unity at the TUC in Brighton Tuesday 11 September 2007
PUBLIC SECTOR PAY
UNITED ACTION IS THE KEY by To ny Conway The succesful united public s e c tor union action in March 2005 led to the government b a cking down on its proposals to force ex i sting public service e mp l oyees to work beyond agreed pensionable age. It also enabled unions to agree new schemes which safe g u a rded good arrangements for new e mp l oyees. We should remember that the government sta ted its proposals we re not negotiable—unity proved ot h e rwise. If we fa st forwa rd to Au g u st 2007, we see Prime Minister B rown at a TUC general council meeting stating that public s e c tor wo rke rs cause inflation and that the current pay re st raint is just i fied as a means of ensuring the British economy stays st rong. We see thre a te n e d legal action against the POA whose members have had to put up with unp recedented numbers of prisoners, and who wa l ked out because of below-inflation pay increases over a number of years. L ets be clear. The government’s inflation ta rg et of two per cent based on an EU index, the CPI, is not the real inflation figure for low-paid wo rkers in the public secto r, many of whom claim tax credits and are on or j u st above the minimum wa g e . The majority of public secto r worke rs earn less than £15,000 and cannot afford homes, holidays or a decent living. It's
no wonder that turnover ra te s are at an all time high. This year's TUC needs to recognise that unity in action as s h own in 2005 is the means by which we can break out of the st ra i g h t - j a cket of public secto r pay re st raint. Basic awa rds of two per cent when inflation is double that is just not enough – and with house price inflation is 5 times higher it is unacceptable. All public service unions are n ow in a battle on pay, some because the government has staged a recommended incre a s e , some due to the fact there is no increase at all. Whatever the reason, all the problems start with the government 's pay re st raint and its wish to blame l ow paid wo rkers not the fat cats in business for rising house prices, higher inte re st ra tes and the levels of debt. We need united action in defence of public servants and their pay. At a time when big business is paying out pensions to its friends of over £200,000 per anum, it's obscene to ex p e c t wo rke rs to survive on the levels of pay pressed on public sector wo rke rs. Motion 48 from PCS and supported by the NUT and POA is a positive pro g ra m m e and should be supported by the m ovement, ta ken into our communities and the Labour Party conference later this month. To ny Conway is a member of the PCS national exe c u t i ve
rally TODAY! 12.45PM HILTON BRIGHTON METROPOLE Defend UK manufacturing; equal treatment for agency and temporary workers; end of privatisation of public services; employment rights to protect jobs; building affordable housing for working people. Hear Derek Simpson and Tony Woodley of UNITE, Carolyn Jones of the Institute of Employment Rights; Jon Cruddas MP for Dagenham Chair: John Haylett, Editor, Morning Star Refreshments will be provided. Sponsored by Unite.
‘CLASS’ IN THE CLASSROOM by Bill Greenshields At Congress this year, teacher unions are working with antipoverty organisations and campaign groups on unemployment to host fringe meetings on the devastating effects of social class divisions on the achievement of working class children and on ‘social cohesion’. The message is clear. Social inequality does not arise as the result of the ‘failure’ of education and other public services. It is class inequality – the widening gap between the haves and have-nots which is central, endemic and essential to our capitalist society – that leads to disaffection of large numbers of young people, to
educational underachievement, to lack of aspiration and to social breakdown, including poor pupil behaviour, crime and violence. The academic research evidence to back this up is there for all those who wa n t to see it. But there are many who don’t. It suits both Tory and New Labour governments to point to the symptoms and bl a m e teachers and other public sector workers for them. Their ‘solution’ is a fragmented two or three tier e d u c ation service, increasingly dominated by private sector control, with ‘diverse’ academic and vo c ational pat h ways in which continued overleaf
continued young people will ‘learn their place’ in our class divided society. H e re the wo r kers of tomorrow will learn to be ‘ f l ex i bl e ’ , to compete with other wo r kers for jobs and pay, to blame themselves or migrant workers if they are unsuccessful … and to believe that there is no altern at i ve . But there is an alternat i ve . Alongside the rapidly d eveloping campaign g roups against Academies and Trust Schools, we need to build real local and national coalitions of unions, community o rg a n i s ations and political activists who see what lies behind gove rnment educational and public sector policy. But understanding the context is not enough. We need to d evelop a new radical alternat i ve economic and political policy designed to meet the needs of the people and our yo u n g generation – instead of the needs of the 5 per cent of the population who ow n about 58 per cent of the nation’s we a l t h . And we need to organise to achieve it. It is a tough task – but living with the social d i s i n t eg r ation brought about by the grow i n g we a l t h / p ove rty gap is eve n tougher. Bill Greenshields is vice-president of the NUT
LUNCHTIME TODAY For all the latest facts, analysis and agitation check out the Communist Pa rt y literature stall!
