THE ALTERNATIVE TO MAASTRICHT IS WORSE

Tribune leader, 25 September 1992

Even though the French referendum resulted in a narrow yes to the Maas­tricht treaty, the treaty is in deep trouble. No way has yet been found around the Danish no in June, and unless the Danes change their minds the treaty falls. More importantly, the exchange rate mechanism of the European Mone­tary System, which is at the heart of Maastricht's provisions for economic and monetary union, is in crisis. Last week's orgy of speculation ended with the pound and the lira dropping out of the ERM.

At the very least, it now seems in­evitable that the timetable for economic and monetary union in the Maastricht treaty will have to be revised. Most com­mentators reckon that, as the dust settles, the way that the ERM operates will be changed, with the German Bundesbank insisting on a reduction in its responsibil­ity for propping up other countries' cur­rencies. Many predict that some sort of "two-speed" arrangement for monetary union will replace the Maastricht ap­proach, with the core economies of France, Germany and the Benelux coun­tries moving rapidly to a monetary union which the rest will join at some point in the future or perhaps not at all.

In the circumstances, it is hardly sur­prising that many left opponents of the Maastricht treaty in Britain have the scent of blood in their nostrils. There is a widespread belief even among supporters of closer European integration that Maas­tricht will force austerity on the whole of the European Community and will do lit­tle to democratise EC institutions. What's more, the treaty seems to be even more vulnerable to a British no - either by way of a referendum or through defeat of the government's Maastricht Bill in the House of Commons - than it was after the Danish referendum, in June.

So is there any reason Labour should not go in for the kill? Unfortunate­ly for those who like their politics simple, there is.

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Maastricht is essentially a compromise among the French, German and British governments. The French gave way on German demands that the proposed Eu­ropean central bank be independent and that the convergence criteria for econom­ic and monetary union be austere in the extreme; the Germans gave way to French and British insistence that the deal on political union did not give very much power to the European Parliament. (The British also got their opt-outs on monetary union and the social chapter.)

Immediately after the Danish no, it was at least possible that a renegotiated Euro­pean union treaty would take account of the Danes' worries about EC democracy by including far greater powers for the European Parliament and would address their fears about the future of the welfare state by beefing up Maastricht's social side and ending the British social chapter opt-out.

If Labour had then swiftly announced that it was opposing Maastricht with the goal of replacing it with such a treaty and if it had persuaded other EC social demo­cratic parties to back its position, there might just have been a hope of Labour acting as a catalyst for a renegotiation on a more social democratic basis.

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In reality, however, nothing of the sort happened. Proponents of an anti-Maastricht pro-Europe position failed to win a majority in the Labour Party, let alone other social democratic parties, which all lined up in support of Maastricht. They argued that although the treaty was not perfect, it did contain enough - the social chapter for 11 out of 12 EC countries, the extra powers for the European Parliament and the regions, the commitment to social solidarity – to make it worthy of support. The

opposition camp in most EC countries was left to the xenophobes.

Meanwhile, it became clear over the summer that, if Maastricht fell, what came next would almost certainly be worse, particularly on political union. In the aftermath of the Danish vote, it was not the German government's position of strengthening integration by moving quickly to give more power to the Euro­pean Parliament that gained ground among EC governments as the favoured next step. Rather, it was the British gov­ernment’s idea of watering down integra­tion by maximising "subsidiarity" (code for continuing to carve up as much EC business as possible in closed intergov­ernmental meetings) that made the run­ning, a tendency that has been reinforced by the close French referendum result.

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Whether or not Maastricht sur­vives, there is now a real danger that, instead of making even small steps towards a Europe-wide democratic polity, governments will now pander to popular nationalism, dramatically slow­ing the pace of political integration. If Maastricht falls, it is likely that what re­places it as a pan-EC agreement will be little more than the status quo ante with a very different ERM and, perhaps, Ger­many, France and the Benelux countries going it alone with an economic and mon­etary union of their own.

This would effectively rule out the Eu­rope-wide strategies that are now Britain's best hope for effective long-term counter-cyclical economic management. Britain might gain temporarily from its current outsider status, allowing the pound to devalue and interest rates to fall outside the ERM. But, in the end, the past two decades show that it is impossi­ble in modern capitalism for a medium-sized country to get lasting benefits from "dash for growth" policies.

