In order to defeat Osbornomics it is necessary to understand it. A central tenet is that the private sector is the key to prosperity and that therefore everything possible should be done to promote and encourage it. The state should shrink in order to release the inherent dynamism of the private sector. The argument runs that it may be that some people fail temporarily so some sort of safety net may be necessary, if affordable. In this framework, if it is necessary to cut support for disabled people and the poor in order to fund tax cuts for high earners and business, then so be it.
The attack on disabled people has rightly been the focus of hostility to Osborne’s Budget. But this is not an isolated case, as all those who have suffered those cuts can testify. This has been a repeated pattern of Osborne Budgets, supported by all Tory and LibDem MPs beginning in 2010. The right of the Labour Party has had no significant disagreements with it.
At the same time, the long-term decline of the steel industry has turned into a full-blown crisis. In a very useful report the Institute of Public Policy Research (IPPR) debunks the myth that the crisis is due to ‘dumping’ of steel in the EU. The UK loss of market share in core industries producing intermediate goods, such as steel, is twice the rate of the industrialised countries as a whole over the long-term. Despite alleged ‘dumping’ by Chinese firms in Europe, German steel production rose by 2% in 2015.
The IPPR report shows that all of these industries combined have suffered a devastating reversal. While by the end of 2014 UK GDP had recovered by 4% from its pre-crisis level in 2008, the producers of core materials used in manufacturing and construction were still 20% below their pre-crisis level. They are in a deep crisis.
Two trends
These two trends are linked in policy terms; the repeated attacks on the poor and those who should be entitled to support, combined with a decline in key industries. In this way, the central proposition of Osbornomics is revealed by the most striking simultaneous giveaway in the 2016 Budget, which was the further cuts in the tax rate on corporate profits (CT), as well as the cuts to Capital Gains Tax (CGT).
Osborne has cut CT so that it now stands at 20%. In the 2016 Budget the announced cut to 17% is in effect funded by attacking disabled people and cutting public services sharply in real terms (after adjusting for inflation). He also further cut CGT. It should be remembered that New Labour also cut both CT and CGT.
All of this has been cast in terms of boosting investment and ‘freeing the private sector’. It is nonsense. In Fig.1 below the level of CT is shown against the proportion of business investment in GDP. It also shows the projected level of CT rates that Osborne has announced for future years.
Fig.1 UK Corporate Tax Rate and Business Investment as % of GDP
Both the tax rate and the investment rate have been in a long term downtrend. The high-point for business investment over the period was in 1998 and 1999 when the CT rate was 30%. Cutting taxes has not spurred investment. The new freedom for the private sector is a greater proportion of its post-tax return is free to fund excessive boardroom pay, share buy-backs and to fund speculation in financial markets, including housing.
Britain has an investment crisis. This has led to a crisis of production and of jobs. But cutting the CT rate has done nothing to address it as business investment continues to remain weak. All other things being equal, the cut in the rate from 28% to 20% has reduced public sector tax revenues by approximately £30 billion in the current Financial Year. If the private sector will not invest, then the public sector must. Any measures to begin to reverse this unproductive cut in taxes will lead to greater revenues available for public sector investment.
Steel should be renationalised and provided with large scale investment via a National Investment Bank. This and an all-round programme for investment is the way to generate growth and prosperity. On this basis there would be no more cuts to the entitlements of disabled people and others and the cuts to incomes can be restored.
This article first appeared at Socialist Economic Bulletin
Excellent piece by Michael and the look of horror on the face of a spokesperson from The Institute of Directors on the TV yesterday at the thought of democratic public ownership of steel (with the emphasis on democratic) was a picture to behold.
And Michael is bang on about Tory ideology which is what we need to attack.
When I was about a 20 year old working class young man I rebelled and dropped out.
I had worked in offices since I was 16 and felt trapped; I wanted to be free as a human being and couldn’t understand why we had to work 5 days a week and why didn’t we share the work out, and the World?
I hadn’t worked out at the time that I was a socialist and my rebellion only lasted a few months until I realised that we all needed to work to make society work so I returned with gusto.
I remember at times on the dole being down to my last fish finger before the Giro finally arrived and feeling grateful.
So I soon returned to office jobs (you could virtually pick and choose jobs then) although I still found them boring but I started doing community work with tenants groups etc. which I enjoyed more and I joined the Labour Party.
Quite a few years later someone told me about a very good local University course so I enrolled as a mature student (the first in my family).
The best thing I learnt at university is that there are 2 welfare states – ours the working class one which is often associated with stigma, shame and is minimal and is under attack on welfare, the bedroom tax, tax credits and the housing bill etc. and the upper class one which is which is luxurious and the rich and powerful are subsidised to the hilt on practically everything particularly through tax relief etc.
It is funny because at university I also read Hayek and he felt that welfare was tyranny so why don’t we free public schools from charitable status and tax subsidies and their tyranny and let the parents pay to the true market rate and stand on their own two feet, or is it market forces for us but not for them?
