Issue 207 of SOCIALIST REVIEW Published April 1997 Copyright Socialist Review

NOTES OF THE MONTH

Editorial, abortion, pensions, polls, economy

Editorial

This issue is our last to appear before the general election, which is already being compared in grandiose terms to those of 1906, when the Liberal Party won a landslide victory, and Labour's success in 1945.

The 1906 government started the first major aspects of Britain's welfare state and the 1945 administration brought in the health service and many other aspects of welfare. Both were landslide elections which clearly indicated a desire for change.

The big difference between this election and those is that although there may very well be a substantial majority for Labour very little change is on offer from a Blair government. Blair has followed on from and extended the policies of Socialist leaders of the 1980s such as Mitterrand in France, Gonzalez in Spain and now Simitis in Greece. He is standing on a programme which accepts the basic success of the market and the need for sacrifices by workers in order to solve the problems that remain.

The prolonged period of crisis which has affected the capitalist powers over the past two decades means that the reforms which were taken for granted in the boom years of the 1950s and 1960s full employment and expanding welfare and social services are no longer on offer. No wonder therefore that the feeling among workers in the advanced capitalist countries is one of bitterness and despair rather than optimism and hope.

Most workers want to see the back of the Tories. The only electoral alternative to them in most places is Labour, although in some constituencies there will be the chance to vote for socialist candidates. We support a vote for such candidates and a vote for Labour elsewhere. A Labour government will be confirmation that workers in Britain have at least broken sufficiently with openly Tory ideas to elect an alternative.

But voting Labour will not mean voting for a government with workers' interests at heart. Instead a Blair government will try to manage capitalism more efficiently if necessary at the expense of workers. In response we need to extend the influence of socialist ideas.

Around Europe there are bitter battles between employers and government on the one hand and workers on the other who are refusing to accept the bosses' solution. Those battles will come to Britain too. But there is no automatic reason why disillusion with capitalist crisis always leads in a left wing direction. In order to ensure that it does we need a fighting socialist alternative to Labour. Building such an alternative requires ideas and organisation.

This month Socialist Review carries an article by Paul Foot on what real democracy means and why what people do to change the world is far more important than how they vote. We also carry articles on how the struggles are growing in continental Europe and why Britain is not an exception to these developments. And our Notes of the Month look at some of the policies put forward by the Tories and Labour. There has never been a more important time to fight for a socialist alternative like the SWP.


Abortion

Backstreet manoeuvres

Judith Orr

Thirty years after abortion was made legal in Britain the religious right wants to put the issue at the centre of the general election agenda. The anti-abortionists have formed the Prolife Alliance Party and are threatening to use pictures of a late term abortion in an election broadcast. Their plan is to stand against candidates such as Labour MP Clare Short who have a pro-choice record.

The hierarchy of the Catholic Church has weighed in with Cardinal Basil Hume describing abortion as a 'great evil' and Cardinal Thomas Winning, the leader of the church in Scotland, offering money to women who choose not to have an abortion. But, as an Independent editorial pointed out, if the church was to offer what it really costs to bring up a child, calculated at around 10,000 a year, the total would come to 3.2 billion a year if all abortions were to be avoided. Of course the church knows that money is not going to make women carry an unwanted pregnancy. The purpose of the bribe is part of a campaign to shift public opinion away from supporting a woman's right to choose.

Fortunately this is something that the anti-abortionists have found increasingly difficult to do. Public support for a woman's right to choose has actually increased since the 1967 Abortion Act was passed. Last month a MORI poll showed that 64 percent of the population supported the provision of legal abortion compared with 54 percent in a similar poll in 1980.

There is widespread support for greater access to abortion. The reproductive rights organisation, Marie Stopes International, and the National Abortion Campaign, carried out a survey last November which showed that seven out of ten voters said their vote would not be affected if their chosen candidate supported a change in the law to make abortion available on request in the first 12 weeks of pregnancy. In fact, 59 percent thought that this was already the case.

The Catholic Church is even more concerned about the attitudes of its members after a recent survey of Scottish Catholics revealed that more than two thirds of them are in favour of women having the right to a legal abortion.

It is plain that the right to choose abortion is part of the mainstream of British public opinion and is far from being a vote loser. However, Tony Blair has refused to make a public commitment to maintaining, let alone expanding, a woman's right to choose. Instead he has had a secret meeting with a cardinal about the issue and has allowed the church to criticise party policy.

Labour cannot be relied on to make any sort of principled stand against the bigots. Instead the party has always allowed Labour MPs to vote according to their conscience, a compromise which far from satisfying the anti-abortionists actually encourages them to continue to campaign. Noises from Labour's shadow front bench suggest that Labour will do nothing to challenge the anti-abortionists, however distasteful individual Labour MPs find their politics.

