28. The Class Divide Grows¶
Core Argument¶
Under New Labour, the long decline of British capitalism accelerated, producing widening inequality at a rate unmatched by any other industrialised nation. The pay gap reached its highest point since 1886. Government data placed parts of Manchester, Liverpool, Middlesbrough and Newcastle among Europe’s one hundred most deprived areas, while tuberculosis rates in some London boroughs matched those of Russia and Brazil. Public infrastructure—housing, schools, hospitals, transport—was crumbling. Investment in the public sector under Blair fell by 4.4 per cent annually, a rate lower even than under Thatcher. PFI hospital trusts accumulated massive debts, forcing cuts to beds, services and jobs. Education standards slipped from twelfth to near the bottom of OECD rankings, behind Slovakia and Greece. Meanwhile, the super-rich saw their collective wealth rise 27 per cent in a single year.
Privatisation remained deeply unpopular: 76 per cent wanted railways renationalised, 60 per cent opposed private prisons, and 72 per cent opposed privatising air traffic control. Yet Blair pressed ahead with further privatisation and public-private partnerships. Labour’s local election results in 2000 were its worst since 1992. Industrial militancy grew, particularly in transport, call centres and the Post Office, where unofficial strikes far exceeded official figures. The Communication Workers Union moved left. Manufacturing continued to collapse, with closures at Rover, Ford Dagenham and Vauxhall Luton. Blair won a second term in 2001 with backing from traditionally Tory newspapers.
In that election, turnout in working-class areas fell sharply to 59 per cent; Liverpool Riverside saw just 34.1 per cent, 18 per cent lower than 1997. Tory support collapsed further, leaving the party a rump confined to the South East, prompting William Hague’s resignation and replacement by Iain Duncan Smith. Blair then prioritised public service “reform”—in New Labour double-speak, counter-reform: attacks on workers’ conditions, flexible labour, and private capital penetration via PFI projects. Gordon Brown promoted US-style “enterprise culture”, cutting Capital Gains Tax from 40 per cent to 10 per cent. In the NHS, foundation hospitals were planned, creating a two-tier system, with private firms building “fast track” surgery centres and taking over “failing” hospitals. Unison and the GMB attacked these pro-market policies. Blair denounced public sector workers as “wreckers”, provoking comparisons with Thatcher’s “enemy within” rhetoric. The government sought to provoke a split with the unions. In autumn 2002, firefighters became the target; the government demanded acceptance of the Bain report, cutting 6,000 jobs. The FBU leaders failed to escalate action, and the dispute ended with modest wage rises but opened the door to “modernisation” and cuts. The chapter argues Blair’s provocations are preparing a major working-class backlash, with unofficial BA action, postal strikes, and a leftward turn in union elections.