The Staggers 26 January 2015 The Labour left demand a change of direction - why their intervention matters The party's backbenchers recognise that political instability could allow them to increase their influence over the leadership. John McDonnell, MP for Hayes and Harlington and chair of the Socialist Campaign Group of Labour MPs. Sign UpGet the New Statesman's Morning Call email. Sign-up By historic standards, the Labour left has been remarkable by its quiescence in this parliament. The anticipated split over austerity, as Ed Miliband and Ed Balls committed to strict deficit reduction targets, never materialised (in contrast to that of the Conservatives over the EU). But, apropos of nothing, 16 MPs from the party's left have just released a statement demanding a change of policy direction in three areas. The first is over public spending. They reject Labour's pledge to eliminate the current deficit by the end of the next parliament, calling for a £30bn investment package funded either by higher borrowing, the state-owned banks, a new round of quantitative easing, or a special levy on the super-rich. The second is over rail policy. Rather than Labour's plan to allow not-for-profit firms to bid for franchises as they expire, the MPs demand that contracts are automatically returned to public ownership. The third is over trade union and employment rights. The MPs call for the promotion of sectoral collective bargaining and improved recognition for unions. None of these demands are particularly original or surprising. But it is striking that the MPs (largely represented by the Socialist Campaign Group) have chosen this moment to apply pressure to Miliband. Many on the left believe that they can take advantage of the rise of the anti-austerity Greens and the SNP to push Labour in a more radical direction. In the likely absence of a majority, backbenchers such as the 16 signatories could exert significant influence over a minority or coalition government, determining whether it lives or dies. Just as the rebellions of the Conservative right, and David Cameron's subsequent concessions, have been a feature of this parliament, so those of the the Labour left could be a feature of the next. Alternatively, should Labour lose, shadow cabinet ministers fear that whoever succeeded Miliband would struggle to avoid a major split (particularly were a "Blairite" candidate elected). Len McCluskey's repeated threat, both in public and in private, to establish a new workers' party if Labour is defeated is one that all sides are taking seriously. Here's the statement in full. 1 An alternative to the continuation of austerity and spending cuts till 2019-20 All three main parties, tragically, seem to agree that deep spending cuts must continue to be made until the structural budget deficit is wiped out in 2019-20, even though wages have already fallen 8% in real terms, business investment is still below pre-crash levels, unemployment is still 2million, the trade deficit in manufactured goods at over £100bn is now the largest in modern history, and household debt is now over £2trillion and still rising. The Tories want to continue with these cuts because it gives them political cover to achieve their real objective which is to shrink the State and squeeze the public sector back to where it was in the 1930s. It isn’t even as though the deficit is being reduced by these savage cuts. Because the reduction in the government’s tax revenues as a result of shrinking incomes exceed the spending cuts, the deficit (which is still nearly £100bn) is likely to rise, not fall, in 2014-15 and in future years. There is an alternative way out of endless austerity. We need public investment to kickstart the economy out of faltering growth and to generate real job creation and rising incomes. It can readily be funded. With interest rates at 0.5%, a £30bn investment package can be financed for just £150m a year, enough to create more than a million real jobs within 2-3 years. And even without any increase in public borrowing at all, the same sum could equally be funded either through the two banks which are already in public ownership, or through printing money (quantitative easing) to be used directly for industrial investment rather than for bond-buying by the banks as hitherto, or through taxing the ultra-rich by a special levy. 2 Returning rail franchises when expired to public ownership rather than subjecting them to competition The essence of rail reform must be to reverse fragmentation, to reintegrate the system under public ownership, and to run it in the public interest. At present Britain has the highest fares in Europe. The additional costs of privatisation to public funds are estimated at more than £11bn, or around £1.2bn a year, so that the costs to the taxpayer are now three times as much as under British Rail. Since 2010 rail fares have increased 25%, yet at the same time more than £200m a year has been paid out in dividends to shareholders or overseas state-owned rail companies which now hold two-thirds of the current rail franchises. Over 80% of the public want the railways re-nationalised, which must include a significant proportion of Tories. The most obvious and simplest way to achieve this is by letting the rail franchises expire and then taking them back into public ownership at no cost whatever to the taxpayer. To subject them to a public bidding competition with private bidders is not only wholly unnecessary but sends out the wrong signals, as though we’re not confident of our own ideology. The Tories certainly didn’t offer a competitive option when they forced through privatisation! Anyway, the franchise process, so far from being economic, encourages the gaming of wildly optimistic passenger number projections and this, combined with huge legal contract complexity which is bureaucratic and wasteful both in time and money (except for the lawyers and accountants), has led in the past to franchise failures and operating chaos, most notably on the East and West Coast lines. From past experience public ownership has consistently worked better, and we should not gratuitously throw obstacles in our own path in getting there. 3 The need for the restoration of collective bargaining and employment rights as a check against excessive corporate power When the Thatcher government came to office in 1979, 82% of workers in the UK had their main terms and conditions determined by a union-negotiated collective agreement. The latest figures now show that the coverage is down to just 23%. One very significant result is that the share of national income going to salaries and wages has fallen dramatically from 65% in 1980 to 53% in 2012 – a loss to employees of some £180bn! This has happened partly from the collapse in trade union membership from 55% of the workforce in 1979 to 23% in 2012. But it has also happened partly as a result of the anti-trade union laws introduced in the 1980-90s and partly because the state has withdrawn support for collective bargaining as part of the free market ideology of de-regulation of all markets, including the labour market. It is somewhat ironic however that de-regulation of the labour market requires the tightest regulation of one of the key players in that market, the trade union movement. An incoming Labour government should choose to enhance the role of trade unions because trade union rights are human rights, a trade union presence creates more just and equal workplaces, and trade union collective bargaining is more redistributive than statutory wage setting and will assist on the road from austerity. We should therefore actively promote sectoral collective bargaining and strengthen the rights of trade unions to recognition, and of their members to representation. Diane Abbott Dave Anderson Katy Clark Jeremy Corbyn John Cryer Fabian Hamilton Kelvin Hopkins Ian Lavery John McDonnell Michael Meacher Ian Mearns Grahame Morris Linda Riordan Steve Rotherham Jim Sheridan Chris Williamson › The new Greek Prime Minister's first tweet after winning the election was to Hugh Laurie George Eaton is senior online editor of the New Statesman. Subscribe For daily analysis & more political coverage from Westminster and beyond subscribe for just £1 per month!