The upshot is simple: if Labour is seri­ous about Europe-wide alternative eco­nomic strategies, it has to be committed to European union - and the Maastricht approach to European union, however flawed, is the only one on offer. Labour should be arguing for a devalued sterling to be returned to the ERM (if not at once). More important, it should not vote against the Maastricht Bill when it eventually finds its way to the Commons. There will be plenty of opportunity to address the democratic deficit and to push for left European economic and social policies after ratification. Without ratifi­cation, the democratic federal Europe that the left desperately needs will be­come once again a distant dream.

DEVALUATION BEATS AN INTEREST RATE HIKE

Tribune leader, 18 September 1992

The president of the German Bundesbank, Helmut Schlesinger, might be insufficiently politically accountable; he certainly deserves to take a large measure of the blame for the recession now afflicting all of western Europe. If the Bundesbank, obsessive about the dangers of inflation, had not run such high interest rates in the past couple of years, life would undoubtedly have been easier for everyone.

But on one thing, he is undoubtedly right, unlike the elected politicians who control, or rather claim to control, Britain's monetary and fiscal policy. As Mr Schlesinger said in an interview published on Wednesday, sterling should have been devalued against the Deutschmark on Sunday, when the Italian lira devalued by 7 per cent, as part of a general realignment of currencies within the exchange rate mechanism of the European Monetary System. Instead, the British government decided pig-headedly to maintain the pound's parity with the Deutschmark, no matter what the cost to the economy.

After intervention in the currency markets to prop up sterling had failed, the government on Wednesday put up interest rates first by 2 percentage points – and then by another 3 percentage points after that had foiled to end the run on the pound. The government's hope is that these moves, which are guaranteed to make worse the already dire recession, will end the speculation against sterling. But it is apparent that the feeling on the currency markets is that the pound is overvalued. Devaluation of sterling, if it has not happened by the time you read this, is on the cards. If the French vote no to Maastricht on Sunday, it is a virtual certainty.

During what now seems to have been the inexorable drift towards devaluation, the Labour leadership has gone out of its way not to appear in favour of devaluing the pound – a position that has drawn heavy fire from within the party, particularly from the anti-Maastricht soft left, whose intellectual flag-bearer, Bryan Gould, has long been a proponent of devaluation.

That the argument has been had is no bad thing: for the first time in several years, Labour has had a free and frank political discussion in public, which is most refreshing. John Smith should resist the calls from Gerald Kaufman and others for the devaluationists to be gagged and "collective responsibility" to be enforced. Moreover, even if some arguments for devaluation are unconvincing, it is difficult to disagree with the case for devaluation if the choice is between devaluation and higher interest rates, as it has been this week.

But those who have attacked the leadership position of keeping quiet about devaluation are not tactically right. Having kept their remarks on the possibilities of devaluation to the bare minimum, Mr Smith and the Shadow Chancellor, Gordon Brown, are now in an optimal position to attack the Tories when devaluation actually comes. John Major and Norman Lamont, unable to say that they are doing only what the opposition recommended, look set to get a deserved political ducking.

More members good, no members bad

Labour is broke. It needs more money – and fast. Usually, in times of trouble, the party turns to the trade unions. But they are broke too. And there's no way that the party's direct-mail fundraising operation can bring in any more money than it already does.

In  the  circumstances,  it  is perhaps unsurprising that the party has decided the  only option   is   to increase membership subscriptions for a year for  ordinary members from the current  £15. An extra £3 a member would make a lot of difference to the party's finances.

The problem is that it's not quite as simple as that. Even with generous discounts for people who can't afford the full membership fee, if the proposed increase in subscription rates goes ahead, thousands of potential members will be deterred from joining and thousands of existing members will think twice about renewing.

Indeed, there is a danger that the numbers put off will be so large that the party will get no net financial benefit from putting up the subscription rates.

Given that Labour's membership is already at a post-war low, it seems utterly mad to take such a risk.