It is also the labour of the working billions which creates the wealth and makes societies work so perhaps the real dependency culture is that of the rich; they are totally dependent on all of us turning up for work tomorrow.
New Internationalist estimates that the rich and powerful stash 22 trillion dollars a year globally in illicit off shore bank accounts (perish the thought that they pay tax on this to pay for things like adult social care, mental health, addressing poverty including child poverty etc.) and yet ideologically the Tories call some of the poor skivers.
Of course we need to empower the poor through the ideas of the likes of Paulo Freire (another university gift) but as someone once said we seem to have socialism at the top in Britain.
So we need to take the Tories on ideologically and after all brothers and sisters: Markets is people! Solidarity and education!
Yes, Excellent article.
Excellent piece.
The crisis has been the fault of successive governments and their wilful neglect and wanton destruction of this and other key industries.
The solution is nationalisation, an immediate 100 per cent ban on all steel imports, and a large-scale programme of public works and infrastructure.
Good article. While nationalization is certainly necessary, we do want to be careful to avoid the mistakes of the past, though. Whenever a failing industry is nationalized, there is the peril that you will simply prop it up without addressing the reasons why it was failing. If the reason is dumping or imported steel being produced with lower wages then it’s just a matter of, for example, putting import duties on steel equivalent to the difference in wages. However, if there are issues around failure to modernize then those will have to be addressed via investment, rather than keeping the industry limping along like they did with British Steel in the 70s.
Excellent points CMac,
We certainly don’t want to see the type of nationalisation that just sees public money poured in to make the industry “attractive” to privateers so it can then be gifted back to the private sector again.
It needs to be a permanent nationalisation, with serious investment in new plant and equipment, and expanded to meet the demand of the various large-scale infrastructure projects we need in the UK.
The only point I’d disagree with you about is on import duties. We should ban all steel imports.
I don’t have a problem with doing that either. I’m just not sure if there are any trade agreements or rules which it could fall afoul of. In particular, wouldn’t it be impossible to ban imports from other EEA countries?
Yes indeed it would. The Treaty on the Functioning of the European Union prohibits all quantitative restrictions on imports – including outright import bans – between Member States. So we would need to leave the EU.
I should add that once a product from a non-EU country enters any EU Member State (Chinese steel for example), and once the EU common customs tariff is paid and any formalities are undergone, that product becomes in law a product of that Member State, and therefore enjoys free movement within the territory of the Union. It is fully subject to the free movement rules and the non-discrimination rules.
“So we would need to leave the EU”: rubbish!
The EU does *not* preclude state aid up to and including nationalisation:
As the UK’s steel industry faces extinction, the Tories prevaricate over what – if any- state aid they are willing to offer in order to save the Tata operations at Port Talbot, Rotherham, Corby and Shotton (North Wales). At least 40,000 jobs are at stake.
Business minister Anna Soubry initially stated that the government was willing to consider “everything possible” – including nationalisation – in order to save the Port Talbot plant. But now her boss, business secretary Sajid Javid has ruled out nationalisation, arguing “if you look around Europe and elsewhere, I think nationalisation is rarely the answer.” According to the Daily Telegraph, Tata Steel have suggested that EU rules restricting state aid were to blame for its decision to sell the UK steel business – a claim that has been seized upon by campaigners for Brexit, including the supposedly “left wing” Morning Star, always willing to let the Tories off the hook by claiming (entirely falsely) that the British government “is banned by EU competition laws” from intervening to save the industry.
While it’s true that EU rules place some restrictions on using state aid to prop up industries, European governments with the political will have either turned a blind eye to the regulations or found ways round them. For instance, while the EU blocks support for “manufacturers in difficulties”, it allows national governments to nurture the “long term competitiveness and efficiency” of industry, and also to provide state funding to lessen the “social impact” of closures.
Even outright nationalisation is not barred by the EU: Article 345 of the Treaty on the Functioning of the European Union, states: ‘The Treaties shall in no way prejudice the rules in Member States governing the system of property ownership.’http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:12008E345
All across the EU states have majority shares or own and run their own transport and energy sectors. This is confirmed in this 2013 Estep report, commissioned by the EU: http://www.esparama.lt/es_parama_pletra/failai/ESFproduktai/2_UM_valstybes-valdomos-imones_2013-03.pdf
In particular the report states: ‘SOEs are entitled for public services provision, which can be broadly observed in utility sectors such as transport, telecommunications or energy.’
While nationalisation may be restricted it is not banned or illegal. This is a widely-believed myth, promoted, in particular, by the anti-EU “left”.
In Italy the government took control of the Ilva steelworks last year to save 16,000 jobs. Then the firm was handed £74 million for “environmental improvements” – ie direct state aid.
Germany also provides aid to its regional governments on the understanding that steel produced in the country is used on any German building or engineering projects. Germany also operates the part-publicly-funded Gesellschaft, a research organisation that provides applied science for companies that would otherwise find the cost prohibitive.