Re-regulate buses to serve the people! NO MONEY FOR MANUFACTURING WHO SAYS? by Kevin Halpin This year’s TUC meets at a time when the rich have never been richer, and the gap between rich and poor is greater than during the Depression of the 1930s. On the same day that Gordon B r own reneged on the 2.5 per cent pay deal with the POA, it was reported that company directors’ pay had gone up by 37 per cent, with the highest ‘earner’ gra bbing £23 million last year. But the other directors of FTSE 100 fi rms didn't do too b a d ly and their total package – including bonuses and share options – came to more than £1 billion. Elsewhere, it was reported that City bonuses had increased by o n ly 30 per cent in 2006. Even so, that produced a record £14 billion pay out. Isn’t it time a Labour g overnment turned its anger on these vultures and stopped reviling hard-working publ i c sector worke rs? Where does all the cash fo r the top bosses come from? Well, a lot of it derives from the ability of the transnationals to move i nvestments around the world and take manu f a c t u ring to where its cheapest.They don’t g i ve a damn about closures and job losses. No wonder manu f a c t u ring e m p l oyment in Britain has fallen
to a 30-year low, with 46,000 jobs disappearing in the last quar ter alone. This situation will only be turned around when g ove rnment puts tariffs on impor ted goods which have replaced British manufactured goods as the result of job tra n s fe rs. Restrictions on the export of capital is also necessary to ensure that more of the profit made in Britain is r e i nvested here. The lack of jobs brings more than miser y on the dole or in dead-end casual or part-time employment. It also brings tragedy when so many of the casualties in Iraq and Afghanistan come from the deindustrialising areas of Britain. How many other options are there if there are no longer any jobs in the aircraft, shipping or motor industries which once employed their parents? Bringing back manu f a c t u ring might not be so profi t a ble fo r big business and high finance (although they made big enough profits in the past). But it’s time this gove rnment stopped priding itself on the achievements of City spivs and speculators – and started listening to the just demands of those people whose votes will be needed to defe a t the Tories. Kevin Halpin is the Communist Party industrial organiser
COMMUNIST PARTY TUC FRINGE DO WE HAVE A PARTY OF LABOUR? R o b e rt Griffiths General Secretary, Kevin Halpin Industrial Organiser Chair: Joanne Stevenson YCL Women's Organiser Wednesday 12 September 12.45-1.45pm Sussex Room, Old Ship Hotel,
by Graham Stevenson The government is poised to restore control of bus networks to procuring authorities – PTAs and councils – which can then contract out the delivery of those services to the private operators. But this should not be by the old failed methods of auctioning off to the lowest bidder, as we saw under competitive tendering. Contracts must be awarded on the basis of quality of delivery and, to deliver quality, establishing minimum employment standards is crucial, for without properly paid and trained staff, a quality service cannot be delivered. Quality contracts should be let on the basis of ensuring that decent and minimum employment conditions, such as wages, pensions and facilities for staff, are taken into account, or obliging the continuation of preexisting conditions of employees in any bus provider in any given locality in any pre-qualification process. More to the point, bus workers don’t want to see their job and themselves hived off to a low-cost operator just to make it easy for a Labour council to balance the books! Local authorities should determine which local services should be provided in their area and by what standards and terms in relation to fares, frequencies and timetables. There should be provision for those authorities which want to move back to direct local ownership to be able to do so. In effect, there should be a re-municipalisation of bus services, with an element of workers’ involvement on democratic boards and a say for passengers through PTA and local trades council appointees. A national body must set broad standards for investment and employment practice. Passengers’ rights must be confirmed by creating a national framework for ☛ page 4
PRIVATE EQUITY fact & fiction