Of course, the reason that Labour's membership has declined is not simply that it has become too expensive to become or remain a member. But a far more sensible solution to Labour's financial crisis would be a dramatic cut in subscription rates and a vigorous national recruitment drive. Where Labour Party membership is concerned, more really is better.

DEVALUATION – TRICK OR TREAT?

Tribune, 18 September 1992

Paul Anderson examines Labour's differences on exchange rate policy

“The impossibly high exchange rate is pushing up interest rates and turning Britain into a rust-bucket economy," declared John Edmonds, general secretary of the GMB general union, at the TUC congress in Blackpool last week. "Most people in industry know that the pound is overvalued against the Deutschmark. Realignment is now in­evitable."

At the time, Edmonds was careful not to call explicitly for a unilateral devaluation of sterling, although it was clear that he thought that such a devaluation would be better than inaction. By Sunday, however, after the devaluation of the Italian lira, he came out explicitly in favour of similar treatment of the pound, describing the British failure to devalue at the same time as the Italians as a "missed opportunity".

What is most remarkable about this in­tervention is that Edmonds is not the usual sort of Labour devaluationist. He is a long-standing enthusiast for European eco­nomic and monetary union (the GMB tabled the pro-Maastricht motion at the TUC) and a firm believer in British mem­bership of the exchange rate mechanism of the European Monetary System. In recent years, Labour proponents of devaluation have typically been Euro-sceptics, oppo­nents of ERM membership (or at very least unenthusiastic about it) and believers in a national-Keynseaian approach to economic management.

Probably the most consistent and coher­ent spokesmen for this point of view have been Peter Shore, the veteran anti-EC Right-winger, and Bryan Gould, now Labour's spokesman on national heritage. Both of them start from a belief that ster­ling has been consistently over-valued for years. Gould made devaluation one of the cornerstones of his unsuccessful campaign for the Labour leadership and deputy lead-leadership earlier this year. “If we continue to defend an overvalued currency we will continue to crucify manufacturing in­dustry," he told Tribune in May.

Gould has moved away from advocating unilateral devaluation of sterling: he now favours devaluation as part of a general re­alignment of currencies within the ERM. But his position is still tied up with opposi­tion to the process of European monetary union laid out in the Maastricht treaty. His assault last weekend on "governments which persist in defending an overvalued pound" followed a swingeing attack on the deflationary implications of Maastricht. The same hostility to Maastricht charac­terises the other prominent Labour politi­cians who have spoken out in favour of de­valuation in the past week: John Prescott, David Blunkett and Peter Hain.

It is, of course, unsurprising that the question of devaluation has been linked with that of Maastricht. The ERM semi-­fixed exchange rate system is envisaged by Maastricht as a stage in the process that ends in a single European currency and a European central bank. Even if the thesis that sterling has historically been overval­ued is wrong (and it is notoriously difficult to prove either way), there is no doubt that the pound's value in the ERM has been sus­tained in recent months only by govern­ment intervention in the money markets and by high interest rates, which are hold­ing back the recovery of the British econo­my.

But what Edmonds's intervention indi­cates is that there is a growing belief even among Labour supporters of the ERM and the Maastricht treaty that the government's policy of maintaining sterling's val­ue is having a disastrous effect on the British economy and that it is not enough for Labour to respond by changing the sub­ject or by arguing that the Deutschmark should be revalued upwards against the other ERM currencies.

On the Edmonds view, the problem is not with the ERM, semi-fixed exchange rates or economic and monetary union in principle but with the attempt to maintain ERM par­ities despite Germany's decision to put up interest rates to dampen inflation in the wake of German unification. As a result, all the other ERM member countries, and all those with currencies “shadowing” the Deutschmark or the European Currency Unit, were forced to put up their own inter­est rates in order to maintain their curren­cies' value against the Deutschmark. The Bundesbank eased the pressure on interest rates everywhere except Britain with its minuscule cut in interest rates on Monday, but the Deutschmark remains undervalued against most of the other European currencies.

Although the simplest solution would be simply for the Germans to revalue the Deutschmark upwards against the other ERM currencies, the argument goes, the unwillingness of the Germans and French to sanction any such course means that Britain should devalue sterling just as the Italians devalued the lira on Sunday.

