Martin Hall assesses which way Boris Johnson's government is heading and the contradictions he faces
Boris Johnson’s new government is only weeks old, and yet it’s already appearing to go in a number of directions at once. There’s been proposals to spend more money on the government’s designated priorities of schools, hospitals and regional inequalities, but at the price of ministers having to implement 5% cuts in their budgets by March. There have been calls from the prime minister suggesting he wishes to take advantage of looser state aid rules, in the context of his leading a party that is ideologically committed to free markets. There are deeply unpleasant anti-immigrant policies and actions, along with more liberal attitudes, such as getting rid of the £30000 salary floor. Northern Rail has been taken back into public ownership, of course a key demand of the relevant trade unions, while legislation has been announced to limit the power of those trade unions.
To the casual observer, this may seem contradictory and even incoherent, but that assumes that Johnson’s strategy at this stage is to get all his ducks in a row in order to appeal to one constituency. However, his election victory, won off the back of a mixture of Labour voters staying at home, some lending him their vote and some voting for the Brexit Party while supporting his stance on Brexit, means that he has both a dilemma and an opportunity: he must say something to this new layer, and if he does so successfully, he and his advisors will be thinking they can lock the Labour Party out of power for a generation. He also needs to keep British capital happy, while providing opportunities for growth that is likely to have to take place without free trade with its nearest neighbour.
There is some sort of precedent here. Margaret Thatcher’s first governments saw her attempt to respond to what she saw as a new set of Tory voters attracted by what she had to offer. That being said, 2019 is not 1979 nor 1983 (nor 1997, when a Labour Party that had ditched Clause IV and promised to stick to Tory spending plans gained power). It does not appear, at this stage, to represent a sea change in British politics, though it’s impossible to say whether or not it will turn into one. That will certainly be what the right want.
In short, Johnson wants to do and already is doing a number of things:
- As part of an increase in spending, use state aid to give certain forms of capital a shot in the arm, and in so doing, boost the places that voted for him and reduce regional inequality. This will be in the service of presenting him as a one-nation Tory.
- Get a ‘Canada Plus[i]’ trade deal with the EU that frees Britain from Single Market rules, while ensuring that the interests of financial capital are safeguarded.
- Achieve a trade deal with the US while presenting himself as the leader of a new, confident Britain that won’t kowtow to the Americans.
- Attack trade unions and weaken the left further.
- Indulge in populist racist dog-whistling to appeal to a section of his base, which he also imagines will play with a section of the people who voted Tory for the first time in December.
In this context, repeating tired shibboleths about it being the most right wing government in history just won’t cut it. Toryism does not always mean what it has generally meant these last 40 years. It has, at various times, pushed for interventionist economic policy when it deems it necessary. Why? Because the majority of Tory governments have favoured pragmatism, in service to their prime objective: the maintenance of power. What is becoming clear is that Johnson’s vision of post-Brexit Britain is not that of the European Research Group, which favours a race to the bottom via deregulation, lower corporation tax, a reduction in consumer protections and an attack on workers’ rights. This is not to say that Johnson will protect workers’ rights, of course. But he has been saying that Britain is not “leaving the EU to undermine European standards”, while pointing out that workers’ rights in the UK are in advance of the EU, a point made by those of us on the left who argued for a leave position on many occasions in the last three and a half years. Let’s look at all this in more detail, while paying attention to the context.
The IMF has made an announcement regarding governments tackling inequality, and more importantly in terms of understanding Johnson’s thinking, the European Central Bank is urging countries to boost growth via public spending. This follows on from a variety of economists and academics backing Labour’s spending plans in the run-up to the general election. While it is too early to talk about a shift left in any meaningful sense, there is no doubt that Corbynism has shifted the economic narrative in the UK. This has had two effects that we’re seeing at present: as Larry Elliott has suggested, “Boris Johnson has sensed the way the wind is blowing and tacked accordingly”, and every Labour leadership contender has announced to a greater or lesser degree that they’ll honour the manifesto commitments in this regard.
