What Should Be the Direction of the Economy?

Tony Blair always likes to steal the clothes of the progressive forces. He began the New Year in his message by re-stating the government’s "coherent vision" of Britain’s future.

Now, everyone knows from their experience how the fabric of society is being destroyed. Tony Blair’s special contribution is to oversee this trend while giving justifications to suggest this direction is progressive and that the opponents of this direction are conservatives of whatever stripe. While the forces who are organising to open the door for the progress of society oppose the destruction of society through giving the line of march to the new society a new coherence through providing it with a programme and a vision, Tony Blair claims that it is the government which has the "coherent vision" of Britain’s future.

It turns out that his claim is based on what he calls "economic competence". In his New Year message, he conceded that there were huge frustrations over the state of some public services particularly the rail network. But, according to the Prime Minister, "The foundations of a successful future for Britain and for its hard-working families are being laid." He pledged: "There is much still to come." His boast was: "I believe the mantle of economic competence now falls to New Labour."

So Tony Blair’s argument, as he further explored in an interview on BBC1 as he looked ahead to the election campaign, is: "The economy will be the key battleground, and – literally for the first time in my party’s history, in 100 years – we can go into that election not just as the best managers of the economy, but as the one party that realises that if we want to have prosperity for everyone in the future, we need to make the critical investment in our public services."

It is interesting to unravel this argument. It is as if the whole history of the 20th century were being assessed in terms of "economic competence", how well the economy is managed. Finally, Tony Blair has the answer – he realises that the foundations of a successful future for Britain are to be laid by making critical investment in public services. It should be noted that this claim is being made at a time when the country has gone through two decades of a great programme of privatisation of public services. The finance capitalists having squeezed the country dry through that method then demanded that they have a stake in the running of the core social programmes of health and education in particular but that the government also stump up its share. This has been called public-private partnership and private finance initiatives. Now Tony Blair is promising them even more public funds to secure their investments.

The missing factor from Tony Blair’s argument is: for whom is the economy being managed, and who is deciding its direction?

Not for the first time, Tony Blair plays fast and loose with history. If we look back 100 years at the Labour Party’s history, the clearest fact is that it was formed in order to represent the interests of organised labour in parliament. This may have been a limited objective, and may have overlooked that the essence of party government is to keep the working class away from political power. However, its roots were not in a desire to manage the capitalist economy with competence. The Labour Party has precisely been transformed under Tony Blair to manage the economy and provide justifications for its direction to serve the interests of the rich as the road to the progress of society is increasingly blocked.

Only the working class can provide a coherent vision of Britain’s future as part of the movement of the working class and people world-wide for emancipation. Only the working class can empower the broad masses of the people so that they can decide the direction of the economy in their favour.

Teacher shortages could force some schools to operate a four-day week. And it has been reported that the government may have to hand out "golden handcuff" bonuses to keep staff.

For example, Holywells High School in Ipswich, Suffolk, gave more than half of its 900 pupils an extra two days holiday to give heads time to recruit temporary teachers. It was one of a number of schools which have had to take emergency steps to cope with teacher shortages.

A massive advertising campaign triggered 2,500 calls to the Teacher Training Agency last week, but figures showed that 2,289 fewer graduates have applied compared with this time last year. Union leaders warned that the drop in numbers means the teacher shortage will get worse, and said some schools were being forced to consider a four-day week for pupils.

Holywells headteacher Barrie Whelpton said the crisis at his school was the worst he had seen in 30 years in the teaching profession.

Suffolk County Council said the school had not been able to recruit enough replacements after six staff left last term.

Barrie Whelpton said people were put off entering the profession because of the pressure on teachers. "I have been teaching for 30 years but never in my personal experience have I experienced something as bad as this," he said. "I don't think it is going to get any better for a long time."

In the face of this mounting evidence, however, the Department for Education and Employment has said that while a few schools in England have had difficulties finding enough staff, there was no general threat of a four-day week.

According to school standards minister Estelle Morris, the problem is that there has been a backlog in converting responses to the recruitment campaign into applications. At the same time, she unveiled the £32 million "golden handcuffs" scheme aimed at keeping key teachers in secondary schools.

However, Estelle Morris rejected a proposal to pay trainee teachers £15,000 a year. Teachers’ unions have called for an above-inflation pay rise as the best way to attract more recruits. The School Teachers Review Body is due to announce its salary recommendations later this month.

The one thing neither the unions nor the DfEE has mentioned is the need for political renewal of the society in order to combat the effects of the anti-social offensive that this disastrous situation in the teaching profession represents.

Workers at the Scunthorpe plant of Anglo-Dutch steelmaker Corus Plc are to vote on whether to strike over company plans for redundancies, an official of the Iron and Steel Trades Confederation union said on Monday.

Ballot papers will be issued on January 13. The steel workers are opposed to the plans for compulsory redundancies under a restructuring plan announced by Corus. The plant employs 4,500 people.

Union officials are to consider a similar move at the company's other main plant at Teesside at a meeting on today.

The union is currently meeting Corus in talks over the restructuring plans. Corus has said it wants to make 1,200 steel workers redundant, on top of 4,000 workers who it has already announced will lose their jobs. Nearly 200 of the new job losses could be compulsory redundancies.

Increased Losses for Honda in Britain

Honda, the Japanese vehicle maker, saw operating losses at its plant in Swindon deepen by almost 20% last year in the context of the ultra-competitive European car market.

