A few snap-shots of recent post-Brexit developments in the UK

These snap-shots will necessarily be pretty blurry, as the impact of the pandemic, the results of Brexit and the general global crisis overlap.

Before looking at some of the more empirical tendencies within the post-Brexit regime it is important to remember why we are doing this. The main aim is to clarify the political contradictions that can surface and be discussed and acted upon during current strikes – or other situations where workers come together as a collective force. We want to relate to these contradictions and demonstrate their wider systemic context. Here are some of them:

‘Fire and re-hire’ in a situation of labour shortage

There are of course uneven sectorial developments in terms of labour shortage, but in general the bosses attack workers wages and conditions in a pretty tense moment on the labour-market, in particular in the UK, where the government would have extreme political difficulties if they would just ‘bring more migrants in’. In some sectors, such as logistics, the contradiction is blatantly played out on workers backs, e.g. by the government allowing longer driving hours or ‘seasonal visa without social benefits’ for newly arriving workers. This ‘labour shortage’ is not just a Covid blip, it is also a demographic trend. For truck drivers the condition on the labour market has recently translated into 28% pay increases XPO at Arla Hatfield, negotiated through Unite – while John Lewis increased wages by £5k even without an official union demand. As we were able to see even on a microscopic level (Heathrow cargo vs. passenger traffic), the unions won’t use (market) power in one sector to support workers in others, as they are not class organisations.

Workers’ control in the workplace during the initial Covid phase

Bosses have to launch the attacks on wages and conditions in a difficult moment not only in terms of labour shortage, but also on the background of a mass experience of basic workers’ control during the initial phase of Covid. However limited these experiences might have been (collective refusal to do certain tasks, without PPE etc.), they will have strengthened bonds at work, again, even if all that workers did was ‘having to talk to each other about a collective situation. For us the challenge still is to discover how these primitive experiences of workers’ control might re-emerge during collective disputes.

The public discovery of ‘essential labour’ clashes with the mass experience of ‘bull-shit’ jobs

The public discovery that ‘only’ about 40% of social labour is actually essential clashes with workers’ experiences of their own labour – or their ‘time off’ (‘national holiday’) during lockdown. For months there was ‘life without work’, even with a significant numbers of workers off work society didn’t collapse. Not only can we discuss what aspects of our labour is needed, we can discuss this on a wider social plane: why do so many bull-shit jobs exist and why do they even proliferate, in form of personal services etc., during the crisis? More acutely, why should we accept mass redundancies and pay cuts in a moment where the ‘fair re-distribution’ of essential labour would be a common sense reaction (“We all work, we all work less, we all work only if it makes sense?”). The experience of workers’ control of the shop-floor relates, in fine and precarious threads, to the question of social control. As we can see, though, this question of ‘social control’ can hardly be raised on a national level at all.

The tension between the need for global decisions and corporate and national interests rises

It becomes more apparent that on one hand the discourse of neoliberalism, dominant for decades, has been shattered. The Tories become state interventionists, ‘money can be found’. At the same time it is very obvious that the national governments are paper-tigers when it comes to tackling global issues, such as an economic crisis, a pandemic or climate change. Again, the UK is a primary test-case here, with the government trying hard to demonstrate post-Brexit sovereignty, but failing on all fronts – more on this below. But workers can see the need for global coordination not only in the sense of ‘decision making’ or ‘sharing of ideas’ when it comes to the pandemic or climate change. The current global supply-chain crisis is experienced by millions of workers, from missing microchips in car plants to lack of wet-wipes in hospitals – immediately as an uneven global dependency, potentially as a form of global re-composition of class power.

The statist left and the unions are very clearly confined by the national frame-work, rendering them increasingly irrelevant

Labour’s only answer to the crisis and Tories’ interventionism is ‘buy British’. Most unions react to the ‘fire and re-hire’ attacks by complaining about a ‘betrayed Britain’. Here the question of ‘politics’ and the question of how to defend our conditions on the most basic and material level join hands. Only a class that is able to defend itself – in concrete: is able to question toothless pickets; lockdown rules that limit our fighting power; symbolic, rather than materially damaging actions etc. – is also willing and able to explore the political contradictions laid out above. The question of ‘social control’ (“who works, how, how long, and why’) won’t be addressed as campaigns, decrees or legal changes, but in form of concrete and proliferating imposition as facts vis-a-vis the bosses. As communists we have to be able to contribute to the fighting power of each struggle in order to open space to talk about the wider contradictions. Economic self-defense and political clarity are inseparable.