In 2012 French president Hollande threatened to nationalise Arcelor Mittal steel’s operations in the Lorraine plateau in order to save the blast furnaces of Florange and their 2,500 jobs. He didn’t seem to be particularly concerned about any EU state-aid rules. Ironically, Hollande’s threat was denounced by Boris Johnson – now a leading light of the Brexit campaign.
In a written answer to Labour Euro-MP Jude Kirton-Darling at the time of the Redcar steelworks closure last year, the European Commission confirmed that the UK Government could have given state aid to support the steelworks. Here are some of the ways that other EU governments have intervened to support their domestic steel industries, and other energy intensive industries. There are also examples of regional governments taking initiatives in Germany and Spain.
(Temporary) Renationalisation
In early 2015, the Italian Government temporarily renationalised the Ilva Steel works in Taranto, Southern Italy. The Italian government cited the unabated toxic emissions and very poor environmental standards, which had led to unusually high rates of cancer in the area around the plant. It is estimated that it will cost €1.8bn to make Ilva compliant with the Industrial Emissions Directive’s standards. This decision is currently subject to a complaint from EUROFER (European steel industry association) under state aid rules.
Investment in strategic R&D facilities
The French government are providing state-aid to the ArcelorMittal plant at Florange, in France to support their ongoing R&D work, this follows on from a long running industrial dispute over the closing of two blast furnaces. This public support comes to a total of €20-50 million over 4 years, with a further 33 million been raised in public-private investment.
Support for energy efficiency/environmental technologies
In 2010, the European Commission accepted German state aid of €19.1 million for an energy-saving steel production project run by Salzgitter Flachstahl GmbH, a subsidiary of the Salzgitter AG group. The aid will allow Salzgitter to produce steel through an innovative production process, Direct Strip Casting (DSC), which consumes less energy than alternative processes. The aid is in line with EU guidelines on State aid for environmental objectives (see IP/08/80) because on balance, the positive effects for the environment largely outweigh potential distortions of competition.
Loan guarantees
In 2010, before the May elections (which saw a change in Government), the UK Labour government was willing to provide Sheffield steel producer Forgemasters with an £80m loan to develop new technologies as part of a supply chain for nuclear reactors. While ultimately the new government withdrew this offer, the reasoning for a change of heart was ideological and not related to European State-Aid rules.
Taking a public stake in a steel company
Following the sale of 20.5% of shares in ‘NLMK Belgium Sogepa Holdings SA’ for 91.1 million euros ($123 million), the Belgian public authorities have a shareholding in a new company producing steel which owns steel plants in Belgium, France and Italy. NBH employs about 1,000 people in Belgium, while the European division employs 2,530 people in total. The engagement of the Belgian public authorities has helped strengthen the commitment of the Russian group, and transformed the company carrying the steel business in public private joint venture with the financial support of the Walloon region.
Compensation for energy costs
A range of German Government industry policy interventions provide German industry as a whole, including its energy intensive industries, with a range of long established reliefs from energy and climate change-related duties, levies and taxes:
Over the period 2010-2012 Germany’s support for its EIIs were worth 26bn euros, or some 8bn euros (£6.4bn) a year (table 2).
Support covers thousands of firms. Unlike the UK package, support is not confined to specific sectors.
At company level, in Germany compensation is available for 90% (or in the case of larger and energy intense consumers, 100%) of electricity taxes.
In Sweden, the PFE programme aims to encourage, through incentives (reductions in the amount of energy taxes), energy-intensive industries to improve their energy efficiency. This is a long-term agreement involving the Swedish government, the energy-intensive industries and trade unions. The duration of this program is 5 years. 117 industrial companies are involved in this project (i.e. 250 plants). The Swedish Energy Agency monitors and controls the programme. The Programme Board, established in 2005, brings together representatives from government, business, trade unions and employers as well as research centers. Both with an advisory and regulatory purpose, the Board meets four times a year. After only two years of existence, more than 900 measures were implemented or underway. These measures cost the companies € 110 million but benefited from a rapid return on investment (two years on average). They have saved about 1 TWh per year of electricity, i.e. from 500 kT to 1 million tons of CO2, and a total of € 55 million. In 2010, it doubled its objectives.
Using the powers of the official receiver to support employment & attracting buyers for troubled plants
In November 2014, the Italian government agreed to sell Italy’s second-largest steelmaker Lucchini’s Piombino complex to family-owned Algerian conglomerate Cevital. Lucchini was previously owned by Russia’s Severstal but was declared insolvent in 2012 and placed into special administration. The company received two offers for its core assets in Piombino, one from Cevital and the other from India’s JSW Steel. The government administrator said the Cevital offer was more attractive as it foresaw full employment at Piombino. The Piombino complex employs about 2,000 people and can produce up to 2.5 million tonnes of steel a year.
Jim, you need to actually read what people are arguing.