This makes economic sense from the point of view of the Tories: growth is low; real wages haven’t reached the level they were before the 2008 crisis; the evidence is that voters understand this and that Labour’s policies were popular. Clearly, this isn’t to say that Johnson wants to emulate the Labour manifesto, but the Tories do seem to be realising that something different needs to happen and that it would be politic for them to go in the direction of extra public investment. That being said, this is contributing to the tension between Johnson and Sajid Javid, the Chancellor of the Exchequer, which is manifesting in a number of areas, and which also pertains to the influence of Dominic Cummings, which Javid and other ministers would like to see reduced.
There will obviously be no return to the levels of manufacturing that existed in the UK prior to Thatcherism, nor necessarily any great reduction in the level of the service sector that effectively replaced it, but any government in post-Brexit Britain has to address the fact that low productivity and low investment are a major problem. The British economy is not only one of the most financialised in the world, it is also one of the most globalised in terms of ownership of production, which presents further problems.
Moreover, the EU, as Costas Lapavitsas has argued, is still a “a treaty-based alliance among sovereign nation-states, while also possessing its own transnational institutions” in which the trend has been that “member states have transferred the ostensible locus of harsh economic and social decisions onto the transnational institutions of the EU, thus gaining an important domestic political advantage for each member state’s ruling bloc”. While this has been less true for the UK due to it not being in the Eurozone, it did sign the Stability and Growth Pact; for the purposes of this discussion, though, the salient point is that since 1992 and the Maastricht Treaty, this has allowed successive Tory governments and their allies in the press to lay certain problems at the feet of the EU. That is not the case now, and Johnson will have to find ways to match some of his party’s Brexit rhetoric, while nodding in the direction of voters in the ‘Red Wall’ who may have voted leave with an eye on the opportunities for state investment and some sort of (however nebulously defined) project of national renewal.
Regarding the trade deal he wants to negotiate, there are choppy waters ahead. Both sides have opened with wildly contrasting proposals. Michel Barnier has indicated that trade in services will not be covered by the proposed trade deal, and that the City of London will lose its passporting arrangements, which will be replaced by what is known as the equivalence system of access, which can be withdrawn unilaterally. The British government, on the other hand, wants provision regarding trade in services to be covered by the deal. Barnier has also threatened to slap tariffs on UK goods if Single Market alignment is not maintained. What is the case is that the City of London is the financial centre of the continent, and its concerns carry a large amount of weight. Brussels is comfortable with the City’s continued power.
It is not comfortable with deviation from alignment with Single Market rules, and that will be the area where it will attempt to exercise the greatest influence. From Johnson’s point of view, he will keep the majority of British capital on board if the trade in financial services is unencumbered. If trade in goods is subject to tariffs, as is currently looking likely, then globally-owned manufacturing is likely to go elsewhere. In that situation, the sensible thing from his perspective is to use tariffs to his benefit, via investment and tax breaks for British manufacturing. That is certainly what the plan will be if the EU wins the battle over the terms of access to its market.
The situation with the US is even trickier. Donald Trump’s trade policy has been broadly speaking protectionist, for one thing, plus cracks are appearing in the relationship over Britain’s decision not to bow to US pressure and to allow Huawei to continue its role in Britain’s 5G network, with this leading to an irate Trump shouting down the phone at Johnson, though others in the administration have been quick to suggest that it’s business as usual in the ‘special relationship’. This has two aspects to it of relevance here: Johnson has to play to the delusions of post-imperial grandeur that played some role in the Brexit vote by standing firm; the type of investment provided by Huawei will be needed even more if Britain loses tariff-free access to the Single Market. Regardless of who is making the decision, it is objectively the right one.
There is also the question of the NHS, on which the Tories were caught out during the election campaign, and in general the further opening up of the British public sector to US business. The US will insist on this. The UK will know that it won’t fly with the British public, and that it would provoke a robust response from the trade unions and the labour movement. There is also the matter of regulatory alignment, which poses problems here, too.
US food regulations are not as tight as Britain’s nor the EU’s. It will be difficult for the Tories to argue that they’re seeking a lack of alignment with the EU in order to exercise control over the economy and are prepared to countenance tariffs if needs be to do that – rather than because non-alignment gives it the freedom to dispense with the veneer of rights enjoyed by EU citizens – then at the same time make the case that they need to reduce people’s consumer and social rights in the name of free trade with the US.
