Michael Meacher - Labour's Future

Speaking to the CBI, Tony Blair has finally made his long suspected support for civil nuclear power explicit , ahead of the government’s own Energy Review. Previously, it was widely believed that the purpose of this review was to enable the Prime Minister to reverse the decisions of the 2003 Energy White Paper. This proposed a major expansion in renewable energy combined with enhanced conservation efforts to compensate for decommissioning ageing nuclear plants, whose contribution to UK energy generation will fall from 19% to 7% by 2020.

Since then, the debate around reduction of carbon emissions has seen nuclear power advocates leap on the green bandwagon, claiming it is carbon neutral (it is not) to justify a new civil nuclear power programme. It was these arguments that Blair cited when warning that nuclear power was “back on the agenda with a vengeance.”

In this context, the sale of BNFL’s British Nuclear Group (BNG), is enormously significant. The sale opens access to three huge income streams. One is guaranteed from a successful purchase, placing BNG’s buyer in pole position to access the other two.

The first of these money flows comes via BNG’s contract to clean up the UK’s nuclear waste, initially at Sellafield, subsequently at other nuclear power stations as they are decommissioned. The Sellafield deal alone is worth £1bn a year for its first five years. There will be an option to extend if it is deemed to have been a success. Over the next 75 years, the Nuclear Decommissioning Authority (NDA) will spend a similar amount annually on closing the UK’s obsolete nuclear power stations, the second income stream.

UK companies such as Amec would obviously like to bid for this lucrative work. They will face stiff competition from the likes of US giants Halliburton and Fluor. The NDA’s £72 billion nuclear waste clean up pot makes it an attractive business proposition. It is the US companies who have most experience in the nuclear sector – identified by the NDA as a crucial factor in awarding contracts.

Those involved in cleaning up old waste are likely to be first in line for the third income stream if the government decides to sanction the building of new nuclear power plants, making the Prime Minister’s backing for nuclear power all the more important.

Were this alone insufficient encouragement to attract bids, one has to look only at the budget speech given by Gordon Brown, where he promised that the UK government would promote the liberalisation of European energy markets with failure to open up to competition penalised with “independent investigation and enforcement”.

So there are two powerful drivers from the very top of UK government. Strategically, from the Prime Minister for nuclear power and economically, from the Chancellor for the private sector to earn vast sums decommissioning old plants and building new ones.

Yet we simply do not need a new generation of nuclear plants. The downsides are stark. It’s more expensive - half as expensive again as gas, up to twice as expensive as wind. It’s more dangerous - nuclear power means a waste stream containing some of the most toxic materials known to man. Yet no one knows what to do with it. And mining uranium ore is far from carbon neutral.

In the meantime renewables have never been seriously tried, despite the fact that, for example, the potential for wind power in Britain is recognised to be far ahead of both Germany and Spain, the EU’s leading markets, and on a global basis above Texas, the previously strongest market.

As with telecommunications and the EU services directive, a neo-liberal outlook is driving government energy policy. This is no way to protect employment, skills or trade union rights. We need a rather more measured - and social - examination of the UK’s energy needs than the Prime Minister and Chancellor’s words would suggest.

Posted by Michael Meacher at 10:10 AM | Permalink | TrackBacks (0)

Although the price for July deliveries of Brent crude is over $70 a barrel, Lord Browne, BP's chief executive, thinks prices will halve in the medium term. According to a recent interview, he believes large oilfields are still being found and Canada's oil sands could be exploited.

Some hope. Already four-fifths of the world's oil supply comes from fields discovered before 1970 and even finding a field as large as Ghawar in Saudi Arabia, the world's largest, would only meet global demand for another 10 years.

Peak oil is the point at which oil production rises to its highest point before declining. Almost all expert opinion agrees that it is fast approaching, possibly within five years, almost certainly within 15, according to the former Saudi oil chief, Dr Sadad al-Husseini.

Whilst it has taken 145 years to consume half of the 2-2½ trillion barrels of conventional oil supplies generally regarded as the total available, it is likely that, given the huge increases in demand from China and India, with rates of growth of 7pc-10pc a year in economies supplying two-fifths of the world population, the other half will be largely consumed within the next 40 years.