This position would have been anathema to the Labour leadership before the elec­tion, partly for tactical reasons - devalua­tion means price increases on all imported goods, which would be difficult if not impos­sible to sell to voters, and the very prospect of a pro-devaluation party coming to power would create turmoil on the currency markets – but partly because of scepticism among Labour's advisers about the useful­ness of devaluation as a tool of policy.

Devaluation, the sceptics argued, is not a means of cutting interest rates. It works (insofar as it does) by cutting real wages and could easily set off an uncontrollable spiral of wage and price inflation. Worse, in Britain it would not work very well. Domestic British manufac­turing was in such a dire state that British companies would not be able to meet the potential demand at home or abroad for competitively priced British-made goods. The priority for Britain was not devalua­tion but an effective strategy for overcom­ing the structural weaknesses of its econo­my: crumbling infrastructure, poor educa­tion and training and so on.

It is in this light that the reluctance of the Labour leadership in the past week to endorse devaluation must be seen. As Shadow Chancellor and trade and industry spokesman before the election, John Smith and Gordon Brown were wedded to an ap­proach to economic policy that eschewed devaluation; today, as Labour leader and Shadow Chancellor, they remain extremely cautious.

Smith responded to last week's calls for devaluation by saying that he was "not in favour of a devaluation of sterling because that would not assist in reducing interest rates", although he added that the EC should "not rule out a revaluation of the Deutschmark".

His remarks were echoed by Brown, who announced that "Labour is not the party of devaluation", emphasising the centrality to Labour's approach of "an emergency em­ployment programme", concentrated partic­ularly on housing and public works, and "concerted Europe-wide action" to bring down interest rates and end the recession. Brown reacted to the devaluation of the lira and subsequent Bundesbank decision to cut interest rates by calling for the British Gov­ernment to emulate not the Italians but the Germans.

Instead, after massive intervention by the Bank of England failed to stem specula­tion against sterling, the government put up interest rates by a total of 5 per cent on Wednesday. But sterling remains under pressure and many now believe that deval­uation is inevitable, particularly if the French vote no to Maastricht on Sunday. It would not take the most apocalyptic sce­nario now doing the rounds, complete col­lapse of the ERM following a French no, for Labour's arguments over the past fortnight to be entirely irrelevant within a few days.

STILL OUT IN THE COLD

Tribune, 4 September 1992


On the eve of the TUC Congress, Paul Anderson looks at the issues facing Britain's trade unions

Next week's TUC Congress in Blackpool was supposed to be the first in years that everyone took seriously.

With Labour in government, the unions would be back in the corridors of power, if not enjoying beer and sandwiches with Neil Kinnock at Number Ten.

Instead, Labour lost the election and the unions face four or five more years out in the cold. Far from being a celebration of a return to political relevance, Blackpool looks set to be dominated by rumination over the unions' long-standing problems.

The most obvious of these is that the number of union members is declining and has been for more than a decade. Accurate figures are difficult to come by because trade unions exaggerate their membership figures. But in 1979, the peak of union membership, there were 12,172,508 workers in TUC-affiliated unions according to the unions' own statistics. This year's figure has yet to be published, but the estimate is about 7,757,000, a drop of more than one-third. On these trends, membership of TUC-affiliates will be lower at the end of this year than at any time since the second world war.

Last year, the vast majority of affiliated unions saw membership decline. Of those with more than 100,000 members, only two gained members last year: NALGO and the CPSA. The AEU (now merged with the non-TUC EETPU in the AEEU) experienced a net loss of 99,000, 11 per cent of the 1991 total, and both the TGWU and the GMB suffered net losses of 8 per cent. All trade unions, but particularly the big general unions, experience a constant turnover of membership. The GMB, for example, which says that its loss rates are better now than six months ago, is currently recruiting 17,000 new members a quarter, but 25,000 are leaving.
Most unions blame the recession for declining membership. "While these figures are disappointing, they say more about the state of the economy than they do about trade unions," said Norman Willis, the TUC general secretary, when the January 1992 membership statistics were released.