by Jerry Jones UP TO three million workers in Britain are now employed by firms owned by private equity groups. Private equity (PE) is, nominally, a form of risk capital. Hoping to get an above-average return, wealthy individuals and financial institutions invest in businesses lacking access to other sources of funding, helping them to expand or diversify, or to overcome various constraints. Used in this way, as in the case of most smaller deals, private equity can have a positive effect on employment and economic activity. Because they are not public companies with shares quoted on the stock exchange, PE concerns can invest for the long term without the need to generate immediate profit to satisfy external shareholders. Taking the 30 largest private equity deals in Britain in 2003-4, there was a net increase in employment of 26 per cent, from 141,000 to 178,000. Overall, their rate of increase in employment has been around 9 per cent a year, compared with 1 per cent for FTSE-100 companies. But on a larger scale, the activities of many big PE enterprises have degenerated into a speculative, asset-stripping exercise to realise a quick profit. For example, Permira is Europe’s largest PE group, having raised £14 billion over the last ten years, mainly from financial institutions including a third from public and private pension schemes. It has made a profit of £300 million in three years, buying and selling the Little Chef restaurant group and the Travel Lodge hotel chain. Instead of rebranding and sprucing up the 368 restaurants, it shut down 130 of them, selling then leasing back another 130 which raised £280 million. It then sold off what was left to the People’s Retail Group, which has since gone bankrupt. Now, another PE
group, R Capital, has bought up 193 of the restaurants, leaving 42 facing closure. Permira also gained notoriety when it closed down a Bird’s Eye factory after buying it from Unilever, and after assuring workers that it would not do so. And after acquiring the AA in partnership with another private equity firm, CVC, it got rid of 3,500 workers – a third of the workforce. These two groups have since made £630 million profit following AA’s merger with financial and holiday services company Saga, itself owned by the Charterhouse PE group. Meanwhile, a private equity consortium comprising CVC, Texas Pacific and Merrill Lynch made £1 billion profit buying Debenham’s, the 103-store chain, on the cheap in 2003. The consortium then re-floated Debenham’s shares less than three years later, at three times their original price. This was at the expense of investment – shares in Debenhams have since plunged. The company has issued three profits warnings. Another major criticism of PE groups is that they load up the businesses that they buy with excessive debt (or ‘leverage’), often via holding companies based offshore, thereby jeopardising workers' jobs and pension funds. The debt interest payments are then offset against corporation tax. In the case of AA-Saga, the PE ‘masters of the universe’ – as Paul Kenny called them in the Morning Star – have left behind a workforce saddled with unfunded pensions and £4.8 billion in company debts. Then there is the ability of PE investors to avoid paying taxes. Many PE multi-millionaires pay no income or capital gains tax at all by keeping their assets in offshore accounts and claiming ‘nondomicile’ status in Britain. However, public limited companies (plc’s) and their major shareholders can be just as guilty of all these practices at the expense of workers and taxpayers. What is special are the tax perks granted to PE investors by former Chancellor Gordon Brown. In 2003, he allowed them ‘taper relief’ which slashed their capital gains tax to 10 per cent on assets held for at least two years (even in the US it’s 15 per cent). It was a move designed to make Britain the world centre for private equity. Having their income classified as a capital gain with taper relief means that PE investors are paying less tax than their office cleaners. In fact, they can cut their CGT rate further to 5 or 6 per cent by tax dodges involving management fees and ‘carried over interest’. A test of Brown’s commitment to social equity is whether he acts to stop these privileges and block the loopholes for the super-rich. Only a Wealth Tax and higher top rates of income tax would begin to end Britain’s status as one of the most unequal socities in the developed capitalist world. Meanwhile, trade unions must continue to advance workers’ rights and job security among all employers, to collect data on best practice and get better deals out of rogue employers – whether private equity, plc, or the government. Jerry Jones is a member of the Communist Party economic committee
RAMSAY McB ROWN? With his pedecessor Digby Jones now a member of Gordon Brown’s ‘National Government’ is seems only natural for CBI director-general Richard Lambert to appear before us at a Question & Answer session today. After he has lectured us about working harder, retiring later, learning to live on left-over dog food etc. So here’s a question. Who said private equity was a ‘substantial and valuable part of the UK economy’ and that ‘changing the rules on tax deductibility of interest would be seriously damaging for all businesses, not just those owned by private equity’. Clue: he used to edit the Financial Times.