The significance of this can hardly be over-stated. Oil is the fundamental underpinning of our civilization.

Alternatives like biofuels, ethanol or biomass can play a marginal supportive role but nowhere near on the scale required. When the oil runs out the economic and social dislocation will be unprecedented.

But isn't this too pessimistic? Won't new discoveries continue to fill the gap?

The pattern of the past few decades argues very strongly against it. Some 98pc of global crude oil comes from 45 nations, of which more than half may have peaked in oil production, including seven of the 11 Opec nations.

Major oil field discoveries fell to zero for the first time in 2003. Worse still, the excess capacity held by Opec nations has dwindled, from an average of 30pc to about 1pc of global demand now.

The political significance of this is almost incalculable. World oil and gas production is declining at an average of 4pc-6pc a year, while demand is growing at 2pc-3pc a year.

Global oil production is 84m barrels a day. As the president of Exxon Mobil Exploration, John Thompson, said in 2003: "By 2015 we will need to find, develop and produce a volume of new oil and gas that is equal to eight out of every 10 barrels being produced today." That is not just a problem of better technology. Additional oil on that scale is not available.

There are three options to escape this dilemma. One, which the US is ruthlessly pursuing, is to grab by force of arms the lion's share of what remains.

A second is to shift into unconventional sources of oil - tar sands, extra heavy oils and gas to liquids processing. A third is to accelerate the switch out of oil altogether into renewable sources of energy, especially wind power, biomass, tidal power and solar.

What is so disturbing is that long-term global policymaking on this, perhaps the biggest decision this century, is virtually non-existent and driven instead by self-destructive short-termism.

The first option was the real reason behind the first Gulf War in 1991, to deter Saddam gaining control of the Saudi oilfields.

It was also a major reason for the orchestrated revolutions in Ukraine, Georgia and Kyrgyzstan, as well as the military interventions in Afghanistan and Yugoslavia, all of which offer key oil transit routes from the Caspian Sea Basin, which holds the world's biggest untapped fossil fuel resources, worth up to $5 trillion.

Equally it is also one major reason for Russian intervention in Chechnya, part of the northerly transit route between the Caspian and Black Sea under current Russian control. It is certainly another reason for US concern about Iran, holding only slightly lower oil reserves than Iraq.

But, above all, option one was the main trigger for the Iraq war. Of more than 80 oilfields discovered in Iraq, only about 21 have been at least partly developed.

Despite this, Iraq's proven oil reserves exceed 110bn barrels but its total reserves are likely to be far more, perhaps even 200bn barrels more.

This explains US determination to control this fulcrum but it has involved an escalating political, military and economic price that must make this option unsupportable even for the US.

An alternative strategy is to take advantage of the rising oil price to develop unconventional oil sources, notably the Athabascan tar sands in Canada and the Venezuelan Orinoco heavy oils.

However, the downsides in terms of cost, manpower, water shortages and, above all, CO2, are prohibitive.

Cost-wise, the International Energy Agency reckons that investment needed in oil and gas over the next 25 years to meet an expected 50pc increase in global demand, will be $5 trillion, equivalent to more than four times the entire GNP of the UK.

The biggest constraint, however, is environmental. It takes almost as much energy to mine, process, refine and upgrade the oil extracted from tar sand as the energy contained in the light oil produced.

Worse still, the processing releases five to 10 times more greenhouse gases than a barrel of conventional oil. This is the exact opposite to the scientists' requirement for the world to cut greenhouse gas emissions by at least 60pc by 2050.

The third option is clearly the right way forward - a new energy world order. The potential for powering the world economy via renewables is almost infinite. Governments should now be switching to this option, far faster and on a far greater scale.

Posted by Michael Meacher at 10:11 AM | Permalink | Comments (0) | TrackBacks (0)

Even before the recent rally in manufacturing has taken root, the prospect of the Bank of England raising interest rates this autumn threatens to choke it off. This is ominous when the manufacturing base, the lifeblood of the country, has still not reversed its long-term decline.

