Election crisis: markets call the shots

The hung parliament that has resulted from Britain’s inconclusive general election is certain to lead to a prolonged period of political instability slap bang in the middle of the gravest economic and financial crisis since the 1930s.

Now the horse-trading begins – behind the voters’ backs – to put together a government that is unlikely to see the year out. The Tories, New Labour and the Lib Dems don’t have much time, as the markets made clear while the last votes were being counted.

Sterling fell on the foreign exchange markets, while the cost of borrowing to fund the huge budget deficit rose as dealers in British bonds began to take evasive action. Shares on the FTSE 250 – which more closely reflects the British economy - fell by over 270 points. “They have got until the markets open on Monday to sort this out,” one dealer said.

Paralysis at Westminster comes amidst turmoil coursing through global markets in the wake of Greece’s bail-out by the International Monetary Fund and other eurozone countries. Few think the £100 billion rescue package will be sufficient and the resistance by Greek workers has further unnerved the markets.

“The election is shaping up to create the worst possible outcome at the worst possible time,” warned David Morrison, strategist at GFT. “Investors’ nerves are already jangling and this added uncertainty will undermine UK equities further. The sell-off in gilts [bonds] and sterling is a clear indication of how unimpressed the City is by the lack of a clear winner.”

If the City was unimpressed, so too were the electorate. Their refusal to give any party a clear mandate could be seen to express a fear that such an outcome would make massive cuts in services and living standards more certain. While the turnout was up slightly on 2005, in many inner-city areas it was below 60%. More than one in three registered voters did not participate, despite intense pressure to do so.

Clearly the TV debates did nothing to enable voters to distinguish one party from another, apart from the style of the respective leaders. Many undecided voters failed to work out a choice in time while thousands of those who made up their minds late in the day found themselves locked out because polling stations were understaffed.

All the major parties have now pledged to act “in the national interest”, which is tantamount to saying that the markets must be mollified by a cross-party agreement to make the cuts they hinted at but shied away from spelling out in any detail during the election campaign. Ruling in the people’s interest is not an option for any of them.

One thing is clear. New Labour spent 13 years in office promoting a market capitalist economy that ultimately crashed and in doing so created the political space for the hated Tories to make a comeback from the dead. In 1997, New Labour got 43% of the vote and more than 12 million votes. Now they are down to a 29% share and 8 million votes.

A majority New Labour government is now no longer a practical possibility in British politics. Any pact with the Lib Dems would simply confirm a new political alignment that is not so much “progressive” as anti-socialist, anti-trade union and pro-business.

The election result shows that the Parliamentary system is in melt-down, one that reflects the real chaos in global economics and finance. An anti-people regime without any mandate will set about clobbering the electorate very shortly. On that basis, we have an absolute right to oppose and reject whatever government and policies emerges this weekend. More than that, we should set out creating the framework for a real democracy in the shape of a network of People’s Assemblies. The old system is broken and can’t be fixed.

Paul Feldman

Communications editor

A future unfair for most

Once upon a time in the 18^th century, a Frenchman wrote “the style is the man”. Studying New Labour’s election manifesto published yesterday, it is wise to keep this in mind.

The garish-kitsch-retro design of the manifesto cover is a ham-fisted attempt to refer backwards to Old Labour with lashings of Stalinist Socialist Realism. The “vision” it presents is of a white family looking out over green fields towards a radiant sun emblazoned with the words “a future fair for all” (whatever that means).

From where most of us live in large or small cities and towns, this is not a Britain we would recognise, except when we might be on holiday. Likewise the bizarre fake cornfield projected behind Gordon Brown at the launch – has Britain suddenly turned into a rural idyll?

The appeal is directly to the middle classes, as confirmed by Brown: “We are the party of everybody of middle income and modest incomes in this country. We are the party appealing to middle class voters in every constituency.”

New Labour’s hope is that it can keep the real issues and its real plans in the shadows. Behind all the tinsel and promises of crumbs, the real strategy is “to encourage a culture of long-term commitment to company growth”. There is not an instant’s reflection on what has taken place since 2007, when the financial meltdown got under way.

New Labour’s corporate-friendly “high growth” policy of the last 13 years will continue if it is re-elected – as if there has been no evidence that the financial and economic crash was the direct result of giving free sway to the interests of the banks and global corporate capitalism.

That’s why Lord Mandelson said that “the spirit of Tony Blair smiles down on New Labour today” and described the manifesto as “Blair plus”. Helping the corporations to maintain their growth and profits will remain at the heart of New Labour, however great the suffering this will wreak on all but the super-rich.

