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The Labour government of 1997 inherited five years of economic growth, growth that has continued throughout its eight years in office. Gross domestic product (GDP) has risen by over 40% in this period. It represents the longest period of sustained growth since records began. Yet despite this, as JIM CRAVEN reports, Labour has completely failed to make any significant impact on the poverty, insecurity, poor health and education faced by the majority of the working class in Britain.
Instead, it has been boom time for the rich. The Labour government has assured complete freedom for the financial sector providing record profits for all the big banks, and maintained an unregulated labour market ensuring plenty of low-paid workers, easily hired and fired, working the longest hours in Europe. It has retained the Tories’ anti-trade union legislation. To provide new sources of profit for its rich friends Labour has continued to privatise public assets and to encourage the intrusion of private capital into health, education and other national services. The transfer of public services to private industry was worth £44 billion in 2003-4 and is set to rise by 50% over the next three years to £67 billion per year. In 2004-05 the Private Finance Initiative (PFI) will account for 18% of all publicly sponsored investment.
PFI allows private firms to build public utilities such as schools and hospitals and then lease them back to the state. These companies expect to make a handsome profit. Their fees will total many times the cost of building by the end of the lease and threaten the viability of the services provided. The projected fees in 2006-07 for PFI projects are £6.3 billion. Meanwhile, Labour has cut back on the proportion of national income devoted to public spending. Only this year will it finally rise above the level inherited from the John Major government (40.6%). As a consequence, Labour has consolidated its position as the preferred party of the ruling class and so seems likely to be rewarded with another period in government.
Your family better off? Labour’s poverty-ridden Britain
Labour claims to have taken one million children and 600,000 pensioners out of poverty in the last eight years and that it will achieve its target of reducing child poverty by 25% before the end of 2005. Whilst official poverty rates may have fallen for those targeted by Labour’s slender improvements to tax credits and old age pensions, poverty amongst adults of working age without children has actually risen by 300,000 to 3.9 million. In 2002-03, the latest year for which official figures are available, 12.4 million people, 22% of the population, were living in poverty. This includes more than a quarter of all the children in Britain, a total of 3.6 million. It excludes hundreds of thousands more such as asylum seekers and ‘unofficial’ workers.
These people, and millions more, cannot even afford basic necessities such as warm clothing, nutritious food or decent furniture. Half of them have no savings at all. Almost two million people cannot afford to heat their homes adequately, resulting in 50,000 deaths every winter. Poverty in Britain is still more than twice the 1979 level. Even those whom Labour claims to have taken out of poverty have not, of course, had their lives transformed. For the most part they have been lifted from just below the poverty line to just above it. For a lone parent with two children to bring up this amounts to just £207 a week. For all these people life remains a day-to-day struggle just to get by.
Inequality grows under Labour
The fruits of economic growth have primarily benefited Labour’s wealthy friends. By retaining low direct taxation for the rich and raising indirect taxation the tax burden has been disproportionately shouldered by the poorer sections of the working class. The gap between rich and poor is getting ever wider. The wealthiest 1% have increased their share of national wealth from 20% to 23% under Labour; an extra £737,000 each. The share of the poorest half of the population has fallen to just 5%. Under Labour top executive pay has risen by 500%. The average rise in earnings has been just 45%. In 1995-96 just before Labour came to power the gap in weekly disposable income between people in the 10th and 90th percentiles was around £300. By 2002-03 this gap had risen to around £490 (both figures based on 2002-03 prices).
This growing inequality means the official poverty line will rise faster than any increase in earnings for the poorer sections of the working class. Even if the economy continues at its present levels of growth this will mean more and more people will be threatened by poverty and Labour will find it increasingly difficult to keep those who have risen just above the poverty line from falling back below it. Since Labour has retained the Tory policy of linking benefit and state pension rises to prices, which always rise less than earnings, people receiving these will fall deeper and deeper into poverty.
Labour’s myth of full employment
Another of Labour’s empty boasts is that it has substantially reduced unemployment. The official number of people out of work and claiming benefit has halved over the last decade to around 813,000. However, this figure is just the tip of the unemployment iceberg. Altogether there are 2.3 million unemployed people who want work. Job centres have reclassified workers as long-term sick or disabled to meet targets for reducing the unemployment figures. Their numbers have burgeoned by a third since 1997 to reach 2.4 million by last year.
The unemployment situation is particularly severe among certain sections of the population. The official unemployment rate among young adults aged 16 to 24 years is 10%. Among lone parents 40% do not have jobs. The official unemployment figures also hide the fact that there are 7.3 million part-time workers many of whom would like full-time jobs and 1.5 million other temporary workers who would like permanent jobs. 40% of unemployed people who do get a job are out of work again within six months.