Whether or not we are able to do this is the only measure for the degree to which we are actually organised ourselves, as a collective, a group, a political organisation! – more on that in a separate input.

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The following points sketch out some broad post-Brexit economic-political trends. The political class has reacted to the crisis by further centralising certain economic decision-making in particular when it comes to foreign trade, subsidies and labour migration. Power is taken away from ‘independent regulators’ and more directly given to the political class. Here are some recent examples:

The NHS reform: After years of preaching ‘local solutions’ and competition, the reform gives the ministerial political administration an increased influence over what is happening in the NHS. As a footnote: the fact that this is combined with an easing of handing out contracts to private companies (no public tendering) is seen as an open door for further corruption.

The (steel) tariffs: trade secretary Liz Truss, seen as a staunch neoliberal, brought forward emergency secondary legislation that does not go via parliament to uphold a number of steel tariffs in order to ‘defend local industry and jobs’, against the decision of the Trade Remedies Authority. This move might even infringe on WTO standards. Shortly after this protectionist measure the government decided to nationalise the steel manufacturer Forgemaster, claiming national defence interests. On the flip-side Truss decided to cut import tariffs on raw sugar – which has been challenged in High Court (might be framed as a subsidy, as there is only one main refinery in the UK, plus infringe on NI protocol).

An increase in subsidies: The government decided to heavily subsidise the Nissan battery plant (total investment £1bn), amongst others. The greater freedom to grant subsidies is portrayed as a major benefit of Brexit. The new subsidy control bill replaces the earlier EU state aid rules with a looser regime that puts the final decisions over subsidies in the hands of ministers. The Financial Times complains: power is taken from a bureaucrat and given to a politician, who is prone to act opportunistically. They complain about the ‘economic populism’ of the Tories.

Intervention in foreign investments: There were several foreign investments, in particular into nuclear power construction (Sizewell, China) and micro-chip manufacturing (Nvidia and Ultra Electronics, US) which were subjected to UK government intervention. The National Security and Investment Act, passed in April 2021, created a new legal framework for this. Ministers can block takeovers in 17 areas — some remarkably broad, such as energy, transport and communications.

Stronger intervention into labour migration: The political class has more scope to decide which category of workers is supposed to receive work visas and under which conditions. They can also make clearer political decisions, such as offering British passport holders in Hong Kong easier terms to settle in the UK or declaring unofficial entry to the UK by refugees as a criminal act. The EU workers continue to be a political pawn, as out of 6 million applications for settled status, 2.33 million received only ‘pre-settled status’. Their fate will be decided in the coming five years.

Are these developments really an expression of a ‘power grab’? On the left the primary view is that these measures express the ‘power abuse’ and ‘corrupted nature’ of the Tories, crediting them with more capability than they have, wiping away the contradictions that any government, whether left or right, would face when trying to steer a sinking ship. The decisions listed above are made within a shrinking space to manoeuvre. In this sense it is more of an expression of weakness. Here are some indicators for the weakening position of the UK ruling class:

General economic decline: In terms of the crisis we can distinguish that the UK economy is harder hit than the Eurozone. Between the second quarter of 2016 and the first quarter of 2021, the UK economy shrank by 4.3 per cent. Italy’s performance was similar. But overall the Eurozone’s economy grew by 1.3 per cent over this period. Even in the relationship with the closest neighbour Brexit means that companies rather pay for a physical detour than for extra bureaucratic costs. The volume of roll-on roll-off cargo transported from Ireland to Britain were down by 29 per cent in 2021 compared to 2019, as companies try to by-pass the UK. It now seems that Brexit and the visible economic impact has rather muted the anti-EU sentiment in countries like France.

