Tony Blair faces first major defeat over privatisation at Labour Party conference

Tony Blair thought he had buried the "Old Labour Party" and had put in its place so-called New Labour with all its spin and arrogant bravado. But at this year's annual Labour Party conference it was quite clear that the old traditions of the Labour party are not dead at all. Blair is no longer looking so confident as he was only a few months ago. For only the second time since he came to power Blair has had to swallow defeat in his own party, on a key issue: the participation of private capital in the providing of public services (PFI). And he also came close to defeat on his plans to wage war on Iraq!

Just as at the Trade Union Congress a few weeks earlier, in this year's Labour Party conference we are witnessing the first steps in what will prove to be a major turn around inside the Labour Party over the next period. It was clear before the conference began that Blair and all he stands for were going to be tested, perhaps for the first time since he came to power.

Yesterday on the first day of the annual British Labour Party conference two controversial motions were debated, one on the government's Private Finance Initiative and the other on the question of the war in Iraq.

Three of the biggest trade unions (in the public sector) UNISON, TGWU, and the GMB, tabled a motion that called for a survey into the cost-effectiveness of PFI. As we have reported before, this government initiative is a continuation of the capitalist policies of the Tories, and is a license for banks, building companies, and service contractors to make easy money at the expense of the workers. PFI leads not only to inefficiency and a reduction in the quality of services, because the capitalists who run the services want to squeeze out as much profit as possible, but it is also extremely expensive.

In the case of Edinburgh's new PFI hospital, the public will pay £900 million over a 30- year period to a private consortium to run the hospital that would cost £180 million if the government paid for it directly. At the end of the 30-year period the hospital and the land it is built on will revert back into the property portfolio of the private owners and they will offload prime development land for a nice profit.

The transfer of "privatised" staff from public to private sector employment is of particular concern to the unions. This system has created a two-tier workforce, where it is unclear whether the same employment rights or wage increases will apply to these workers.

The motion backing an independent review of whether PFI provides value for money was carried decisively: 67% in favour to 33% against. The delegates also rejected a hastily drafted statement written by the Labour Party National Executive backing PFI. Government was forced to take comfort where they could find it. And the only comfort available was in the fact that the majority of delegates from the constituencies (that is the territorial branches of the Labour Party) did not vote for the review. In other words it was the union vote that pushed through the motion.

An indication of the mood was the reception delegates gave to Paul Boateng, the Chief Treasury Secretary, as he attempted to defend PFI. He was booed, heckled, and slow hand-clapped as he wound up the debate. There is a strong and growing mood, not only among activists, but also among the population as a whole, against private involvement in public services. People have witnessed the very real, as well as financial, disasters on the railways, and now the nuclear industry. People also fear that air traffic control will be next in line for a major disaster thanks to private involvement.

The second controversial motion was the one on Iraq. It was clear that the Labour leadership were panicking about they way things might go. They withdrew their own motion before it went to discussion and vote, because they thought it would be defeated. Instead they put forward a watered down alternative, which implied that any action would first have to seek UN approval. This was eventually adopted by 60% to 40%. The press have characterised this as a tactical withdrawal. It in fact shows their weakness when the Blairite leadership cannot get support for its own motion on the war.

A motion unconditionally opposing the war was put forward and discussed. This argued that military action would increase the suffering of the Iraqi people, and worsen the instability in the Middle East. Alice Mahon MP of the left Campaign Group, made the point that "this isn't going to be a war about weapons of mass destruction. It will be the first war waged about oil, waged by the world's biggest oil consumer."

Conference delegate Eileen Sinclair (Cunningham South), said that the US would go in and bomb everything, creating more misery, and she pointed out that "the Iraqi people themselves, with the pressure of the world behind them, must depose Saddam Hussein - not us with bombs."

Despite the fact that this motion was defeated 40.2% to 59.8% the Blairites can draw little consolation from such a narrow vote. 40% in favour of the motion, shows that there is widespread opposition to the war in the British labour and trade union movements.