I argued for a complete ban on all steel imports and CMac asked whether this would fall foul of EEA regulations. Danny then stated that a ban on imports would fall foul of EU rules and that we would need to leave the EU in order to ban steel imports.
You then post a long, long diatribe arguing against the notion that steel nationalisation is prevented by our EU membership. Jim, that wasn’t what Danny said.
Your problem Jim, like all the rest of the Labour right and ‘soft-left’ is that your obsession with blind support for EU membership blinds you to all rational arguments.
Now, the specific question here is not whether steel nationalisation is allowed under EU rules, but whether a complete ban on all steel imports is allowed under EU rules.
Do you have a view on this question Jim?
Karl: if we had a government proposing a siege economy, that wouold be an interesting question: as we don’t (and even a Corbyn government wouldn’t(, your question is entirely academic.
The issue for now, with regard to steel, is campaigning for nationalisation: and my point is that the obstacle to this is the Tories, not the EU: geddit?
Karl: even if your answer is a siege economy, it’s the UK, not the EU who have been preventing serious tariffs on Chinese steel. Your anti-EU co-thinkers at the Daily Mail report:
http://www.dailymail.co.uk/news/article-3518278/UK-blocked-EU-bid-raise-China-steel-tariff-protected-industry-cheap-imports.html
Jim, we all agree on the need for nationalisation. The further points made are that it needs to be a permanent nationalisation and one which is accompanied by serious investment in new plant and equipment and a major programme of large-scale infrastructure projects.
As well as this, we need a complete ban on steel imports. Not tariffs, a complete ban.
That isn’t a ‘siege economy’ it’s rational economic strategy.
What’s the sense in steel being shipped thousands of miles when it can be produced domestically?
My point is, that the main obstacle to nationalisation and other methods (maybe, a ban on imports from China, in particular) isn’t the EU, but is the Tory government: the suggestion by people like the ‘Morning Star’ that the EU is preventing the Tories from protecting the steel industry, is preposterous nonsense: do you agree?
Of course the UK government would hide behind the opaque EU to disguise itself as someone else work if they could get away with it. But if left exposed as a UK decision (Conservative) I think it is less likely that they would adopt such a posture – certainly in the current climate.
Both the UK Government and the EU, to which it belongs and which it wholeheartedly supports, are preventing nationalisation and the banning of imports.
The difference is that we can defeat, push back, influence, the UK Government. Our movement has achieved significant victories over government policy in the past and recently over a range of issues.
But within the EU a ban on all non-UK steel imports would not be possible.
But the EU does *not* prevent nationalisation (see my previous posting, which gives chapter and verse on this). It’s an urban myth, put about by the deluded little-England “left” that it does. And such myths play into the hands of the Tories, providing them with an excuse (if they needed one) for not intervening. Import controls are not the answer, though a case can be made for much higher tariffs on Chinese steel. imports – and agin, it’s the Tories, not the EU who have prevented this.
I’ve heard heated arguments from both sides of the debate as to what extent the EU prevents nationalization. It would be nice if we could get some neutral, even apolitical, expert on European law to clarify this.
I should be clear: I lean towards the Brexit option. However, given that it’s quite possible that the vote goes the other way, I think it is important for us on the Left to know how far we can take things before it would require leaving the EU. Doing so would be difficult and, were Corbyn elected, he would have a hard time justifying doing so if the referendum voted to stay. As such it is in all of our interests to have as clear-eyed a picture as possible as to what is allowed within the EU, what rules have been bent before, what loopholes we might be able to exploit, etc.
An example of a loophole might be to require certain industries to have a board with, say, 33% representation of workers and another 33% representation of the public. If that were applied to energy it would mean that, even if statutory monopolies are forbidden, in practice only a nationalized industry would be able to put up with those constraints. Doing that could also drive down share prices and potentially make nationalization cheaper.
Jim, that’s just semantics. The various EU competition regulations effectively prevent nationalisation to all intents and purposes.
And yes it’s also true that this Government is as ideologically opposed to public ownership as the EU is.
The problem is BOTH institutions Jim. We need to exit-left from the EU and fight for a left-wing, Corbyn-led Labour Government.
In the meantime, in the here and now, we need to keep raising the call for nationalisation and also for an immediate steel imports ban.
Yes, a 100 per cent steel imports ban will upset your soft-left and Labour-right friends and allies, but it is both politically the right call and an absolute economic necessity.
Do not presume to know who my “allies” are, Karl: at least they’re not Ukip and the Tory hard-right.
We must fight for nationalisation, against the Tories and give them no quarter – as those who either through ignorance or through dishonesty claim the EU “bans” nationalisation unfortunately do.
Now read my first post and tell me where it’s factually wrong, Karl.
Jim, your allies in the pro-EU camp are David Cameron, George Osbourne, Nick Clegg, Tony Blair, the CBI, the top 100 FTSE companies, Wall Street, NATO, the whole of the Labour right wing and the Labour ‘soft-left’.
My allies in the left-exit camp are the Communist Party, the best elements of the Labour left, and the best elements of the non-Labour left.