Increased state debt: Without heavy state intervention the economic decline would have been even more pronounced. For example UK exports had to be propped up with more than £12bn in state financial support, the highest level in 30 years in the 12 months to the end of March 2021. For Covid support (corporate aid, furlough wages) alone the state paid £350bn. All this was primarily debt financed. In the 2020 financial year, the government had borrowed £297.7bn, the highest level in any financial year since records began in 1947. A lot of the new state debt is financed by ‘foreign investors’. These bought a record-breaking volume of UK government debt in 2020. Figures from the Bank of England showed that overseas buyers bought £89.8bn in gilts between April 2020 – 21, the highest ever. Overseas investors hold around 28% of UK government gilts. I would add here that in this situation of state debt, increasing inflation etc. the wage claims in the NHS and of council workers (Unison demand is 10%) might obtain a wider political sharpness, when local authorities predict a £3bn shortfall in their budgets, nearly 60% of all councils have already increased council tax to the max and cut their workforce considerably.

Further capital concentration and potential infrastructure bubble: In order to mobilise money for future investments the government wants to concentrate capital, e.g. by joining pension funds and allowing them to invest in infrastructure projects, to spark an “investment big bang”. Earlier this year the government loosened a 0.75 per cent charge cap protecting millions of savers in defined contribution retirement schemes from high fees, so trustees can invest in sectors such as private equity. At the same time the boss of the UK government’s biggest construction contractor (Kier) said in August that the Cabinet Office decision to “de facto” support the company with contracts for the HS2 railway line saved it from a Carillion style-collapse three years ago. The two pillars (financial/productive capital and state budget) for the government’s expansion plan are wobbly.

Increase in inflation: Similar to the general crisis it is difficult to tell whether the inflation is a temporary blip due to supply and labour shortage or an outcome of the last years of quantitative easing and deficit spending – so far the Bank of England has bought £875bn of government bonds, which fuels ‘over-liquidity’. Inflation levels are definitely going up, which limits the state’s scope for ‘throwing more money’ at the economic stagnation. Inflation has overshot the Bank of England’s forecasts for three successive months, hitting 2.5 per cent in June, with economists predicting it could peak close to 4 per cent and linger above target.

Corporate debt and increased vulnerability towards take-overs: The news are full of complaints that ‘undervalued’ British companies are easy prey for over-accumulated global equity firms. The ‘over-accumulation’ is another side-effect of the quantitative easing / low interest regime. The latest company under take-over threat was the supermarket-chain Morrisons. Overall the number of UK buyouts is up almost 60 per cent in 2021 compared with the same period in 2019 – while across the EU it is up just 14 per cent. Apart from the de-valued UK stock-market there are other indicators that companies are struggling: 5 to 10% of medium size enterprises have not been able to pay back the Covid emergency loans; many companies struggle to pay their rent (the 18 per cent collection rate for July to September 2021 was the lowest recorded in a year) – total outstanding commercial rent grew to £6.4bn. The rise in corporation tax from 19 per cent to 25 per cent in 2023 will add to the strain.

Rising US vs. China tension: With the EU trade being impacted by Brexit the UK ruling class is squeezed between material dependency on investments (and know-how) from China and both political and financial dependency on the US. While the political class made a big case out of cancelling a Chinese investment into a micro-chip plant, the Chinese battery maker Envision will provide more than half of the capital for the government’s main subsidy target, the new Nissan battery plant in Sunderland. On the other side of the Atlantic the Biden government increases the pressure on China, but at the same time doesn’t show much interest in a quick new trade deal with the UK, as Johnson had banked on. Reports speculate that there will be no deal before 2023 and only with major concessions, such as dismantling of the British ‘digital service tax’. The US/China squeeze increases the tension within the Tory party, with Sunak propagating to keep the channels towards China open, while many others oppose this.

Pressure on the Union: While the ‘sausage wars’ around the Northern Ireland protocol continue (see longer article by AngryWorkers comrades), the governments in Scotland and Wales complain that they have less control over state aid policies than they were promised before Brexit. Wales in particular has lost a lot of EU economic aid (£375m a year), which has not been fully compensated for. At the same time the regional crisis dampens the case for independence: Scotland’s budget deficit increased to 22% of economic output in 2020-21, while in the year to April 2020, Scotland’s deficit was 8.8% of GDP, compared with 2.6% for the UK.