But although the recession is part of the problem (when workers lose their jobs, they usually leave their union and no one joins a union when unemployed) it is not the whole story. With notable exceptions, union membership declined even during the boom years of the late eighties.

The reasons for this are many and complex, and differ from union to union. In the early eighties, the decline of manufacturing hit all the blue-collar unions hard, but particularly the TGWU and AEU. Membership of the NUM collapsed because of pit closures and the secession of the Nottinghamshire miners over the 1984-85 strike. The print unions declined as a result of changes in printing technology.


More generally, unions have always found it easiest to recruit and organise among full-time permanent workers in large enterprises with employers who recognise unions. Since the late seventies, however, employers have become increasingly reluctant to recognise unions, the average size of the workplace has shrunk and there has been a massive growth in the importance of part-time and temporary work.

Add the effects of 13 years of Tory hostility to trade unions, and it is perhaps unsurprising that the unions have fallen on hard times. The question is what they can do about it.

The process of small unions amalgamating with each other to form bigger ones is almost as old as the movement itself but it has noticeably gathered pace as unions have grappled with the financial problems caused by declining membership and looked to mergers as a way of reducing overheads. Since 1979, the number of TUC affiliates has fallen from 109 to 74.

The TGWU has swallowed the agricultural workers. What was the GMWU has swallowed the boilermakers, textile workers and garment workers and acquired a white-collar wing, APEX, to become today's GMB. Four print unions have been reduced to one, the GPMU; the SOPS and the CSU have become the NUCPS; ASTMS and TASS have created MSF; the NUR and NUS have formed RMT; and the AEU and EETPU have amalgamated into the AEEU. Next year, COHSE, NUPE and NALGO will merge into a giant public sector union, Unison, with around 1,400,000 members.


All this might be a mere taste of what is to come, however. The industrial logic of a merger between the TGWU and the GMB has long been apparent to many, but deep cultural and political differences have prevented it from being taken seriously by officials in either union. But now there are signs that the ice has been broken. No official merger talks are going on yet, but both unions are moving towards closer co-operation and have agreed to end their traditional rivalry.

With Unison in place, the creation of a giant "Transport, General and Municipal Workers Union", some 2 million strong, would mean that nearly half of British trade unionists were concentratectin two unions. It would also inevitably put pressure on medium-sized unions to merge, either with one another or with one of the big two.

It is not too ridiculous to suggest that, within a decade, four or five super-unions might account for 95 per cent of British trade unionists: say, a TGWU-GMB-RMTUSDAW-UCATT-NUM general union, a Unison-CPSA-NUCPS-IPMS-IRSF public sector union, a GPMU-BECTU-NCU-UCWSTE media and communications union, an NUT-NAS/UWT-NATFHE-AUT education union and a BIFU-MSF-AEEU manufacturing and banking union.

This is speculation, of course: plenty stands in the way of the development of super-unions. But they are certainly in the air, even if the TUC Congress will refer to them only obliquely in a debate on the future of the TUC. Even before the next round of mergers, many of the big trade unions are wondering whether they couldn't do on their own all that the TUC currently does for them. There has been constant off-the-record criticism from the big unions of the Willis regime at Congress House and several of them submitted Congress resolutions this year calling for the TUC to focus its work rather more on areas that individual unions cannot cover.

With money tight, a radical slimming-down of the TUC seems inevitable in the next eouple of years unless it can make itself indispensable in new ways. But financial pressures are not the only reason that trade unions are thinking big.


With the completion of the European internal market at the end of this year, and with the growing importance of the EC in determining the social and industrial context in which British unions operate, they are haying to develop European strategies for organisation and lobbying.

There are, naturally, divisions over tactics on the Maastricht treaty. Although the union movement is united in condemning the British Government's opt-out on the social chapter and in its enthusiasm for stronger links with continental unions, there is likely to be a big argument in Blackpool next week about whether the unions should press for ratification of Maastricht even without the social chapter (the GMB position) or whether they should oppose ratification.
In the longer term, however, the most fundamental disagreements over Europe are likely to focus on the question of how far the unions should go for a continental "works council" model of industrial relations in Britain. Some unions see works councils with legal rights to represent workers as a step forward for British trade unionism, particularly if the works councils follow the German practice of excluding management representation. (The French system is of joint worker-management works councils.) Others, particularly on the left, argue that works councils of any description would weaken union organisation and should be opposed.