The right to a legal abortion is also being chipped away by economic crisis in the NHS. Access to abortion on the NHS has always been a lottery. Health authorities can choose whatever level of provision they like. But now it is being further threatened by a system of rationing with restrictions according to such criteria as age or level of income. For example in North West Lancashire only women who have 'outstanding debt' or who are under 18 qualify for abortions, while in Brighton and Hove to be a student is enough.

Enfield and Haringey Health Authority in north London has introduced some of the most controversial and extreme criteria. Some of the few who qualify for abortions include the homeless or asylum seekers. Such policies are the thin end of the wedge in the drive to force women to pay for private abortions. Doctors fear that for many women on low incomes who do not fulfil the specific criteria the only alternative will be to turn to a backstreet abortion. Once again a woman's right to choose is shown to be a question of class.


Pensions

Paying more for less

Nic Cicutti

John Major, for once, was right when he described Tory plans to privatise the basic state pension as 'not an election winner'. The Tories' proposals are the last 'big idea' we will see from them this side of an election.

The Tory proposals involve scrapping both the basic state pension, now worth 61.15 a week, and Serps, the earnings related pension scheme set up by Labour in 1978. To replace the basic pension, the state would pay 9 per week into a personal pension for every young person until the day they retired. This pension would then be invested with one of the many private companies on the market. The lump sum would then be used to buy an annuity for a basic retirement income.

In place of Serps, Peter Lilley, the social security minister, wants to give everyone a 5 percent rebate on their National Insurance Contributions (NICs), paid into a personal pension.

Serps was seen by Barbara Castle, the Labour minister who pushed it through, as an addition to the basic pension, then linked to earnings. Once the maximum earnings element kicked in after 20 years, the two pension tiers (basic plus Serps) were expected to make up about 45 percent of the average wage.

In practice the Tories have spent the last 17 years hacking away at Serps. As with the basic state pension, the policy has been to link this pension to prices, not average wages. By 2030 the combined maximum of Serps plus the state pension will be worth about 80 a week in today's money. Most people will get far less.

Despite these existing cuts, which Labour has pledged to uphold, the Tories claim their privatisation plans are still necessary. Put simply, there are now about 9 million people of pensionable age. This is predicted to rise to 13.5 million by 2030.

In 1948 there were five people of working age per pensioner. By 2030 this will have changed to three pensioners for every five people of working age. This 'demographic timebomb', as politicians, including Labour ones, call it means, they say, that even 'tougher' decisions must be made.

In fact, among the changes that could have been introduced, privatising the state pension is easily the daftest. The present pension system is based on a 'pay as you go' arrangement, funded by our NICs. Those of us in work pay for today's pensioners. When we retire we expect tomorrow's workers to pay for us.

The Tories' privatisation plans involve turning the state pension into a 'pre-funded' system where we pay for ourselves through money we save up over the years. The bill for this change, expected to take effect in 2040, will have to be paid for by today's generation of taxpayers. We will not only be expected to continue footing the bill for existing pensioners but also to pay for ourselves, while today's teenagers gradually move to the new pre-funded system. Even the Tories admit the extra cost will rise by 160m a year, up to 7bn a year in 40 years time.

These estimated extra costs are based on assumptions about continuous growth for the UK economy over the next 40 years. Should the economy falter, or go into recession, the whole scheme would be in danger of collapse.

What is even more astonishing is that the management of these privatised funds will be handed to big insurance companies. These are the same insurers whose salespeople were responsible for the pension mis-selling scandal of the early 1990s when at least 1.5 million people including many miners, nurses and teachers were conned into leaving perfectly adequate company schemes to set up private pensions instead. It has recently come to light that more than 18,000 people who were mis-sold a pension actually died before they received any compensation.

One would expect Labour to re-extend the system it first brought in almost 20 years ago. But although Labour does oppose the privatisation plans it has said nothing about the shameful fact that millions of today's pensioners are forced to live on a pittance.

The irony is that even under capitalist constraints it would be possible to tax the rich by enough to increase pensions tomorrow. Simply extending the level of NICs to those earning over 24,000 a year would raise enough for an immediate 20 percent raise for all of today's pensioners, but New Labour has ruled out tax increases for the rich.

Also, the 'demographic timebomb' argument ignores the fact that today, workers are more productive, so the system can afford decent pensions.

The question is who controls that production and what it is used for. Millions of pensioners deserve a better answer to their problems than the one they are getting from Tony Blair and Harriet Harman.


Polls

Matt Foot

'The worst results for the opinion polls since they were invented'. That was the reaction of Bob Worcester, chairman of MORI, the morning after the 1992 general election. No one can forget that feeling of the being wound up by the polls, as the grinning David Amess won Basildon. Many people fear that there could be a repeat performance by the pollsters on 1 May. However, there were reasons why the polls got it wrong then, and there is a world of difference between today and 1992.