Problems with labour market / migration regulation: Migration was the main issue ‘to take back control’ over. Currently it seems that the major fluctuations due to both Brexit and the pandemic means that many sectors are experiencing a shortage of labour (construction, agriculture, transport, hospitality). For example, employment in the construction sector fell from 2.3m in 2017 to 2.1m at the end of 2020, representing a 4 per cent fall in UK-born workers and a 42 per cent fall in EU workers. The pressure from the employers grows to grant extra-visas to recruit workers from abroad, e.g. in the haulage or meat sector. For political reasons the government can only admit temporary fixes, such as increasing the driving time from 9 to 10 hours a day and easier access to driving licenses.

Condition of the left: From the Labour left commentariat: “Labour’s ‘Buy British’ policy isn’t nostalgia. Whatever the patriotic gloss and 1960s-sounding slogan, the shadow chancellor Rachel Reeves’s Buy British policy announcement is a genuinely smart response to a newly emerging economic consensus. By insisting that government spending could be deliberately targeted to create secure, high-paying jobs and support domestic supply chains, the policy would run up against the EU’s level playing field rules if Britain were still a member. When Jeremy Corbyn’s Labour launched a similar initiative in summer 2018, promising to Build it in Britain, the howling from certain quarters about “red Ukip” or worse pushed the party into a retreat. Now the country is decisively outside the EU, Starmer’s Labour faces no such constraint. Union jack wrapping aside, the policy bears a close resemblance to Joe Biden’s Made in America programme, which seeks to use the immense spending power of the federal government to deliver on the president’s aims. Alongside the “pro-worker” trade deals promised by new US trade representative Katherine Tai, the plan to provide $300bn of subsidies and investment for hi-tech manufacturing is a key component of the immense shift in economic policy that the Biden administration is overseeing. Nonetheless, the Brexit trade deal signed by the government with the EU takes a distant trading relationship with the bloc in return for strikingly wide freedoms on state aid. Only the World Trade Organization’s weak controls still apply to government subsidies inside Great Britain. And in line with Boris Johnson’s claims to be a “Brexity Hezza”, aping the interventionist leanings of former Tory industry minister Michael Heseltine, this government has been prepared to ignore free-market principles and get stuck in to industry decisions.”

There is not much more to say here, a left that has forgotten that it was not the New Deal that boosted employment and accumulation in the US, but the military complex of World War II and that wants to detach Biden’s deficit spending from his ever more aggressive sabre rattling towards China only helps preparing the ‘nationalisation’ of the working class for future massacres.

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Discussion:

* General problem of these kind of debates

During the end of the 1970s and early 1980s we were witnessing various changes, but we had no clue that we were in the middle of an epochal rupture. Trends only really become noticeable over a longer period of time. We probably are in a similar phase of fundamental change in the relation between nation states, state and capital, capital and workers, but we are still fumbling in the dark, blinded by individual issues and occurrences. The situation is unstable, it will be difficult to predict anything. Covid, for example, changed things quite dramatically, as the state and media had to talk about ‘peoples’ welfare’ and ‘social interests’ again, which is an ideological problem that they have to adjust to. Partly due to this, partly due to the resistance after 2008 it will be difficult for them to sell another round of austerity as a ‘political solution’, in the way they did in the 2010s.

It seems that we have to focus our research a bit more. One way to do this is to focus on three main developments:

a) the relation, in political and economic terms, between the UK, EU, US and China

b) how do they manage to put productive investments, such as the £1 billion battery plant into practice; what are their problems, in terms of finance, skilled labour etc.

c) how does the labour market and migration change post-Brexit

* Tendency towards state intervention and centralisation

Another issue here to mention is the current legal intervention to limit bogus self-employment. HMRC puts pressure on employers to take over responsibility for ‘self-employed’, the state wants companies to burden more of the costs. On a lower level local government uses procurement as a political tool to restructure. In 2013 the Preston model was seen as radical, now it is fairly widespread, but runs into a brick-wall, as council funds are depleted and they increasingly depend on foreign investments. The council budget is too small to really shift to a more ‘localised’ economy, while at the same time private companies, such as care providers, leave certain sectors because there is no money to make. In this situation the ‘Preston model’ is no more than crisis management.