TEAR DOWN THE WALL Trade Union Friends of Israel make their annual appearence today to ask what trade unions can do to aid peace? The advertised speakers, Brendan Barber, Debbie Coulter and Roger Lyons. could offer to lead a team to tear down Israel’s apartheid wall.
NEW! WORKERS OF ALL LANDS A labour movement policy on migrant labour and immigration published by the econiomic committee of the Communist Party £2
unity at the TUC 2007 page 3
PRIVATISATION! OUR BORDERS FOR SALE! by Joel Heyes
Make a donation to the Communist Party £15,000 National Appeal 2007. It won’t buy you a peerage, but donating one day of your income will fund the fight against war and privatisation.
Our self-proclaimed ‘evangelist for globalisation’ and Prime Minister, Gordon Brown, seems intent on taking our public services over the edge and into the abyss of the private sector. This should not be a surprise to anyone, of course – Brown was the driving force behind the government’s commitment to the Private Financial Initiative and so-called ‘public-private partnerships’. But for the neoliberal lunatics who run the New Labour asylum, there’s no end to the schemes that the government can hatch to privatise its own capacity to run the country. We have already seen some of the worst excesses of this policy – the plans for the wholesale privatisation of Job Centre Plus, which would see anyone from recruitment agencies to the Salvation Army running our job shops; the extensive use of third party agency staff in the Ministry of Defence and the transfer of civil service posts into the hands of privateers; and the use of massively expensive private finance to build City Academies and Foundation Hospitals. But this blinkered commitment to the market, which regards the function of the civil service as simply to lease
continued concessionary fare schemes, travel cards and disabled access. Pensioners need a single and co-ordinated national framework of rights. Cuncils should have the power to co-ordinate strategies for promoting bus use like establishing electronic passenger information systems and ticketing/smartcard technology. Every local council needs a Local Transport Plan which sets out a policy framework for coordinating bus networks; liaison with devolved administrations on their plans should ensure an all-Britain framework. Local and regional elected procuring
longer than reasonable) and even a continuous 8-hour 30-minute day with ill-defined 'aggregated' breaks (where the maximum duty should be 7 hours 36 minute s ) . A daily re st of as little as 8 hours 30 minutes is permitted – where 11 hours should be the minimum – and only a 24 hour break once a fortnight is legally re qu i red. Enfo rcement of even these meagre provisions is almost non-existent. When John Prescott launched his 'Workhorse to Thoroughbred' integrated transport strategy for the bus industry, a review of the UK Driving Hours Regulations was promised. However
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authorities should be able to issue contracts to the operators of their choice, setting out details of fares, service, cost etc. If these bodies fail to meet standards, then a national body operating to a standard framework should be able to investigate and, if necessary, oblige the adoption of socially beneficial alternative policies. All bus wo rke rs need decent re st and working conditions, like anyone else. The UK Driving H o u rs Regulations provide only meagre protection for bus drive rs , allowing spells of continuous driving without a break of up to 5 hours 30 minutes (an hour
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functions to the private sector, now makes no sense even by the government’s own agenda. The Home Office has launched pilot schemes to privatisate enforcement functions within the immigration system, notably the detention and deportation of failed asylum seekers and migrant workers. This would see the enforcement of the government’s own immigration agenda being undertaken not by trained civil servants, but by the boot boys from Group 4 or SERCO. How can this possibly help to ‘make our borders secure’? How are human rights and crime prevention going to be upheld by security firms who are only there to make a profit and run? That is why the PCS, RMT, NUT, CWU and UNISON among others have fought long and hard against the government’s obsession with placing private accumulation of wealth over public delivery of service. That is why the TUC motions from PCS and Prospect are key to renewing that opposition. They represent an opportunity to send a message to Brown that he ignores public sector workers and public services at his peril. Joel Heyes is a member of the PCS Home Office group executive
subsequent Labour ministers postponed this promised review pending the outcome of the turbulent negotiations at European level over the Working Time Directive. Now that the dust has settled on this at European-level – and bus drivers have spectacularly lost out in the process – the time has come to call in the government’s promise and win that much needed review. For too long, bus workers and passengers have waited for action on local bus provision. Now is the time for action! Graham Stevenson is the Unite T&G national organiser-transport