We have been losing 100,000 jobs a year, and there is no prospect that the services sector will ever be large enough to compensate for the weakness of manufacturing. In fact, knowledge-based services, which get far more attention, only account for less than a third of our earnings from exporting manufactured goods, and pay for only a quarter of the manufactured imports we want to buy.

The facts are stark. The share of manufacturing in total UK output has almost halved since 1979. This is serious enough, but the decline has recently been accelerating. It fell by 3% in the 7 years to 1986, then by 2% in the 10 years to 1996, and then by over 6% in the 8 years to 2004. Manufacturing employment has fallen even faster, from 28% of all UK jobs in 1979 to less than 12% last year. In 1970 less than a quarter of manufactured goods sold in the UK were imported; now it is 60%. Whereas in other developed countries manufacturing output has been growing, though the service sector has been growing faster, in Britain there has been both a relative and an absolute fall in manufacturing in recent years. At this rate, if these trends were to continue, manufacturing in Britain could almost face extinction within 30 years. Yet the hollowing out of British industry attracts little or no comment.

Worse, the decline in manufacturing jobs is actually seen in some circles as a sign of healthy efficiency, not of failure. Despite the avalanche of Chinese-made goods pouring into Western shops, the free trade lobby draws attention to the continuing expansion of manufacturing output in most developed countries, indeed in the US by nearly 4% a year on average over the last 15 years. Jobs have been lost, they claim, because workers are replaced by new technology to boost productivity, and labour-intensive sectors like textiles have given way to higher-tech ones like IT and pharmaceuticals. Low-skilled jobs have moved offshore, while higher value-added R&D, design and marketing have prospered at home.

There are several things wrong with this argument. First, China and India are not merely dominant in low-tech sectors, but are now turning out a third of a million new engineers a year and rapidly entering the high-tech and service areas as well, such as design, software and digital technologies. Moving upstream will not escape Asian competition at cut-price rates. Second, where new jobs have been created in Britain over the last decade, they have been overwhelmingly low-paid, low-skill, often part-time jobs in retail, catering, entertainment, and care services. Third, there is a regional mismatch. Manufacturing jobs have been lost largely in the North while the expansion of business and financial services has been skewed to the South. Continuing manufacturing losses combined with the lack of any effective regional industrial strategy will leave large swathes of the country outside the South and South-East increasingly denuded of well-paid and attractive jobs.

Britain moreover has been hit harder by these trends than other developed economies. It is noteworthy that since the oil shock of 1973, US manufacturing output has grown by some 120% compared to UK growth of only about 15%. Whilst US companies now achieve more than twice the production levels with the same number of workers since then, British companies produce about the same as before with only half as many workers. In other words, productivity here has been almost exclusively at the expense of labour-shedding – perhaps the biggest failing of the British economy over the last quarter century.

How can this endemic failure be addressed and de-industrialisation halted? The Government has identified the key problem as the well-documented gap in productivity between the UK and its major competitors like France, Germany and the US, and has tried to tackle it by raising Britain’s traditionally low levels of skill, investment, R&D, and innovation. It is true that over the last quarter century the UK seems to have closed the skills gap with the US, though there is still a significant skills gap between the UK and France and Germany. In higher skills (i.e. university level) we match them, but in intermediate skills (technical qualifications like Higher National Diploma) – which many experts argue are the key ones for economic performance – we are still far behind.

Another area of chronic UK weakness is investment. Britain has performed significantly worse than all its main competitors in levels of capital intensity (capital invested per worker hour). A recent cross-national research study found that in 1999 the German level was on average 32% higher, French 46%, Japanese 65%, and US 42%. Against this, however, it is true that the UK record has markedly strengthened in the last decade, the quality of capital has improved, and the impressive growth in ICT investment has begun to impact on output growth.

Nevertheless, Britain continues to lag badly in R&D expenditure, which many studies have shown significantly contribute to productivity growth. Britain still spends far less of its GDP on R&D – as much as 45% less than the US and Japan. Moreover, British R&D has been too heavily concentrated on defence and pharmaceuticals rather than cascaded across sectors where technological capability is now even more important than price competition.

