In April, the government announced that it was postponing the sale of a 49% stake in British Nuclear Fuels (BNFL) worth £1.5bn until the summer of 2002. The decision followed the collapse of BNFL contracts with Japan and Germany after revelations that the company had forged safety certificates. But in Labour’s view, this is a temporary problem: the sale will go ahead once BNFL has put its house in order. In early May, John Prescott faced down Labour ‘rebels’ who opposed the sale of a similar stake in the national air traffic control system. This will raise £1bn. Despite Livingstone’s election as London’s mayor, Prescott still intends to part-privatise the Underground. ‘Private Finance Initiative’ (PFI) is another method of privatising state assets; PFI is now the main means of financing new hospitals, or putting advanced computer systems into government. Neither the fiasco of the railways, nor the innumerable computer disasters now besetting the Home Office and the Inland Revenue have deterred Labour from considering privatisations the Tories rejected out of hand. Robert Clough reports.
Why is Labour so determined? Why does Prescott proclaim that the aircraft traffic control sale will not jeopardise safety at the same time as the inquiry into the Paddington disaster reveals that this is precisely what has happened with the railways? Why does he pursue a policy on the Underground which clearly most voters rejected? Why, when a recent government report shows that the NHS is now short of beds, promote PFI which will reduce them still further? It is not because the government is short of money. It has just received £22.5bn from the sale of airwaves to mobile telephone companies. The answer lies in the struggle of giant multinationals to secure and extend their monopoly positions in conditions of deepening crisis. Privatisation has allowed the development of new utility and service multinationals that have been in the forefront of a new form of colonialism: buying up state assets of oppressed nations. Privatisation of state assets in imperialist countries enables such multinationals to achieve the necessary size to allow them to play a role on the world stage. Privatisation of state assets in oppressed nations then provides such multinationals with potential sources of huge profits with minimal outlay.
Labour’s dogmatic support for privatisation can only be understood within this context; it is a necessary consequence of its absolute commitment to maintaining British imperialism’s completely parasitic existence. Labour is acting as the executive of British imperialism, and it has created an economic, political and ideological framework in which the interests of the multinationals are completely dominant. When Socialist Worker complains, along with the diminishing band of Labour lefts, that Labour is ‘giving in to the fat cats’, they miss the point. The government is not a passive footsoldier in this process; nor can one explain its role by suggesting it is led by cowards who are frightened to stand up to the multinationals. Quite the opposite: Blair and his cronies are active and committed partners to developments which are designed to give free rein to capitalist interests whilst shackling the working class and poor with an ever more oppressive regime.
Side by side with this privatisation process is the merging of multinationals with the state apparatus. Blair’s cronies are not just the career politicians of the parliamentary Labour Party: they are representatives of the multinationals themselves. Multinationals reach into the heart of the government and are active through their representatives in all sorts of policy-making bodies. Lobbying groups facilitate the introductions: there are 35,000 appointments within the direct grant of ministers. Small wonder that there is no going back on the policy of privatisation. As if to make sure of this process, Labour is stuffing the ‘reformed’ House of Lords with more appointed peers than any previous government. And who selects these peers for preferment? The multinational consultancy PriceWaterhouse Cooper. The programme of privatisation is part of a whole where multinationals are playing a direct role in government.
Privatisation and the creation of utility multinationals
The creation of utility and service multinationals is an expression of the complete parasitism of imperialism today. Privatising state assets in imperialist countries was a first step in allowing new forms of domination of third world economies to develop. Privatised water and gas utilities have merged with service multinationals to create huge new conglomerates. British Gas is one example. It has two arms: BG International and Transco. BG International heads a consortium of oil and gas corporations that dominate the Caspian Sea oil fields. In early May, the consortium announced the discovery of a new oil field with an estimated capacity of 30bn barrels – the largest outside of the Middle East.
Water companies are no different. Thames Water was an early investor in Indonesia, although it nearly lost out when the Suharto regime was finally ousted. More recently, riots broke out in Bolivia as people protested against a 35% increase in water prices ordered by the newly privatised water industry of Cochacamba. This is now owned by International Waters Ltd of London, itself owned by Bechtel, a giant US construction company. The company claimed the rise was necessary because of the costs of the nearby Misicuni Dam project. There are two points here: first, the dam has not yet been built, second, the contractor is…Bechtel. However, passing on the costs in advance to the consumer is a policy that is being endorsed by the World Bank. The first water privatisation in the region was in Buenos Aires, Argentina, where the municipal water company was taken over by Anglia Water. 6,500 jobs were axed, and the system fell apart for lack of maintenance. But for a company like Anglia this is no problem: it is in a position of complete monopoly. Its income and profits are guaranteed regardless of the state of the system. In March a meeting held under the auspices of the World Trade Organisation in The Hague agreed to accelerate the privatisation of the world’s water systems in a move which will reinforce imperialist domination of oppressed nations.