The company, which recently filed accounts showing an annual operating deficit up from £49.5m to £59.06m, is the latest Japanese manufacturer to report mounting losses on operations in Britain. Toyota and Nissan have also reported losses and said the strength of sterling could hamper further investment. The accounts showed sales in the financial year ending March 31 fell from £960.4m to £943.1m.

Last week Toyota said economic conditions remained extremely difficult, even though output is due to increase at its Derbyshire plant over the next year.

Toyota and Nissan have also warned against any rapid return to profit in Europe. Nissan, in particular, has said the competitiveness of its British operations could affect its imminent decision on whether too build its new Micra small car in Britain.

At Swindon, where Honda employs 3,700 people in its factory, the figures showed production slowing by 7% to 105,616 cars in the last financial year – about 30% below the factory's potential capacity. Of the cars, 56% were exported.

Minoru Harada, president of Honda Motor Europe, recently said all British-based exporters were threatened by the strength of sterling. He blamed currency issues as a central factor behind Honda's failure to make a profit in Britain. He apparently did not comment on the over-capacity of car production for the European market, where competition is at its most cut-throat. In these circumstances, the group has seen accumulated losses at the Swindon plant reach almost £130m in the past three years.

GM to Discuss Future of Vauxhall's Ellesmere plant

The long-term future of Vauxhall's Ellesmere Port car plant could be determined next month when senior executives of General Motors, the carmaker's US parent, meet to discuss where to assemble its next-generation Vectra model.

GM, which last month announced plans to end car assembly at Vauxhall's Luton plant, will nominate either the Merseyside factory or a rival plant in Antwerp, Belgium, as its new "flex" site for producing Vectra cars. The favoured plant will receive new investment to assemble more than one model platform.

Ellesmere Port and Antwerp assemble Astra models for GM. But the carmaker wants one factory to provide additional capacity for the Vectra – currently assembled at Luton and Russelsheim in Germany.

Nick Reilly, chairman of Vauxhall, said he would fight to ensure that Ellesmere Port would become the "flex" plant to support Russelsheim, where main production of the new Vectra is being planned. But he warned: "Investment-wise we have got a slight disadvantage."

Vauxhall is seeking further productivity gains, along with cuts in distribution and marketing costs. GM's European strategy board is expected to finalise which plant will be chosen in the next four to six weeks.

Speaking ahead of the North American International Auto Show in Detroit, Mr Reilly insisted that car production would continue at Vauxhall's Merseyside factory even if it lost out to Antwerp on Vectra. However, some analysts have questioned GM's commitment to Ellesmere Port when current production of the Astra ends there in 2004-05. But Mr Reilly said strong British demand for the Vectra, particularly among fleet buyers, could strengthen the case for assembling models in Britain despite currency risks. He said Ellesmere Port and other Vauxhall plants could be competitive at an exchange rate equivalent to DM3 to the pound.

Gordon Brown Moves to Placate Oil Companies

Gordon Brown on Friday night moved to reassure oil companies that he would do nothing to damage investment in North Sea oil exploration after they reacted to a warning that he was still considering a new tax on their profits. The Chancellor had told The Times newspaper he was "monitoring the situation" of petrol prices at the pumps.

Gordon Brown is concerned at people’s opposition to the high rise of fuel, and is sensitive to the fact that the oil companies have not reduced the cost of petrol in line with declines in the price of crude oil. His remarks coincided with new fuel protests at several oil depots. However, the oil companies appear to have given the Chancellor a way out by warning that any new tax could undermine investment in the North Sea. In the light of this, the Treasury has stressed that Gordon Brown would not be swayed by "short term" considerations. One official said the interpretation of his original remark had been overstated and the government position remained unchanged.

Although the Treasury said that the Chancellor was "concerned about the reports that oil companies are not passing on reductions in world oil prices to consumers" and that he kept the case for a special tax on the sector "under constant review", they were at pains to stress that the oil companies profits were not under serious threat. The Treasury emphasised: "He is determined not to make short-term decisions based on short-term factors and he is not going to do anything which damages the prospect of long-term investment in the North Sea."

The oil companies also pointed out that the bulk of the cost of petrol still comes from government taxes.

One oil executive said: "A windfall tax on North Sea operators would be a curious move because the North Sea needs investment and if the province became less attractive, oil companies would go elsewhere." Royal DutchShell added: "The UK retail petrol market is already the most competitive in the world. Stripped of tax, UK petrol is cheaper than anywhere else in Europe."

Poorest Households Suffer from High Electricity Bills

According to the House of Commons public accounts committee, poorer households spent more than 10% of their income on heating but had benefited less from electricity competition than wealthy consumers who spent a smaller proportion of their income.

David Davis, chairman of the committee, said that the households who use prepayment meters – mainly those whose income is low – were paying up to £15 a year more than those who paid by direct debit. He added that consumers in rural areas were less than half as likely to have changed supplier because power companies focused marketing campaigns on urban areas. "It is a sad state of affairs that the poorest members of society are actually paying more for their electricity, not just as a percentage of their income, but in real terms," he said.

The committee's comments came as the National Audit Office, parliament's spending watchdog, published a report on the effects of domestic electricity competition.

The report found that one in four households had saved money by switching supplier as a result of the introduction of competition in September 1998. However, poorer households were less than half as likely to have benefited from competition and, among those who had changed their supplier, complaints about service had risen six-fold.