However, the vote against the war was even higher among trade union delegates, 48% of whom voted against. This compared to 32% among party delegates. This is no accident, and is fully understandable. In the past the right wing of the Labour Party could count on the their friends at the tops of the major trade unions for support. An example of this was Sir Ken Jackson, the recently ousted general secretary of the AEEU (now called Amicus, the engineering workers' union). One by one these old right-wingers are being ousted. A new more militant layer is coming to the fore and this is being reflected at every level of the trade union movement. As we predicted, this is now having an effect within the Labour Party itself. It is in the workplaces that workers are feeling the pinch. The process of radicalisation inevitably starts inside the trade unions. But this inevitably had to spill over into the Labour Party itself. There is an organic link between the trade unions and the Labour Party. The party could not remain immune to this process. Already there is opposition in the party branches. As trade union activists draw the conclusion from their struggles that they must get involved politically they will start to fill out the party branches and on this basis opposition will also be strengthened in the constituencies.

The past twenty years or so were years of lull in the movement. Over this period the right wing strengthened its grip on the trade unions. This in turn strengthened the shift to the right inside the Labour Party and eventually allowed Blair to claw his way to the top of the Labour Party and carry through the bosses' agenda under the banner of so-called "New Realism".

In the past the Labour Party constituencies were to the left of the unions, and their motions and resolutions were opposed at conference by the trade union block vote. However, over the last year especially, we have seen this process reach its limits. Now it is turning into its opposite.

As the Marxists explained, the radicalisation of the movement has occurred first in the unions - this is because workers have spent their time struggling against the attacks of first Tory and then Labour governments. Workers see the problems in the course of their everyday lives. For whole a period hey could not see a way out. They were not given a lead. Now, however, the accumulated frustration has boiled over. This has led to the election of a "new breed" of young, confident, left-wing leaders, an increase in strike figures, and a growing awareness of the need to fight back.

Workers have had enough of attacks on their pay and conditions, and the deterioration of the public services, such as the railways, the schools and hospitals. John Edmonds General Secretary of the GMB, (by no means a hard left) said in a recent interview: "Over and over again the price of PFI failure is paid for by cuts in staff, cuts in quality, and a reduction in patient care."

Now that Ken Jackson and his kind, which were a dead weight around the necks of workers, have been jettisoned, the unions are going forward. They have moved ahead of the constituencies of the Labour Party. And this was revealed in the voting patterns yesterday. But this is only the beginning of a more long-term process. At the moment many local branches of the Labour Party are empty, to all intents and purposes. Over the past period many of the more militant activists dropped out and, understandably, saw no point in attending.

Now it is ironic to see how a demand which some sectarians on the fringes of the movement supported is being taken up by the bourgeois press. The bourgeois press are now raising the question of breaking the link between the trade unions and the Labour Party. As Marxists we have always been opposed to this demand. Now that the bourgeois strategists are raising this demand we can show how right we were in resisting this demand. Why do the bosses want to break the link? Because they know that through the trade unions will come a wave of opposition inside the Labour Party that will shake it from top to bottom. So long as the unions were bastions of the right wing they had no problems. Now they see the unions as the enemy. As often happens in history the sectarians unknowingly play into the hands of the bosses and the right wing. Now is not the time to break the link. Now is the time to send more and more union members into the Labour Party. The vote at yesterday's conference confirms this. The unions can become the tool with which to transform the Labour Party!

The bourgeois commentators are also raising the question of state funding of political parties. The Labour Party depends to a very large degree on funds provided by the trade unions. State funding is seen as a way of cutting across the new danger of the trade unions' influence inside the Labour Party.

We must oppose tooth and nail these proposals, which would play into Blair's hands. Up until recently to defend such ideas meant we had to go against the stream. Now the stream has begun to flow against Blair. Opposition is building among the unions. At this year's TUC already the currents of opposition were there. The leadership narrowly won a vote on the war. Next year the right wing will have lost most of its remaining support. The shift to the left will lead to a radical transformation of two giants of the labour movement, the TGWU and Amicus. On this basis next year's TUC congress and Labour Party conference will see even greater opposition.

The Blair government is entering a period of crisis. The effects of privatisation will become clearer as time goes by. The economy is facing recession. Blair will have nothing left to offer. He and the clique around him will, more and more, come into conflict with the trade unions and his own party.

It is early days yet, but whatever Blair does he cannot avoid his fate. He has picked a fight with the fire fighters, the London Underground workers, and the local government workers (and he is squaring up to face many others). At the same time as preaching wage restraint to public servants he is throwing money to the privateers who run the PFI schemes, and preparing to spend billions of pounds on a war with Iraq. Whatever he does he will inflame the discontent of workers and the youth. He is paving the way for a struggle between the classes that will see the Labour Party reclaimed, transformed, and restored as a political fighting organisation of the working class.