Your first post misses the point entirely. It’s an argument against something that was not being advocated.
We should not import steel from abroad when we have no shortage of potential steel-making capacity here in the UK.
Of course we’d need to import steel if we were unable to manufacture it here, but that isn’t the case.
Alan THornett (for many years a left “outer”) reports on a bizarre non-“debate” at which “left” outers found they had some embarrassing support:
https://shirazsocialist.wordpress.com/2016/04/02/the-anti-eu-left-and-its-embarrassing-friends/
I was at the same meeting. And yes, out of an audience of around 100, there were indeed three grumpy old men who spoke from the floor in favour of the EU.
Perhaps one of them was your friend Mr Thornett.
I was at the same meeting as your friend Mr Thornett and yes, out of an audience of around 100, there were indeed three grumpy old men who spoke from the floor in favour of the EU.
… and several who went on about “national sovereignty”, excess immigration and the need to work alongside Ukip, according to Thornett.
No Jim, one contribution from the floor (from Lewisham People Before Profit if memory serves) spoke about campaigning alongside UKIP.
Another person contributing from the floor was a former Labour MP who spoke about the official “Vote Leave” campaign.
And all the other speakers, from the platform and from the floor, were very specific about the need to campaign for “Lexit” in a specific “Exit-Left” campaign.
These speakers included a lady from the Communist Party, another from Counterfire, a speaker from the RMT, and a guy from the Socialist Worker.
A man from Nigeria spoke about how the EU is a racist institution, which damages the economies of African nations, and another speaker from Counterfire completely took apart the ludicrous claims of the Labour right and “soft-left” that the EU is somehow a defender of workers’ rights.
The only “bizarre” contribution was from a local lady, who seemed to be suggesting there was something of a conspiracy taking place involving members of the local council.
It was an excellent meeting, well-attended and showed the breadth of opposition across the left to the neo-liberal EU.
Jim, one of the best quotes of the evening was from the RMT speaker, who said: “Voting to leave is the only choice for socialists and trade unionists – supporting the EU lines you up with people who have destroyed countries’ economies.”
Sorry your friend Mr Thornett didn’t enjoy it, but I appreciate that being in a minority of three grumpy old men among a meeting of around 100 people would not be an enjoyable experience.
All the same, it was good to see that people can come along to our Exit-Left meetings and express a dissenting point of view, be listened to politely and their comments appreciated.
Karl: for the sake of argument, lets just say that membership of the EU *does* preclude the nationalisation of the steel industry …
Should we say (a) “Oh, we can’t nationalise because that would be breaking EU rules”;
or (b) “We should nationalise, but only after we’ve voted to leave the EU”;
or (c) We’ll nationalise steel and then worry about what the EU has to say about it”
..geddit, comrade?
We should nationalise steel and we should ban all steel imports.
We should also exit-left from the neo-liberal EU and urge the peoples of other EU members states to do likewise and join with us and other peoples of the world in creating progressive alternative and people-first systemes of international trade and commerce.
Still avoiding the question, eh, Karl? The truth is, you and your little England Stalinist friends have no coherent answer on the EU beyond parroting what Ukip and the Tory hard-right say, but adding a few words about “internationalism” and “socialism” to make yourselves feel a bit better about the foul company you’re keeping.
No Jim, I answered your question absolutely directly. Do you have problems reading Jim?
You asked whether I thought we should advocate nationalisation regardless of the view, rules or policy of the or the EU and I replied: “We should nationalise steel and we should ban all steel imports.”
That’s a direct answer to your question Jim.
In what way can that direct answer of mine be possible described as my “avoiding the question”???
Jim, how on earth can a position that argues for a Corbyn-led left-wing Labour government and calling for peoples of other EU members states to also leave the EU and join with us in creating better, progressive, and people-first systems of international trade and commerce possibly be described as “parroting what UKIP and the Tory hard-right say”???
Where, when did anyone from UKIP or from the Tory hard-right call for a Corbyn-led left-wing government?
How on earth can a call for peoples of other EU members states to also leave the EU and then join us in creating better, progressive and people-first systems of international trade and commerce possibly be described as a “little England” position???
Jim, the problem you pro-EU fanatics have is that you have a few rehearsed lines of attack and you’re utterly unable to deal with real, genuine, left-wing and internationalist ideas.
This was the same problem your Mr Thornett and his two grumpy old pals had at the recent Exit-Left meeting.
They refused to engage with any of the left-wing, internationalist arguments that were actually voiced at the meeting, and, like you, they parroted the same old lazy clichés you’ve bored us all with on here.
There is no coherent left-wing argument for voting “remain”. The only principled position for anyone on the left is “Exit-Left.”
