New Labour flounders as old order crumbles

When the prince of darkness – aka Lord Mandelson – tells his fellow New Labour ministers not to panic, you can be sure that is exactly what they are doing. The reason is simple. Social anger is mounting as the economic crisis worsens almost by the hour and the government appears to have no sense of purpose or grip on the crisis.

Political intrigue is more frenzied than ever as ministers compete with one another for future dubious spoils, such as the leadership of New Labour. Some brief that Brown is shortly off to head a new global body designed to regulate international finance (!), while others are undoubtedly stoking the fires under David Miliband, the foreign secretary, for his department’s role in the torture of a British resident in Guantanamo. Miliband famously fluffed a challenge to Brown last year.

But Mandelson’s plea for the government to “handle expectations”, “keep a steady nerve and cool judgment” and not be “pushed into hurried judgments because we fear accusations of indecision" will make little or no difference. The pace of events is phenomenal, as is their dynamic, with the old economic order crumbling before our very eyes.

Not long ago, Lloyds Bank was regarded as a boring, safe bank. Forced by the government last autumn into a shotgun marriage with HBOS, today its shares are worth just 50p each. The debts of HBOS are equivalent to the entire capital of Lloyds. And there is worse to come. During the property boom, HBOS lent massively to commercial property developers, hotel chains and leisure companies. Most of these loans are secured against assets now worth far less while as the economy worsens, many of the borrowers are going bust. It seems Lloyds will be back for further state aid. Yesterday prime minister Brown defended the merger as the right thing to do at the time.

Meanwhile, as New Labour makes the saving of the capitalist financial system its sole priority, jobs are disappearing in the real world as recession turns to slump. Yesterday’s instant sackings by BMW in Oxford led to an angry response by the 850 agency workers laid off in the most brutal fashion. Not all of it was directed at the company either. One report says sacked workers threw eggs and fruit at union representatives, accusing them of betrayal. It appears they were in secret talks with BMW about redundancies.

One agency worker, Silvia Fernandes, said: “I've never been sick, I've never missed work and they tell me one hour before (the end of my shift) that I have been sacked. That's not on. That's why people are angry and so upset with BMW and with the union.” Others vented their frustration on new cars at the plant, scratching bonnets with keys, smashing dashboards and hiding ignition keys.

Agency workers, of course, have fewer rights than permanent staff and their vulnerable position owes much to a rotten deal with the government after a half-hearted campaign by the union leaders which left them out in the cold. The angry scenes at Cowley follow on from the explosive strikes by oil refinery workers earlier this month and augur social turmoil on a mass scale.

In the United States, Washington's new director of national intelligence, retired Admiral Dennis Blair, has warned that "the primary near-term security concern of the United States is the global economic crisis and its geopolitical implications”. It could trigger, he said, a return to the "violent extremism" of the 1920s and 1930s. While the New Labour government flounders, you can be sure that at the heart of the British state, similar views are being expressed and that scenario planning is well advanced. It would be a mistake to think otherwise as attention turns away from terrorism to dealing with wider, social unrest.

Paul Feldman
AWTW communications editor