New Labour intends to recover the staggering £900 billion national debt by huge cuts in public spending, including £20 billion-worth in the National Health Service and attacks on public sector pensions – punishing the very people who keep the country going – fire-fighters, NHS and council workers.

The manifesto boasts: “We will take a tough stance on public-sector pay, saving over £3 billion by capping public-sector pay rises at one per cent in 2011-12 and 2012-13. We have agreed tough reforms to public-sector pensions.”

Meanwhile, immigrant workers, young people and “problem families” are effectively blamed for social problems and crime. The manifesto proudly announces its primitive attitude: more punishment and medieval-style “shaming”: “We will ensure a total of 96,000 prison places by 2014. More EU and other foreign prisoners will be transferred abroad….For offenders not sentenced to prison we have brought in tough new ‘Community Payback’: hard work in public, wearing orange jackets.”

The database surveillance state will be breathing down our necks and prying into our lives. CCTV, DNA profiling and databases, biometric ID schemes (i.e. passports) will be “offered” at high prices. DNA data will be kept for six years for “serious” offenders.

A vision? New ideas? Quite the opposite. The manifesto is a tawdry and shameful attempt is to hoodwink the middle classes and whip up anti-immigration sentiments. Meanwhile, the need to pour money into the black hole of debt to pay for the banking bail-outs will consign lower-paid and public sector workers, the poor, the young, the disabled and pensioners to an impoverished and insecure fate.

And yet, you still meet people who tell us that you have to vote New Labour to keep the Tories out. Surely they are just joking?

Corinna Lotz
A World to Win secretary

New Labour lines up with BA

There’s nothing like a looming national strike to bring out the true class credentials of the political parties, together with the baying hound-dogs of the media. The democratically-agreed industrial action by 12,000 BA’s cabin crew workers in defence of their jobs, pay and conditions is certainly having this effect.

Leaders of all the major parties are only too anxious to condemn BA workers. Leading the pack are New Labour’s Lord Mandelson and transport secretary Lord Adonis (NB: There are no elections to the Lords). Adonis said yesterday: “I absolutely deplore the strike… it’s totally unjustified.” Today Gordon Brown declared: “It's not in the company's interest, it's not in the workers' interest and it's certainly not in the national interest."

Never mind the fact that cabin crew staff have now voted twice for strike action with overwhelming majorities. In the latest ballot nearly 79% of the membership voted 80.7% for action. New Labour, you will recall, was elected with the support of 25% of all registered voters at the last election. As for turnout, the BA ballot is far higher than anything you can expect in the upcoming general election.

And the notion peddled by the Tories that New Labour is “soft on the unions” is complete and utter hokum – and they know it. It is a fact that Britain’s biggest trade union, Unite, has paid a total of £11 million into the Blair and Brown’s coffers since 2007. It is the biggest single donor to New Labour. Without this support, New Labour would be unable to survive. The £11 million has brought Unite nothing in return.

Rather than making New Labour more pliable towards the interests of trade union members, the opposite is true. The rights of trade unions are perhaps even more restrictive than they were under the Tories. Secondary strikes and effective picketing remain illegal because this government retained all the anti-union laws introduced by Thatcher. Union leaders, with a few honourable exceptions, have fallen over backwards to comply with New Labour and its capitalist policies such as bailing out the banks.

Willie Walsh, BA’s chief executive, who is paid £735,000 a year, is determined to sack up to 2,000 staff and undermine the union Unite. The company has been running courses for strike breakers ever since the union’s first ballot showed a huge majority in favour of strike action. Walsh plans to use a 1,000-strong force of strike breakers to keep a skeleton service running and to defeat the strike.

Instead of getting ready to mobilise its membership at Heathrow and other airports against this threat, Unite leaders Len McCluskey and Tony Woodley have expressed shock at Adonis’ outright support for BA management. But this is a false naiveté. The real danger for BA cabin crew is that Unite leaders and the Trades Union Congress will quickly buckle under pressure and impose some rotten deal on their members. In any case, McCluskey and company certainly have no intention of defying the anti-union laws, which would be necessary to defeat BA’s strike-breaking actions with solidarity strikes.

British Airways, like the economy as a whole, in a major crisis. Walsh knows what is at stake. He needs to enfeeble the trade unions to save the airline for shareholder returns. Pretending that New Labour will broker a favourable compromise deal because it faces an election is living in a dangerous cloud cuckoo land. Precisely because of the election, Brown, Adonis and Mandelson will take the hard line. The future of a private corporation like BA is more important to them than the jobs and pay of the workforce.

Corinna Lotz
A World to Win secretary