the left-winger had “talked a big game” and that most MPs would judge him by results. “The Tories are rubbing their hands with glee but they also know Labour’s not going to tolerate any leader who performs disastrously in elections.” Others fear, however, that the members will merely blame MPs for being insufficiently supportive of Corbyn if he flounders with the electorate. “It’ll be all our fault. They’re already preparing a great narrative of betrayal,” Gapes said.

Should Corbyn make it to a general election, shadow cabinet members believe that Labour would face a generation or more in opposition. One predicted that the party would lose between 30 and 50 seats and fall below 200 MPs for the first time since 1935. Some fear that the Conservatives, like the Christian Democrats in Italy and the Social Democrats in Sweden in past decades, would attain hegemonic status. The Tories, meanwhile, are divided between those intoxicated by this prospect and those who fear that a Corbyn-led Labour Party would force the Conservatives to move leftwards to occupy a redefined centre ground.

Others note, however, that Margaret Thatcher proved immune from this affliction in the 1980s as she dragged the political consensus rightwards.

In Labour, all sides are preparing to enter what feels like a looking-glass world, or an alternate universe. “There is going to be a new establishment: Corbyn, [Michael] Meacher, [John] McDonnell, [Ken] Livingstone, [Diane] Abbott,” a shadow cabinet minister told me. “They are now, for the first time in their political careers, going to be the political establishment. They are going to have responsibility and they will be running things. They won’t be able to pose as being outsiders or insurgents any more: they will be the establishment.” 

George Eaton is political editor of the New Statesman.

This article first appeared in the 20 August 2015 issue of the New Statesman, Corbyn wars