“the problem you pro-EU fanatics have is that you have a few rehearsed lines of attack and you’re utterly unable to deal with real, genuine, left-wing and internationalist ideas”: that’s because there are none worth taking seriously, as the anti-EU “left”‘s willingness to share platforms with Ukip (through Vote leave, Trade Unionists Against the EU, CAEF, and as individuals like Boyd, Denny Galloway, Hoey etc have already done). Frankly, Karl, the weakness and incoherence of the anti-EU “left” is demonstrated by your inability to gikve straight answers to straight questions, and such preposterous call for “peoples of other EU members states to also leave the EU and then join us in creating better, progressive and people-first systems of international trade and commerce” in a situation in which everyone knows that a vote to leave will be a triumph for the most reactionary forces in UK and European politics and a massive setback for any concept of internationalism. The anti-EU “left” are playing a grossly irresponsible and, frankly, shameful role which – but for the fact that *no-one* is listening to them would warrant them being branded with infamy in working class history.
I understand Labour is saying that shovel-ready public works projects should be hurried on, and these should favour the use of British steel. Has there been an analysis of whether this would be compatible with EU public procurement law, which aims to prevent discrimination between the goods and services of the Member States?
I very much doubt it would be compatible with EU rules. Also, today’s ludicrously cynical “instruction” from the government for local council’s to “Buy British” with their steel-based product purchases , runs up against the overarching requirement for all councils to secure the “best value” (ie , lowest cost to local council taxpayers). Working in local government for 20 years I found this constantly derailed sporadic council campaigns to “buy locally” – never mind “buying British”.
As an aside – I was momentarily amused by the young American-accented neoliberal zomboid “economist/spokesperson” put up by the Institute of Directors on a Sky interview yesterday to pooh pooh any thought of “interfering with the market” to save the remaining UK steel industry. So in touch with the realities of UK steel was this IOD “Spokesperson” , that she referred throughout to the Port Albert (sic) steel works !
The left Brexiters are putting workers’ rights in danger – and playing into the hands of the right
Comrade Tortolano of Trade Unionists against the EU had a piece in the Morning Star recently. He began his piece by noting that there are situations for socialists in which fundamental political principles must take precedence over the day to day pragmatism of trade union-style negotiations. In principle, I can agree: I’d argue that getting rid of Trident – even before we have an alternative jobs plan in place – is a case in point. Getting out of the EU most certainly isn’t.
At most, it could be argued that the argument over Brexit v Remain is a dispute between different factions of the ruling class over two alternative strategies for British capitalism, in which the working class has no interest one way or the other. In the past (during the 1975 referendum, for instance), some of us have argued just that, but I will now go on to explain why that approach does not apply in the present referendum campaign, and why trade unionists and the left should argue to remain.
I say that those on the left wishing to leave the EU need to be able to answer two questions: whether Brexit will benefit unions and workers in any practical sense, and whether the “left exit” campaign will help develop workers’ consciousness and the left politically. When leaving is put in such sharp terms the idea of a left wing exit rapidly falls apart, particularly around the consequence for unions.
Unions can only progress member’s interests in two ways: industrially and through legislation. As unions’ industrial power has declined so the importance of pro-union and pro-worker legislation has increased. Such legislation creates a floor below which unions and workers’ rights cannot fall. With one major exception (TU recognition) all such post- 1980 legislation originates from the EU.
It is the case our floor of rights is weaker than many other European counties – the result of the way European laws have been introduced in the UK – the Posted Workers Directive being a case in point. Comrade Tortolano cites the Viking, Laval and Ruffert cases as demonstrating “beyond reasonable doubt” his case that the ECJ’s rulings on the implementation of the Directive is anti-worker: in reality the Directive gives member states latitude to determine what constitutes the minimum rate of pay. The Blair Government set the rate at the minimum wage creating a two tier workforce while in Ireland they linked the Posted workers rate to the ‘going rate’ set by collective bargaining. While we may blame many things on the EU the vast majority of problems unions have with EU legislation is a consequence of how successive UK governments have enacted EU legislation – and in directing their fire at the EU people like Comrade Tortolano in reality let the Tory government and its Coalition and New labour Predecessors off the hook.
However weak the present floor of rights may be, post-exit the Tory Government would have the ideal conditions in which to set about dismantling our present laws, further eroding unions’ abilities to defend members and further worsening workers’ terms and conditions. And the consequence of this dismantling of the floor would almost certainly start a European wide race to the bottom as E.U. countries are forced to compete with the rock bottom wages of UK workers. What possible benefit can unions and workers derive from such a development? On this fundamental level of workers’ rights those who wish to leave do not have a leg to stand and so tend to keep quiet on this pivotal matter, unlike the populist right. In fairness to Comrade Tortolano, he does at least address this crucial issue, but only by denying reality and obscuring the real issues with empty rhetoric (“it is anti-internationalist to foster the illusion that Britain outside the EU would suddenly become prey to a demolition of workers’ rights” etc).
The major argument put forward by the exit camp which directly purports to have workers interest at heart comes from UKIP, though it is hinted at in Comrade Tortolano’s piece, where he complains of the European Court of Justice upholding the principle of “free movement” of labour: that foreign labour has reduced wage rates, hence ending immigration will resolve low pay. Such demagogy shifts the blame for the decline in wages from the employer and government to ‘the foreigner’ it also writes out any role for unions in bidding up wages.
