The Blair government: two views from Britain

Jon Cruddas & John Monks

Return of the working class

Jon Cruddas

A truly shocking acknowledgement of the realities of contracting-out was contained in last week's leaked Cabinet Office memo on the two-tier workforce. While contracting-out has led to a reduction in staff numbers, white-collar workers have become better off. Their blue-collar counterparts have been given worse pay and conditions.

The document goes on to consider the evidence around the conditions of new recruits in contracted-out jobs. Their new terms and conditions depend on the local labour market: "This has led to new recruits being offered lower rates of pay, in particular where jobs are low-skilled and where unemployment rates are high". (Remember a memo was drafted specifically to unwrap a commitment to extend TUPE - the Transfer of Undertakings for Public Employees - provision) that protects privatised workforces.

This all means that the civil servants who wrote the documents accept that the effects of contracting-out are worse in more deprived areas, and worse for lower-skilled, lower-paid workers. The government has refused to introduce either a fair wages resolution or a robust system of contract compliance to put a floor underneath these vulnerable workers. At best, it tacitly supports the growing inequality, At worst, it is culpable in a strategy that actively intensifies the exploitation of big parts of the working class.

How are we to understand this? Why are elements in the government so hostile to labour market regulation? And why is it that every single labour market initiative has to be fought line by line, almost street by street? Why are we now seeking to rewrite, or de-write, earlier commitments made to protect people at work?

This ideological hostility to regulation is not simply the product of deference to corporate wealth and power. Its basis lies in the conception of the 'new economy' that underpins much government language and action. According to advocates of the 'new economy', paid work is in decline. The jobs that provided employment for millions of workers are said to be disappearing. According to these pundits, the future does not lie in manufacturing industries or in manual occupations in intangible assets services. It lies in the exploitation of knowledge, know-how and entrepeneurship. One of the new orthodoxy's leading proponents is Charles Leadbeater. In his book Living on Thin Air: The New Economy, Leadbeater argues that "smart" technologies and globalisation are the midwives of the new, knowledge-driven economy.

The influence of Leadbeater's work in the Downing Street policy dynamic and among think-tank wonderkids cannot be overstated. The simple dualism that comes out in this work between 'old' and 'new' economies parallels the dualism within the Labour Party between 'old' and 'new'. The 'new' (high-tech) economy is counterposed to the 'old' (industrial) economy.

The way this literature has conditioned a hostility to labour market intervention needs to be explained a little. To start with, the 'new economy' is meant to be a Very Good Thing, with benefits reachi