When the polling companies throughout the Market Research Society (MRS) investigated the disaster of 1992, they found three main causes.:

Late swing: This is always a possibility as polls are only a snapshot in time. Some people in 1992 changed their mind very late even on election day itself.

The sample: All the market research companies used a sample based on the National Readership Survey, which had inaccurate data on class.

The 'don't knows': They voted disproportionately for the Tories.

One reason for the 1992 result and a general problem for pollsters is that the lack of ideological distinction between the parties leads to volatility. Another is that polls cannot accurately measure how committed people are to the party they say they will vote for. What none of the psephologists said was that Kinnock's Labour Party did not capture the anger felt against the Tories at the time. More people refused to pay the poll tax than voted Labour in 1992. Labour did not even win these voters.

The polling companies have reacted differently to the 1992 disaster. Some have switched to telephone polls from the traditional face to face method. More importantly they have introduced 'adjusted' polls. ICM add five points to the Tory rating and NOP give them two points. The adjusted polls reflect a pessimism and a belief that 'don't knows' are likely to vote Tory. These polling companies are simply worried about getting it wrong again and could well have gone too far the other way. MORI have not gone for the adjusted poll but have tried to improve their sampling base.

Such changes do not alter two basic facts. First, most polls have been reliable: of the 13 elections between 1945 and 1987 the average error of the final polls was only 1.4 percent. More importantly, there is no correlation between now and 1992, either politically or psephologically. Six months prior to the April 1992 election the two main parties were neck and neck. For the past four years Labour has consistently had a lead in double figures. Just before the 1992 election, Labour had 41 points, the Tories 39 today Labour has 50 and the Tories 30, a lead of 20 points.

These findings have been substantiated by the 1994 elections to the European parliament (in which the Tories got their worst share of the vote since the 1832 Reform Act) and the 1995 local elections, where 2,000 Tory councillors were sacked.

Sir George Gardiner may be right it could be a Tory rout. If it is, what will Ivor Crewe's explanation be after all that drivel in the 1980s about how Labour could never be elected again?


Economy

If this is success...

Chris Nineham

The Tories are claiming that the British economy is performing better than for years. They say that the economy is booming, especially compared to other European economies, that unemployment is falling, and the so called 'feelgood' factor has returned. This is supposed to be their trump card for the forthcoming general election. Even some Labour supporting commentators agree, suggesting Brown and Blair may soon have the 'historic opportunity' of running a radical government at a time when the economic figures look good.

To most people all this seems pie in the sky. Far from feeling good, most workers feel overstretched, have suffered a whole series of tax increases over the last five years and are constantly threatened by unemployment.

The Tories argue that the last 18 years of labour market reforms and deregulation have put Britain in a highly competitive position. They claim flexibility has increased productivity and is leading to real falls in unemployment.

Yet a series of recent reports throws doubt on the Tories' claims about unemployment. As well as causing untold misery for claimants, the Tories' constant benefit changes make real unemployment trends hard to track. Most commentators accept there has been some fall. But the independent Unemployment Unit estimates that half the drop in claimants in the last six months can be put down to tightening of restrictions under the Jobseeker's Allowance. Estimates made by Labour and the TUC based on the most recent Labour Force Survey suggest that there were nearly 4.5 million people looking for work last summer, more than twice the official figure.

More conclusively, a report by the National Institute for Economic and Social Research shows that the number of people in employment actually fell slightly in the first three years of recovery from the 1990-92 recession. The fall in unemployment in those years is more than accounted for by people dropping out of the labour market, some because they despaired of finding a job, some because they became students, some because they retired early, and others because they were long term sick. The report found the UK's recent record of job creation was in fact worse than Italy, France and the US. And the new jobs that are created are low paid and insecure.

There is evidence, in fact, that low wages and benefit reforms can actually harden the core of long term unemployed and therefore become a drag on the economy. A recent report by the left leaning Employment Policy Institute argues that the average wage of 100 for 'entry level' jobs is too low to be worth taking for many claimants, particularly those with dependants, and that the uncertainty caused by tightened benefit controls is actually deterring others from taking insecure or temporary jobs.

More worrying for an incoming government is the prospect that interest rates will have to rise. Since 1994 the Tories have failed to hit their inflation target, and with recent figures showing a pickup in earnings growth to 5 percent, there will be enormous pressure to increase interest rates in the near future. This will hit working class people the hardest through mortgage rate rises.

A growing number of British bosses are now openly questioning the success of Thatcherite deregulation. Promoting Prosperity, the report of the Labour sponsored industry conference that so enraged Michael Heseltine recently, complains of the continuing relative inefficiency of much of British business. Attended by major industrialists like Bob Bauman, the chairman of British Aerospace, David Sainsbury of Sainsbury's, and George Simpson, managing director of GEC, the conference was prepared to grant the need for some market liberalisation in the 1980s, but argued that deregulation has not solved the fundamental problems of the British economy. It pointed out that, despite 18 years of deregulation, the UK's long term growth rate has not changed and that, measured by the standard indicator of prosperity (GDP per person), Britain, which was third in the world in 1950 and tenth in 1970, is now languishing in sixteenth place.