Moreover, it’s extremely unlikely that much will get done before the US election in November, which will suck up the political oxygen in the States for the entire year. There is also the possibility of a Bernie Sanders’ presidency, who is currently having a conversation about the deleterious effect of NAFTA; a conversation that’s been impossible to have an equivalent of in the UK for many years, and which can now take place. All bets are off with the proposed UK-US trade deal for the moment, and I think it’s safe to predict that it will recede into the background to some degree this year.
In terms of the trade union movement, plans were announced in the run-up to the election to introduce a guaranteed minimum service law to reduce the impact of strike action, and by implication, the power of the trade unions, specifically, the RMT and Aslef. Mick Cash, General Secretary of the RMT, described this as “the hallmark of the right-wing junta, not a democratically elected British government”. It is in its dealings with the labour movement and any other sections of British society that it sees as a threat, that we will see the right wing character of Johnson’s Tories, not in its economic policy, it seems likely. It may well be that hoping to produce a confrontation with the RMT is part of the Tories’ plan, the idea being that this could give him his miners’ strike, and perform a similar role in reducing the power of a militant layer of industrial organisation. There has also been the court case involving the CWU, which we should see as a state-supported attack on the right to strike.
There is also the matter of the increased role of Prevent, with many left wing and socialist organisations added to their list of extremists. This includes CND, Stop the War Coalition and Extinction Rebellion. There is the appalling planned deportation of people to Jamaica who have been recently released from prison, many of whom have not been there since childhood. There will be continued Atlanticism in foreign policy, which means support for Trump’s actions in Iran, despite ongoing tensions over the Iran nuclear deal, over Venezuela, over Israel, and anywhere else where the US exercises its malign influence. There will be cosying up to right wing dictators in Brazil, India, Hungary and elsewhere.
While there may be some observers who are thinking that we are going to see some form of corporatism, of which fascism was the historical high point, it is unlikely. The Tories won’t spend money on that level. Local cuts are likely to continue and hopefully there will be more resistance of the type being mooted in Liverpool. More to the point, it is important to think more generally about what the context is. Another recession is very likely in the continued crisis cycle of late capitalism, with MIT suggesting there is a 70% chance of one in the next 6 months. There are increased calls for another Scottish independence referendum, and the Tories’ withdrawal agreement and the political direction make a border poll in Ireland more likely. Even if that doesn’t come to pass, the situation in the north regarding the British border is ongoing, and the future status of Northern Ireland in the UK and its relationship to the EU are not resolved. There are manifest contradictions that the Tories will struggle to resolve.
Then, there is the matter of the left and the labour movement. The Labour Party is unlikely to play a major role in the struggles to come. Whoever becomes the next leader, even if it is Rebecca Long-Bailey, is likely to oversee a shift rightwards, and certainly won’t shift the party’s emphasis on parliamentarianism. The material and ideological struggle will take place in the workplace, in the union branch, on the picket line, in the community, and on the streets. We must focus on rebuilding the movements against cuts and on increasing trade union membership and strengthening trade unionists’ confidence. It is there that resistance can and must be built.
This won’t be done by fixating on Britain’s relationship with the EU, in particular by taking positions on Single Market alignment that in any real sense will be to the right of the Tories. The Labour Party is likely to do that, and in so doing, continue the debate of the last three and a half years, and drive a further wedge between it and a section of its historical base. That is what Johnson will be hoping for. Instead, the left must start to outline its vision for life outside the EU, and begin a conversation about ethical rather than free trade. Never in the history of our movement have so many people sought to prioritise free trade as they have in the last four years. This must end. Only if we lead the terms of the debate, can we hope to resist the Tories.
[i]The Canada-EU trade agreement (known as CETA,and signed in 2017) abolished 98% of tariffs on goods traded between Canada and the EU. The rest will go by 2024. Both parties agreed to open public contracts to each other's contractors and co-operate on technical standards, safety and quality checks for mutual recognition of professional qualifications. The agreement is not a single market nor customs union so parties are free to do trade deals with other countries as they so wish. It does not cover trade in financial services, hence the ‘plus’ element of the Tories’ proposal, though as stated elsewhere above, British capital will cope with the proposed reduction in passporting.