We can see from the floor of rights question to the populist right’s emphasis on immigration of the decline in wages there are no trade union based reasons for exit, unless someone wished to contend the floor of rights was irrelevant or believes (like, incredibly, Comrade Tortolano) the Tories will leave it intact. As for those wishing for a left exit, it is b – to put it mildly – worrying that they come close to blaming migrants for low wages.
Unable to put forward any coherent or convincing trade union-based rationale, those left wingers advocating Brexit can only do so from a political perspective. While it’s quite permissible to claim, as does Comrade Tortolano, that “It is not possible to apply a limited pragmatism to such a fundamental issue that touches on our system of justice, democracy, collective rights and our freedoms as workers”, he is unable to present any such case, and neither has any other left Brexiter.
The comrade’s rhetoric about “our system of justice, democracy, collective rights” is simply empty guff: as I have stated (above), every single aspect of pro-worker and pro-union legislation in the UK since 1980 (with the exception of TU recognition) originates from the EU. As for “justice”, the EU has forced successive British governments to introduce legislation on parental leave, age discrimination and transgender rights that almost certainly wouldn’t exist otherwise; and in other areas – equal pay, maternity rights, sex, disability and race discrimination, the EU Charter of Fundamental Rights has improved and extended existing laws, making it more difficult for a reactionary UK government to undermine them.
Comrade Tortolano then puts forward the further argument: that “A vote to leave the EU on June 23 would send shockwaves through the global financial architecture and damage its austerity agenda.” Although it is impossible to say what level of destabilisation exit will have on capital we can say with certainty it will have a detrimental impact on unions and the working class. Moreover the impact of a serious downturn caused by exit is likely to have precisely the opposite effect to what people like the comrade believe will happen. Rather than helping the fight against austerity, attacks on unions and workers will be intensified while the labour movement will be divided and unable to respond as a direct consequence of the political chaos exit will sow within its ranks. In truth such chaos will not be down to the left’s intervention, rather an exit victory will build an insurgent populist right and it is that which our movement, including the Labour Party will have to contend with.
The comrade, like all anti-EU leftists, no doubt believes that measures such as renationalising industries or intervening directly in the economy are made impossible by EU membership (I am surprised that this argument is only hinted at in his article): but this is simply not the case – see Article 345 of the Treaty on the Functioning of the European Union, which states: ‘The Treaties shall in no way prejudice the rules in Member States governing the system of property ownership.’
http://eur-lex.europa.eu/legal-content/EN/ALL/?uri=CELEX:12008E345
All across the EU states have majority shares or own and run their own transport and energy sectors. This is confirmed in this 2013 Estep report, commissioned by the EU: http://www.esparama.lt/es_parama_pletra/failai/ESFproduktai/2_UM_valstybes-valdomos-imones_2013-03.pdf
In particular the report states: ‘SOEs are entitled for public services provision, which can be broadly observed in utility sectors such as transport, telecommunications or energy.’
While nationalisation may be restricted it is not banned or illegal. This is a widely-believed myth, promoted by the anti-EU left. But, for the sake of argument, say it were true: are we seriously suggesting that a Corbyn-led Labour government, elected on a clear democratic mandate and manifesto pledging public ownership of the nation’s railway system and ‘Big Six’ energy companies, would be deterred by the objections of EU bureaucrats? This, incidentally, is where analogies with Greece, Spain and Portugal fall down: the UK has the fifth-largest national economy (and second-largest in EU) measured by nominal GDP: the idea that a left wing UK government could be bullied in the way that Syriza in Greece was is simply preposterous.
Across Europe and North America globalisation is causing a rising level of hopelessness among large sections of the working classes who are being galvanised into activity by the demagogy and programme of the populist right. The common denominator across all these movements, and what roots them in workers consciousness is the appeal to their respective nationalism. That’s why the left Brexiters like Comrade Tortolano are so badly – and dangerously – mistaken. It’s also why people like myself , who in 1975 argued for abstention, now say that in the forthcoming referendum, class conscious workers and all progressive people, must argue, campaign and vote to remain.
The referendum is not simply a matter of being about in or out: it is also an episode in the formation of this new, populist right-wing. Not least because the working class base of the Brexit campaign are not concerned with which model of capital accumulation best suits the UK, or for that matter the recent decline in workers’ rights within the EU: rather the referendum is a lightning rod for hitting back against their real and imagined grievances – politicians not listening, growing impoverishment, or the belief that exit will reverse Britain’s decline – not least by stopping immigration. In voting for exit these workers will not have been influenced by the incoherent arguments of the left rather they will cast their vote bound hand and foot to the reactionary leaders of the Brexit campaign.