What goes for water also goes for the former state-run electricity industry. National Power now has extensive power supply contracts within Pakistan. In a rare example of judicial independence, charges of bribery against National Power officials led to the Pakistani courts cancelling these contracts. National Power appealed to the World Bank which intervened and ordered the Pakistani government to pay up. However, customers refused to pay the increased charges and National Power workers threatened strikes. In January, the military was forced to intervene, seizing power plants, gaoling union leaders and sending troops to get customers to pay.
At home, the government published its Utilities Bill in February. Labour had promised this would bring some consumer control of utility pricing and operating policies following revulsion at the grotesque profiteering of the newly-privatised utilities under the Tories, particularly in the water and power industry. Such profiteering continues to this day: the operating profits of the water industry stand at 45p in the pound on water and sewage bills. In 1996, Labour also promised consumers the right to commercial information on utilities and a role in price-setting negotiations. Following intensive lobbying by the utilities, this provision has disappeared. Equally intensive lobbying has excluded the water industry as well as BT from the scope of the Bill. Nor is there any provision to allow access to information about the utilities’ finances and operations. The Freedom of Information Bill currently bars regulatory agencies from releasing information given to them in ‘confidence’ or which is ‘commercially sensitive’.
Multinationals in the government
The Labour government and big business are ever more closely intertwined. Within months of the 1997 election, Labour had defined how it expected the relationship of multinationals to develop. Control of financial policy was handed to the City. Sir David (later Lord) Simon from BP was an early recruit; he was joined by the Chief Executive of Barclays Bank, Martin Taylor. Lord Sainsbury was drafted in to head up science policy. There are 108 people working on various treasury task forces at the moment: 98 of them are business representatives. The City of London reaches directly into the policy-making bodies of the Labour government. The more recent news that British Nuclear Fuels Ltd paid £500,000 to have a post in the Tokyo embassy was followed by further revelations:
- Tarmac, Kvaerner, Ove Arup and Christiani and Nelson, all huge construction firms, have staff seconded into the Department of Trade and Industry (DTI);
- BP and Shell also have staff in the DTI. BP has paid for employees to work in the Washington embassy and on the Foreign Office’s Middle East desk. Since the election, the government has backed down from tightening up the tax regime on North Sea oil and watered down its proposals on a climate change levy.
- BT is another company with staff in the DTI; it has successfully lobbied to be excluded from the Utilities Bill.
Eight British Aerospace staff work in the Ministry of Defence. Others are paid for by Rolls Royce and Vickers, the tank manufacturer. The Labour Party itself has shareholdings in both British Aerospace and GEC; defending this, a spokesperson said that ‘we are not against the manufacture of arms. It’s a big bad world out there’. It is not surprising therefore that there has been no radical shift over arms export policies which are still hidden from public view. Hence no one knows for certain how many Hawk aircraft deliveries are outstanding to Indonesia. Not one of 125 arms licences inherited from the Tories was revoked. A joint report from the cross-party Defence, Foreign Affairs, International Development and Trade and Industry committees pointed out the government had not only refused to disclose the legal advice it had received which it claimed prevented it from reviewing these licences, it would not even name the legal firm involved. Both multinationals and government need to operate under a shroud of secrecy.
Meanwhile, representatives of the supermarkets and food producers fill the Economic and Social Science Research Council, the largest patron of social science in the country, disposing of over £65m grants per annum. Keith Brandon, Tesco’s Chief Executive sits on the governing body. In February David Blunkett addressed the body and launched an attack on ‘perverse’ researchers ‘driven by ideology’ who failed to consider ‘the reality of many people’s lives’. This was apparently because they did not address issues that were ‘relevant’ to politicians. An exception to this would have been the 1999 report on supermarket charging policies by one Dr Mark Harvey who concluded that that they offered ‘choice, quality and convenience’ and that it was ‘oversimplistic’ to accuse them of overcharging.
In capitalism, the state is the executive of the ruling class. In today’s conditions of globalisation, this is not an empty phrase. Multinationals now expect to see their representatives at the heart of government, determining policy, ensuring that their interests are defended. Labour’s slogans – modernising government, public-private partnership – are an ideological expression of this new form of multinational domination of our lives.
FRFI 155 June / July 2000