A new government report on UK manufacturing is even more scathing about Britain's record. Reassessing the Context of Manufacturing Success complains that Britain 'seems quite unable to close the gap between our industrial performance and that of other major nations.' It quotes Ian Mackenzie, chief executive of cement company Blue Circle, as saying, 'If we allow the gap to widen, the UK economy will increasingly deteriorate, society's problems will increase and the environment will become hostile and inappropriate as a base for internationally competitive manufacturing firms.'

Government policy comes in for a hammering in these reports. Promoting Prosperity claims that 'unsteady' overall economic policy has helped create an 'atmosphere of uncertainty about future demand' which is a major block to investment. It shows that the UK's recent pattern of short sharp booms and long shallow recessions has been the most erratic of 13 comparable countries and has led directly to low growth.

But the main explanation of poor performance is the familiar one of 'management short termism'. Spending on research and development in Britain has fallen since the 1980s while it has increased in most of the world's leading economies. Much worse, levels of fixed capital investment have hardly improved. Between 1980 and 1993, Japan used almost twice as much of its gross domestic product for fixed investment as Britain, while Italy, Germany, France and the US all have a better investment record than Britain.

The authors of Promoting Prosperity blame the short termism of city investors, the fear of hostile takeovers and managers' obsession with paying out increasing dividends to shareholders for these problems. But as the Financial Times argued recently, concentrating on these institutional factors obscures the more central problem: 'A more likely explanation for our relative underinvestment in manufacturing is its poor profitability'.

Deregulation has not been the miracle cure the Tories claim. Restructuring and 'labour market reforms' did deliver an increase in productivity in the early 1980s, but this trend slowed through the decade, and as unemployment fell in the late 1980s, wages tended to rise. Although the Lawson boom of the late 1980s stimulated an increase in manufacturing investment, it was mainly driven by non-productive investment particularly in property. The point came when businesses realised there were not enough profits being generated to justify further investments. The resulting recession of the early 1990s caused tremendous damage to many of the flagship companies of the 1980s. Many of them, Coloroll, Polly Peck, British and Commonwealth, Maxwell Communications, went bust.

Some British companies, notably British Airways, and British Telecom have become very profitable under the Tories (though these all benefited from huge levels of state aid and protection in the past). But although British performance in the last ten years may have held steady with its European competitors, this says more about their poor performance than it does about about improvements here. The fundamental problem for British capitalists is that despite limited success in some sectors, average profitability is now only back to the same level as 1988, and not much better than it was in 1970. Britain has not broken out of the circle of relatively low investment and low productivity that has plagued the economy here since the First World War. But the biggest problem facing Labour if it wins on 1 May is that government spending since 1992 has left government finances massively in the red. A recent Treasury paper suggests this is a time bomb for the new government which can only be rectified by either savage public spending cuts, huge tax rises, or a combination of both. The so called Tory 'boom' will see the new government facing a massive hangover.

Blair's programme is less interventionist than that of all previous Labour oppositions. And Labour doesn't even seek to influence investment decisions.

We are left with a Labour policy that, despite the rhetoric, hardly differs from the Tories'. Gordon Brown says he will concentrate on delivering low inflation and low debt in other words more of the same. Brown should take note of the right wing Economist magazine which praises him for his sense of 'responsibility' but warns him of mass unpopularity: 'For his own career it is a dangerous path he has chosen.'


Socialist Worker

The Tories are down, and nearly out, but thousands of people are asking what comes next. Blair, Brown and Straw are promising much of the same no increase in spending on our hospitals, our schools, and no extra money for the pensioners.

Socialist Worker, Britain's biggest selling weekly socialist paper, will also make one promise that whoever wins on 1 May we will carry on fighting for socialist politics. For the last 18 years we have been central to every fightback against this hated Tory government. And where Labour councils have imposed Tory cuts, Socialist Worker has argued for resistance and action to reverse them.

We promise to carry on this tradition. Each week we carry reports and stories that link up workers' struggles from Europe and around Britain. Only recently we have seen glimpses of workers' power. Nearly every major European country has witnessed the kind of struggles that we were told were a thing of the past.

Socialist Worker, unlike other papers, reports all these disputes but we also do much more. We raise the ideas of action and solidarity. We show how all the different disputes are the product of the same system. And we show that workers have the power to fight for a better society in which the needs of the many are put before the greed of the few.

Why not subscribe to Socialist Worker. Or better still, take a few extra copies to sell to your friends and workmates and join us in the fight for a better future.


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