There is a further factor too, almost wholly ignored. As the London McKinsey strategy consultancy recently commented, many UK manufacturers fail to implement management methods, including involving shop-floor workers in improving production, which rivals abroad have recognised as producing results and have taken on. Improving people management and working practices should be central to the Government agenda rather than treating it as secondary to investment, innovation, skills, and competitive labour and product markets.

Nor can one ignore that Britain’s current manufacturing weakness, combined with the Government’s laissez faire neo-liberal ideology, has exposed some of Britain’s most prized industrial assets – P&O, BAA, Standard Chartered Bank, Centrica, BOC, Pilkington, to name just a few – to foreign takeover. Rather than auctioning industrial and financial jewels like these into sub-contractor status to pay off a record deficit, the scale of these losses needs to be stemmed if Britain’s overall national manufacturing capability is not to be irredeemably mortgaged beyond democratic control.

Above all, a good dose of market medicine is emphatically not, as the Government seems to think, an adequate answer to Britain’s manufacturing plight. That is not what successful economies have done either. The US record has been built, not on unalloyed market forces, but on heavy R&D expenditure channelled through the universities, military Keynesianism, government procurement as protagonist for US industry, a resort to protectionism where foreign pressures became too great, and a low dollar exchange rate to assist exports. If that is market ideology, we urgently need more of the same here.

Posted by Michael Meacher at 06:47 AM | Permalink | TrackBacks (0)

This government is more interested in appeasing business and attracting foreign investment than it is in workplace justice.

Gordon Brown last night again extolled the virtues of globalisation and Britain's achievements within it. In his Mansion House speech the chancellor trumpeted "the most global and outward-looking of nations", while condemning any "sheltering against global competition". The benefits of steady and continuing growth are undeniable, but that is only part of the story.

Britain has some of the worst working conditions in Europe. Britons work the longest hours in Europe. The prime minister continues to insist on an opt-out from the EU directive that limits the normal working week to 48 hours, and an exemption from the EU directive providing the same protection for agency workers as for their staff counterparts - a provision of particular importance for women. British workers cannot make a case for unfair dismissal until they have worked for an employer for a year - if sacked after 11 months they have no right of redress. If workers take legal industrial action, they have no protection - whatever the rights of their case - from being collectively dismissed after eight weeks.

Trade union recognition rights are still denied to the 6 million employees - nearly a quarter of the workforce - who work in companies with 20 or fewer employees. This exemption of small firms from most employment protection legislation is not found elsewhere. Yet it is in these small firms, which constitute 85% of Britain's employers, that protection is most needed. These workplaces often have the worst health and safety records. And they employ a greater proportion of women and black people, on lower pay and subject to more discrimination. This exclusion really matters when Britain is the only country in the EU with no proper inspectorate of working conditions, yet prosecutions of employers are rare and there is no other mechanism for the exploited to seek protection.

But it is part of a strategy to appease business and make the country attractive to foreign investment. In 1997 Tony Blair promised that "the changes that we propose would leave British law the most restrictive on trade unions in the western world". The government's own trade and investment website takes the boast further: "UK law does not oblige employers to provide a written employment contract," and "Recruitment costs in the UK are low ... and the law governing the conduct of employment agencies is less restrictive in the UK."

Easy hiring and firing is seen by the government as a major selling point for companies, whatever the costs for workers in insecurity and powerlessness.

But it is a counter-productive policy. Even leaving aside the obvious injustices of the current approach and Britain's defiance of the International Labour Organisation convention, it has not improved productivity or competitiveness. Recent figures show that British productivity is far behind that of our closest competitors - 13% lower than Germany and 21% behind France. Moreover, productivity in the UK has been raised almost wholly by shedding labour - arguably the worst failing of the British economy over the past three decades. And we have slipped down the competitiveness league from fourth a decade ago to 11th now.

Britain's unemployment rate is half that of France and Germany. But that is largely due not to the absence of stifling social protection, as neoliberals claim, but to the freeing up of monetary policy after Britain was ignominiously pitched out of the Exchange Rate Mechanism in 1992, and by staying outside the straitjacket of the one-size-fits-all Eurozone. Even so, the increasing Americanisation of the labour market over the past decade has not prevented a rapid decline in the private manufacturing sector with the loss of nearly a million jobs, while a huge unskilled and poorly educated workforce remains and unemployment is once again on the rise.