Labour maintains poverty pay
If unemployment is a major source of poverty, getting a job is far from being a way out of it. Two fifths of those households below the poverty line have someone in work. In 2004, around seven million workers over the age of 18 years were paid less than £6.50 per hour. This equates to £260 for a 40-hour week; substantially less than the poverty level for a couple with two children. Rather than tackle low pay Labour has chosen to use a system of tax credits to lessen the impact on electorally high-profile groups such as families with children. Three times as many families now receive tax credits to top up their wages as were paid the old Family Credit ten years ago.
Labour also introduced the national minimum wage, which Blair described as ‘a powerful symbol of how this country is changing for the good’. At present the minimum wage stands at a paltry £4.85 per hour, set to rise by a mere 20p to £5.05 this October. Even lower is the minimum wage of workers aged between 18 and 21 – £4.10 per hour – and that for 16 and 17-year-olds – just £3 an hour (apprentices aren’t even guaranteed that!). Yet nationally over 1.4 million workers receive the minimum wage. Once again these numbers do not include the many tens of thousands of people working unofficially for poverty pay in jobs such as agriculture, catering and warehousing.
Homelessness increases under Labour
Labour’s record on homelessness has been even worse. The number of households living in temporary accommodation has more than doubled since Labour first came to power in 1997. By September 2004 the total number of homeless households stood at 100,810. Of these 18% did not even have a temporary place of their own but had to share facilities with other households. The charity Crisis says there are a further 380,000 people living in hostels, squats and similar places. They estimate these numbers will rise to 650,000 by the end of another Labour term of office. These figures do not include an unknown number of people who have to sleep rough. The Joseph Rowntree Foundation reports that there are an estimated two and a half million other people living in overcrowded conditions.
Racism and inequality rampant under Labour
Last year a series of reports demonstrated that there was no let up in racism within the police force, the armed services, the prison service, the National Health Service, in education and in employment. For instance, people of Black Caribbean, Bangladeshi and African origins are twice as likely to be out of work as white people. Black pupils are three times as likely as white pupils to be permanently excluded from school. There are now a record number of more than 75,000 people incarcerated in British prisons, the vast majority of them from poor working class backgrounds, but black young adults are seven times as likely as white young adults to be there.
The number of women workers is rapidly increasing as more and more families require a second wage. But women are overwhelmingly allocated the most menial and insecure jobs. Over three-quarters of part-time workers are women. Despite equal pay legislation the median hourly rate for women remains over 14% below that for men for full time work, and over 43% below that for men for part-time work.
An early death for the poor
Labour’s much-vaunted commitment to improving the NHS has certainly not eradicated huge health inequalities. Income remains the most accurate pointer to health and longevity. For example, infant mortality rates among the poorer sections of the working class are one and a half times higher than among middle class professionals whilst the incidence of low birth weight is one and a third times higher and continues to increase. Adults in the poorest fifth of the population are twice as likely to develop a mental illness as those on average incomes. A man living in one of the wealthiest 10% of areas in the UK has a total life expectancy of 77.4 years and can expect 66 years of healthy life. For a man in one of the poorest 10% of areas life expectancy is six years less and healthy life expectancy is only 49 years. Commenting on ways of radically improving the health service the Joseph Rowntree Foundation concluded ‘redistribution of wealth would have the greatest absolute effect in terms of numbers of lives saved’.
Your family treated better and faster?
The crisis in the NHS
Total UK health spending for 2005-06 is planned to be over £90 billion with a projected average annual rise of 7.4% over the next two years. Much of this increase, however, has already been earmarked for increases in pay, prices, pensions and negligence claims which means that the extra money available for equipment, materials and services is reduced to just 2.4%. On top of this, a government report to Labour Health Secretary John Reid last October indicated that output in the health service was falling just as spending was increasing. 40,000 extra nurses have been recruited during Labour’s term in government but many have left the NHS. Nurses have been recruited from abroad but there is still a shortage. Consequently, the bill for private agency nurses, where pay rates are 70% higher, has tripled. The dental service is also in crisis. In most areas it is almost impossible to register with an NHS dentist. Labour’s targets to cut waiting times have not been resourced adequately. They have forced hospital staff into some dangerous rescheduling of cases and have hindered clinical prioritisation. Overall average waiting times have not improved over the last seven years.
However, it is Labour’s increasing privatisation of the NHS that poses the greatest threat to its long-term survival. In addition to PFI capital spending on new hospitals, the value of NHS services handed to private contractors is set to rise by 150% to £16.4 billion by 2006-07. The handing of hospital cleaning to private contractors has resulted in just one cleaner on the minimum wage for every five wards. Consequently, standards of hygiene have suffered. One in ten patients now contracts an infection whilst in hospital. These infections result in 5,000 deaths a year and contribute to another 15,000.
