markets, and at the current relative something rates of inflation, they would be uncompetitive
The Tories may well be hoping that a Gulf
War will push up inflation rates in the rest of Europe, thereby improving Britain's trading position. But tying sterling to low-inflation currencies may well have dire consequences for the British trade balance in the longer The effect of all this on employment and on standards of living for British workers is clear. Loss of US markets — still a major trading partner for Britain - will lead to closures and redundancies here. Whilst an over-valued pound may bring cheaper imports, and short-term reductions in in terest rates will give some relief beleaguered to mortgage-holders, none of this amounts to real protec- tion from the effects of inflation and recession, rising unemployment. When the ranks of the Govemment's previously well-cushioned if not always well-heeled supporters start to feel the pinch, then the Tories have to worry. According to a recent Gallup poll, 47% believe that the economic situation will get worse over the next year. It looks like they're right. At this year's Tory Party conference, alongside the ritual signals about public spending and tough talking on everything, the Conserva- tives will have to set the political tone to take them through to the election. The priority will be to reassure their supporters and win back waverers. In the face of that, and bearing in mind the real political setbacks they have suffered over the last year, they will be looking for victims. If a Gulf War run by the Americans with Thatcher in support doesn't offer the same flag waving potential as the Falklands, two old favourites might do the trick. Wage inflation is seen as a critical con- tributor to short-lem problems ills, so some union-bashing might come in handy, as well as giving Employment Minister Michael Howard something to do. government spending has refused to go away - so if the Tories can find a way of taking housing and education out of town hall control, it might save on poll tax bills as well as giving the impression of doing Labour's 'alternatives' Whilst Labour's leaders have dithered on the question of full membership of the EMS, SOCIALIST OUTLOOK no 27, October 1990
they are completely in favour of fixed exhange rates and membership of the ERM as a "mechanism for tackling inflation".
Clearly they believe that the rate of sterling at the point of entry is crucial. But they are apparently less concerned with a competitive rate (ic a low rate) than with stability at whatever rate is set. A low rate would have the effect of reducing the trade deficit and making British firms more competitive. But it would also have the effect of making imports more expensive, further increasing inflation, and therefore reducing living standards for workers in Britain.
Key participants in the Policy Review process have argued that membership of the ERM would be a useful brake on any tendency towards a run on sterling following the election of a Labour govemment.
It is clear that, despite the limitation on domestic policies that would be imposed by membership of the ERM, Kinnock and his co-thinkers are prepared to give up control of, and therefore responsibility for, Labour's policies. Harsh anti-inflationary measures with inevitable attacks on workers' living standards will be defended on the basis that the Labour government no longer controls the instruments necessary to run the economy any other way.
Labour is already paving the way for all this by talking tough on pay and the unions.
Shadow Chancellor John Smith, has warned that in the new Burope, British workers must be careful not to price themsel ves out of the competition. To make sure his message is received, understood and obeyed, most of the central Tory trade union measures will be kept on the statute book. The point will be hammered home further at Labour's own conference in October.
To make sure all this happens, and smoothly, Labour's leaders have prepared the ground carefully.
Determined to avoid the scenes of the seventies when the trade unions brought their apposition to the Labour govemment's wage controls right into the Labour Party, Kinnock is proposing that a weaker conference, with looser ties to the working class, would have less say in drawing up policy. The members, without the means of influencing policy. simply wouldn't matter.
If Kinnock's proposed organisational overhaul gets the go-ahead, we will witness sweeping changes on a scale not yet seen, and the death of what little democracy already exists in the Labour Party. Policy changes have come and gone in the past. But these reforms will make sure policy is made from the top, is passed through the movement as required, and doesn't go have to face any unseemly political challenges.
Crawling up quietly behind Thatcher, and winning the next election by default seems to be as high as Kinnock's sights are set. SOCIALIST OUTLOOK no 27, October 1990
FEATURES
POLL TAX TORIES OUT
Poll tax activism remains strong: but only a minority of non-payers are involved The