It is difficult to discern which position currently has the upper hand, although there is no doubt that advocates of works councils have multiplied in the past few years as the unions' workplace strength has shrunk and the Tory Government has destroyed the last remnants of union influence in the corridors of power. The trend is likely to continue as the realisation sinks in that the April election result has ruled out the possibility for at least four years even of the partial return to corporatism promised by Labour's "National Economic Assessment".

Indeed, the outlook for the next few years of this Tory Government is bleak for the unions. The Conservative manifesto promised a raft of legislation to make life difficult and a new Employment Bill is one of the main pieces of business in the next session of Parliament.
The Bill is designed, in the words of the manifesto, to "make automatic deduction of union membership dues without written authorisation unlawful", to "give individuals greater freedom in choosing a union", to "legislate to require that all pre-strike ballots are postal and subject to independent scrutiny, and that at least seven days' notice of a strike is given after a ballot" and to give people who use public services "the right to restrain the disruption of those services by unlawful action".

What many unions fear most is the proposal to end "check-off payments of dues, although the GMB and others have long argued that this is a notoriously inefficient way of collecting subscriptions and should be replaced by a system of individual workers paying by bankers' order.

Almost as disruptive is the idea of giving individuals "greater freedom in choosing a union", by which the Government means the ending of the Bridlington Agreement among the unions not to poach members from one another.

This particularly affects the position of the non-TUC Electrical Section of the AEEU which (as the EETPU) was expelled from the TUC for poaching in 1988 and has since taken an unremittingly predatory attitude towards other unions organising in areas where it has members. The AEEU as a whole will be balloting soon on TUC affiliation and the big unions want the former EETPU back in the club. Critics of the electricians who want the former EETPU to give up its ill-gotten gains before it is allowed back are worried that a TUC without Bridlington will give the AEEU carte blanche to carry on as before.

Blackpool is likely to witness a lively debate on the question of re-admitting the electricians. Almost as spectacular will be the now annual showdown, between Arthur Scargill of the NUM and nearly everyone else, on Tory anti-union laws, with Scargill arguing for non-co-operation and the rest insisting that the Tories' legislation should be replaced with a positive framework for industrial relations legislation. As usual in recent years, however, the most interesting discussions at this TUC Congress will be the informal ones that take place in the bars and restaurants around the conference centre.

ALPHABET SOUP
AEEU: Amalgamated Engineering and Electrical Union; AEU: Amalgamated Engineering Union; APEX: Association of Professional, Executhss, Clerical and Computer Staff; ASTMS: Association of Scientific, Technical end Managerial Staffs; AUT: Association of University Teachers; BECTU: Broadcasting, Entertainment and Cinematograph and Theatre Union; BIFU: Banking, insurance and Finance Union; COHSE Confederation of Health Service Employees; CPSA: Civil and Public Services Association; CSU: Civil Service Union; EETPU: Electrical, Electronic, Telecommunication and Plumbing Union; GMWU: General and Municipal Workers' Union; GPMU: Graphical, Paper and Media Union; IPMS: Instibnion of Professionals, Managers and Specialists; IFtSF: Inland Revenue Staff Federation; MSF: Manufacturing, Science, Finance; NALGO: National and Local Government Officers Association; NAS/UWT National Association of Schoolmasters/Union of Women Teachers; NATFHE: National Associsdion of Teachers In Further and Higher Education; NCU: National Communications Union; NUCPS: National Union of Civil and Public Servants; NUM: National Union of Mineworkers; NUPE National Union of Public Employees; NUT: National Union of Teachers; RMT: National Union of Rail, Maritime and Transport Workers; STE Society of Telecom Executives; TASS: Technical, Aciministfative and Supervisory Staffs; TGWU: Transport and General Workers' Union; UCW: Union of Communication Workers; UCKIT: Union of Construction, Ailed Trades and Technicians; USDAW: Union of Shop, DIstriludive and Ailed Workers