What is so tragic is that there is abundant evidence that greater protection at work, contrary to CBI received wisdom, benefits business and raises productivity, while instability in "flexible" markets does not. Precarious work, low pay, poor working conditions and long hours - Britain has the least regulated labour market, even including the US - undermine productivity, reduce motivation and increase absenteeism. That insecurity is aggravated by the lack of an international level playing field, which means British workers are cheaper to lay off for any multinational company looking to rationalise its workforce in Europe.

It isn't as though there is no proven alternative. The Nordic countries offer much better working conditions with no downside in economic performance - quite the reverse. Sweden matches Britain in growth, GDP per capita and unemployment level, and has a current account trade surplus of £5bn, against Britain's £40bn deficit. Even by New Labour's neo-liberal criteria, Sweden wins: it has lower inflation, higher global competitiveness and a better business record for creativity and research. And in quality of life, it's streets ahead. Its life expectancy is much higher, its poverty level is less than half that of Britain, its illiteracy rate is a third of ours, and its social mobility is far higher.

What, then, would workplace justice mean in Britain today? The national minimum wage should be a living wage, not (as at present) a poverty wage. The Warwick agreement on better working conditions, reached with the unions two years ago, should be implemented urgently, not put on a permanent back-burner. A worker who has been found by a tribunal to have been unfairly dismissed should be entitled to reinstatement. Staff who want their union recognised should have to achieve a majority in a ballot, not be required (as at present) also to obtain support from at least 40% of everyone entitled to vote - no government would accept a hurdle like that in getting itself elected.

When 400 workers are killed each year at work, health and safety should be much more rigorously enforced, with custodial penalties where gross managerial negligence is proven. The case for sympathetic action is clear and should be respected - Gate Gourmet workers would never have won justice if they had not been supported by workers in related jobs. And as is the law in many other European countries, employers should not be permitted to sack workers on a lawful strike. The prime minister promised "fairness, not favours". We should demand nothing less.

Posted by Michael Meacher at 06:44 AM | Permalink

A socialist or social democratic society is one that exercises moral principles, social justice and democratic accountability of power in meeting individual and social needs. A capitalist society is one where the economy is driven by unfettered market forces and power is amassed through the accumulation of capital. In the West, the political struggle largely centres round exactly where the line is drawn between these opposing tensions in the regulation of both economies and societies.

Over the last century or more massive shifts of power have occurred across this dividing line. Following the immense destructiveness of the Second World War, the swing of power towards social democracy was reflected in the establishment of a network of welfare state provisions, a steady diminution over succeeding decades in the inequality of income in society, the strengthening of trade union power in opposition to capital, and a widening of employment opportunities and rights.

But in Britain the pendulum swung back in the 1980s and a confluence of factors ushered in the Thatcher counter-revolution. Contrary to all expectations, after 18 years of Thatcher Major Toryism, these policies have been largely continued by New Labour.The balance of industrial power remains as tilted in favour of big business as it ever was in the 1980s and 90s and the centralisation of state power has been taken even further.

The ideological centre of gravity remains entrenched firmly on the political Right. The question is whether this Right-wing retrenchment is inevitable. This pamphlet argues for a programme that will inject a much more democratic tenor into the quality of public life in Britain today where so much is decided top-down without consultation or accountability. It says there is a yawning gap between the governing class and the governed on a greater scale than for a very long time. It argues that Britain now needs to close that gap, to hold authority to account and to empower those now constrained by the traditional hierarchies of class and discrimination.

The full paper can be downloaded here.

Posted by Michael Meacher at 06:49 AM | Permalink | TrackBacks (0)

“EMBRACING globalisation,” according to Gordon Brown in his CBI speech on Monday night, “is the best way to growth, jobs and prosperity.” Looking at the facts, however, might prompt a rather different response: is globalisation, once thought unstoppable, actually now in decline?