Your child achieving more? Education – for the rich
Most early improvements in school test results under Labour have now stalled. For instance, the failure rate for level 4 in English and maths at age 11 has remained at around 25% since 2000. 12% of 16-year-olds in England and Wales failed to obtain five or more GCSEs in 2004 and 6% obtained no GCSEs at all, figures that have remained unchanged since 1999. The proportion of 19-year-olds who lacked an NVQ2 or equivalent has actually been rising over the past few years. In 2004 it was almost 30%.
It is the poorest sections of the working class that suffer the bulk of this educational deprivation. Only 45% of those children on free school meals achieve the expected standard at age 14, compared with 75% for others. The gap in GCSE success between children from professional families and those from unskilled worker families widened in the ten years between 1992 and 2002. By the age of 16, 87% of children from professional families were still in full-time education in 2002 compared with around 60% of those from unskilled families.
By contrast, in 2000, half of children from the wealthiest 25% of families were completing university degrees compared with just 9% of children from the poorest 25%. The disparity now is greater than it was in the 1950s. And, of course, educational qualifications are the key to better pay and job prospects. So, far from eliminating inequalities, the education system in Labour’s capitalist Britain helps to perpetuate it.
Rising debt threatens Labour
As we have seen, despite rising prosperity for the rich and middle class, the conditions of the working class have barely changed under Labour. If they are not unemployed, these workers are increasingly forced into low paid, insecure, part-time and temporary work with few rights and poor conditions. For the most part they are unorganised. Barely 15% of those on £6 an hour or less are in trade unions compared with 40% of those earning £10-20 an hour. The trade unions are dominated by the middle classes and have continually covered up for Labour – for instance when they refused to challenge Labour’s policy on Iraq at last year’s Labour Party conference.
For the poorest sections of the working class elections are increasingly irrelevant. At the last general election, turnout was barely a third in some of the poorest constituencies. But Labour’s vote now comes increasingly from the wealthier areas. They hold five of the ten richest constituencies in the country. For the time being then, Labour can afford to ignore the plight of the poor and concentrate on maintaining the support of the middle class.
However, the conditions of the middle class are not guaranteed. Much of its present prosperity has been based on rising house prices and low interest rates for credit and mortgages. This has produced a massive increase in personal debt. The total level of personal debt broke through the £1 trillion mark last July when it was rising at a rate of £15 million an hour, faster even than in the United States. 80% of this debt is related to mortgages and other loans on dwellings. The rest, an average of £16,000 for a family of four, was credit card, bank or similar loans. The ensuing spending boom is an important factor in maintaining economic growth.
There are now signs that all is not well. Last year, one in eight homeowners reported difficulties in keeping up payments on loans and larger numbers of young people began filing for bankruptcy after building up huge debts. A fall in house prices, a rise in interest rates or a downturn in the economy leading to greater unemployment could all bring the house of cards crashing down. If Labour wins a third term in office, it may have to turn against a middle class suddenly thrown into poverty by economic crisis.
Labour’s rich friends
Labour’s close alliance with the ruling class is reflected in donations to the party. In the two years following the last election, Labour’s rich friends gave it almost £8 million. Labour’s paymasters included science and technology minister and supermarket magnate Lord Sainsbury, venture capitalist Sir Ronald Cohen, property developer Sir David Garrard and curry emperor Sir Gulam Noon. Altogether, this meant that the percentage of party funds from wealthy individuals rose to 41% while that from trade unions fell to 56%. Labour now gets four times as much money from individuals as the Tories who, together with the Liberal Democrats are increasingly reliant on the public purse for their survival.
The trend continued last year. Gulam Noon and Ronald Cohen made further donations. They were joined by, among others, Sir Gerry Robinson chairman of drinks giant Allied Domecq; Sir Frank Lowe chairman emeritus of his own multinational advertising agency; Sir Sigmund Sternberg, former chair of top software company ISYS, property developer and commodity consultant; publisher Sir Christopher Ondaatje who gave over half a million pounds and Lord Paul Drayson who gave over a million pounds. Drayson gave half a million the month after receiving a peerage and another £100,000 whilst bidding for a £32 million government contract for his pharmaceuticals company. Big businesses that bankrolled Labour included Reddington Finance, GNER trains, Aventis Pharmaceuticals, Bloomberg Tradebrook, Sterling Capitol plc, Canary Wharf Group plc, Novartis Pharmaceuticals and Tesco.
Jim Craven
FRFI 184 April / May 2005