The above is not to endorse the EU as it is today – far from it: the one convincing claim that Comrade Tortolano makes against the EU is about its undemocratic nature. In fact those on the left and within the unions who advocate Remain not only largely agree about the limits of the EU but also know what to do about its shortcomings; our problem is we have not done it.
Organising industrially and politically is our answer, it is our answer to the limitations of the Posted Workers Directive, it is our antidote to blaming foreign workers, and on a pan-European level it is our answer to the present limitations of the EU. For those of us who wish to remain we need to use the existing European wide union and political institutions and networks to campaign not only to democratise the EU but also to fight for our Europe a social Europe. Our starting point however is to ensure we stay in.
Jim:
You say the left are putting workers rights at risk if we leave the EU. What you fail to understand is that employers can intimidate workers to give up those rights, when I worked for a multi national company they sent a piece of paper round for everyone to sign stating they would give up their rights the working time directive. I threw mine in the bin, but many signed without a second thought. The old story is still the same today as it has ever been, rights are hard fought through the unions and they are our last defence.
What a load of right-wing rubbish Jim!
The working-class movement has fought for and won every single right that workers have in the UK today.
Absolutely nothing to do with the EU. It’s been the long- hard fight of workers over many, many years.
The women of Dagenham fought for and won equal pay for women. What a disgusting insult to claim that the EU did this for them. These women fought for this by striking.
The matchgirls of east London and the dockers of the early 20th century fought for and won the principle of a basic working day and against casualization. Not the EU. What an insult to these workers.
Throughout our history, workers’ struggles have been what has won every, single right that workers have today. Not the EU.
“Absolutely nothing to do with the EU. It’s been the long- hard fight of workers over many, many years” this is infantile rubbish, Karl.
OF COURSE, all gains for workers ultimately spring for the willingness of our class to stand up and fight – but that has to result in legislation of one sort or another. And its a simple matter of straight fact that virtually all pro-working class UK legislation since 1980 has originated from the EU. Does your case *really* depend upon denying reality?
No Jim, that’s completely untrue.
Each and every single right that people have at work originate from and continue to exist because of workers’ collective ability to enforce those rights.
If we leave the EU tomorrow, not one single right at work will be lost as a result of that decision Jim, Not one.
People’s rights at work will either be successfully defended, or extended further, or taken away by the employer depending entirely 100 per cent on the prevailing balance of forces at the workplace.
“If we leave the EU tomorrow, not one single right at work will be lost as a result of that decision Jim, Not one”: what an idiotic comment, Karl! It will create ideal circumstances for the Tories to repeal workers’ rights! Are you really so stupid that you cannot see this? The “left” anti-EU campaign is indeed based upon wilful ignorance and denial of reality. As I’ve said before, your irresponsibility towards our class vergers upon the criminal, but (thankfully for you) no-one is listening to you:: the “out” campaign – Ukip and the Tory hard-right – don’t need you, except marginally, to help fool a few gullible idiots like the RMT leadership.
A tariff war with China would be a very bad idea, particularly as European manufacurers are so reliant on exports to China.
There are valid arguments for import controls based on carbon emissions, health and safety and wage levels – all of which could be addressed by international agreements involving the unions.
But the China-bashing meme being spun around the steel issue is shot full of holes.
Allegedly, state ownership means that China can subsidise its steel industry to dump its product at below its cost of production.
Yet in 2014, the UK imported nearly 7 times more European than Chinese steel.
Besides which, why can’t Tata group, which made over £5 million a day from its Jaguar Land-Rover operation, subsidise its loss-making steel operation in Port Talbot?
The answer is that private companies just don’t want to do things like that.
This is another good reason for nationalising Port Talbot- a measure supported by over 60% of the public, including the majority of Tory voters!
Good points Prianikoff and just today I checked out Tata on Wikipedia.
It owns dozens of companies including Jaguar.
Last year it had revenues of over £100b and made a global profit of £6b and yet it cannot stand a loss of £1m a day in UK steel.
Apparently it is 66% family owned by its brothers but it would be interesting to know who owns the rest?
By the way I read that the Gupta family is being criticised in India because of its questionable links to the Govt there (some of the family are interested via the Liberty company in cherry picking parts of Tata steel in the UK) so I am all for democratic public ownership!
So Tata made £6b but it was the labour of their millions of workers who really made this wealth.
I just hope the World’s investigative journalists are now scrutinising the Panama Papers with a fine tooth comb so we hold the rich and powerful globally and not before time desevedly to account.
As I mentioned in the very first post in response to Michael’s article; according to New Internationalist the rich globally stash 22 trillion dollars globally in illicit offshore banks and just think what good we could do in the World for human beings with this if the rich really paid their share?
Why we could even take Tata steel into democratic public ownership!
The rich and powerful legally nick the surplus labour of the working billions and now we are seeing how truly unethical and inhumane they are as billions of their fellow human beings are living in poverty and on less than 2 dollars a day.
A US socialite once said that, “Only the little people pay taxes.”
But this left wing democratic socialist says:
“We now know who are the real little people of the planet!” Yours in international solidarity.