What we do see is an increase in regional tension, not just between Wales, Scotland and England’s administration, but also between central government and bigger local units, such as Manchester area. Post-Brexit we can also see that the state administrative apparatus is in a pretty mess, as they now have to undertake tasks that they didn’t have to do for decades, as long as the UK was part of the UK framework.

On a global level the game of mutual indebtedness can continue as long as one of the big players will say that ‘enough is enough’ and pull the rug in an opportune moment. Something like the Volcker Shock in the mid-70s. At the moment none of the big players is really prepared to take such as step.

* Labour shortage

We had a longer back and forth regarding the quality of the current labour shortage, whether it is a short-term blip or a deeper structural and demographic issue. We are trapped between too general ‘public’ empirical data and personal anecdotes. These seem to confirm that there is indeed a shortage, partly due to lack of migrant workers, e.g. in the hotel sector in Wales. In agriculture we can see the development of major labour agencies, such as Concordia and PowerForce (?), who import the new seasonal labour, primarily from Belarus and Ukraine. Many workers come back on similar schemes, season after season. It is unlikely though that they would be able to reproduce 4 million EU workers on such kind of schemes – workers would not accept a situation where they see that they are needed, but at the same time kept in such precarious loops – see revolt of Latino workers, South Africa etc. These seasonal contracts are only really viable either in agriculture of higher paid fringes, such as programming.

* Struggles

What is missing in the current moment is a nucleus of workers who are able to take an offensive step in the current round of defensive struggle, like the Ford Visteon workers did in 2009 – to set a focal point of attraction and possibly develop both generalisable forms of struggle and ‘demands’. The ’Sparks’, although they infringed on the trade union laws and had offensive pickets, seem to separate from the wider, largely migrant and younger workforce in construction.

We should also not forget, when asking about the ‘response from the class’, that Covid and the lockdown has deepened certain divisions in the class. Some people actually improved their living standards. In general we don’t understand the ‘working class subjectivity’ really. We see distrust in government and union, but no real opposition. In France this manifests in workers taking part in anti-Covid passport demonstrations, here it doesn’t.

* How useful or not is the term ‘political class’

The term ‘political class’ is most likely a hang up from the Marxist / Operaismo debate in the 1960s and 1970s where comrades had to confront the development of an interventionist planning state that combined political control with the economic power over a substantial nationalised industrial sector. A comrade made following comments:

The term “political class” is certainly widely used by writers and commentators across the media. For us, though, we need to avoid language which is aimed at deepening mystification, or pulling the wool over the eyes of workers if comrades prefer. We understand that class is about aggregates of people combined together by their relationship to the ownership of the means of production. The concept of a “political class” is alien to those categories. Obviously, we do use “class” in other ways in different circumstances such as in the context of education. That is correct and necessary. “Political class” is a different type of case. In this paragraph, and in the paragraph about “labour migration” there is a dangerously misleading implication that there is a socio-economic class somewhere embedded in the state. That is not the case, and certainly needs to be avoided by those who have “class composition” as a key concept.

Apologies for restating the basics but the state exists and functions on behalf of the bourgeois/capitalist class. The class origins of the population of the various wings is of some passing interest (see Ralph Miliband’s, The State in Capitalist Society, if you’re really desperate!) but there is no way that a “political class” exists separately from the two “great classes” in all their ever-changing kaleidoscopic complexity.

That aside, neither of the sentences are particularly strong. “Foreign trade, subsidies and labour migration” have been controlled at national state level for well over a century in all cases. The next sentence talks about power shifts between “independent regulators” and “the political class”. For many decades there has been an endless “dance of death” of shifting responsibilities between civil service departments, different geographical or organisational tiers of the state, non-governmental organisations (NGOs) and Uncle Tom Cobleigh and all. If there is really a significant shift going on then we need to ditch the “political class” and provide some examples or evidence.