Politically, the acrimonious collapse of the Hong Kong World Trade Organisation negotiations in December, the stranding of the so-called Doha development round, and the increasing resistance to the Washington Consensus by which the international financial institutions have dominated the last century, all suggest the first stirrings of a shift to a new world order. This is also reflected in the downturn of global foreign direct investment, which fell 41 per cent in 2001, 13 per cent in 2002 and another 12 per cent in 2003.

There are other uncomfortable facts. First, a system that has given unprecedented power to today’s private global capitalists to scour the world for the highest profit return has led to a drastic hollowing out of the manufacturing base of the US-UK economies. This has led to a current account deficit in the US now approaching 7 per cent of GDP and to net foreign debt of over $4 trillion, a colossal 40 per cent of US GDP and still rising. This is unsustainable. In the UK we are losing 130,000 manufacturing jobs a year. Thirty years ago only a fifth of manufactured goods sold in the UK were made abroad; today it is 60 per cent and rising. No economy can survive on the service sector and high tech alone.

The conventional answer is to move up-market to counter the sucking-out of manufacturing jobs to China and other fast-developing countries. But this won’t work either. While information technology and call-centre jobs were the first to move to Asia, the trend is now spreading to areas long thought to be safe from outsourcing, such as financial services, legal servicesand even the media. The unpalatable fact is that China and India are already competing both with very low wages and in high tech as well.

The Chinese share of GDP devoted to research and development is growing 10 per cent a year, while Europe’s is virtually stagnant (0.02 per cent). That’s why in the US, as in the UK, there has been no net job creation in high-productivity sectors. The jobs created are in lower-paid public and private services that cannot be traded internationally. But the average pay in many of them — retail sales, customer services, cashiers — is below the poverty line for a family of four.

Secondly, the global economy has not improved economic performance. Since 1980 world GDP has grown only slightly more than half as fast as it did in the period before 1980. And in some respects its impacts have been quite malign.

Joseph Stiglitz, as chief economist at the World Bank, identified the uncontrolled flow of “hot money” as the main culprit of the East Asian tiger economy crisis of 1997-98, since footloose capital so often generates instability. The same instability of a global economy operating to a single set of monetary criteria lies behind the recurrent crises in Mexico, Argentina, South Korea, Indonesia and Brazil.

For the poorer developing countries the impact has been stark. The share of global income of the poorest fifth of the world has actually halved since 1960 to a paltry 1.1 per cent today. World inequality has grown drastically. The richest 20 countries now have 125 times higher GDP per head than the 20 poorest countries.

The main reason for this impoverishment is that a global economy has locked developing countries into the role of primary producer of basic commodities, forced to open up their markets to transnational competition that they cannot resist as the price of receiving the investment that they cannot do without. What is needed is the right for the poorest countries to erect tariff walls to protect their infant industries, at least until they are strong enough to meet the full force of international competition.

The key is to be allowed to tailor economic policies to domestic needs — which is why for example Vietnam, subject for decades to a US trade embargo, has had a growth rate five times higher than Mexico fully plugged into the world economy via NAFTA. But this is precisely what a globalisation run by the transnational corporations in their own interests will never permit.

Even, therefore, on the economic front the case for globalisation, at least in its current form, is clearly not made. But there is a darker side too which cannot be ignored. That is the global drug trade, the global trafficking of women and minorities, the more rapid transmission of Aids, diseases such as malaria, TB and perhaps avian flu, increasing migrant flows, and above all the relentless intensification of climate change. None of these was caused by globalisation per se, but it has exacerbated all of them.

The global economy is here to stay. But today’s, monopolised by international capital for its own interests, is not serving us well. A new model could achieve a fairer shift of power and opportunity to losers in the South, and entrench all economic activity within the limits of sustainability.

Nor is this a mere pipedream. The resistance to reinforcing the status quo at the WTO conferences at Seattle, Cancún and Hong Kong, and the emergence of a group of 21 vanguard developing countries to lead the opposition, suggests there is a powerful constituency for real change.

Posted by Michael Meacher at 06:14 AM | Permalink | TrackBacks (0)