Post on 29-Nov-2014
The Labour Party’s movement to the Centre: an explanation using the Wright Mills approach
Matthew Zarb-Cousin
Contents Page Chapter
2 Introduction
9 C. Wright Mills’ Elite Theory
12 David Sainsbury and the 1983 general election
23 Tony Blair and the “Opinion Maker”
31 New Labour and the Corporate Elite
47 Conclusion
49 Bibliography
Synopsis Using C. Wright Mills’ theoretical approach – a strand of elite theory set out in The Power Elite – this dissertation offers an entirely original explanation as to why the Labour Party moved to the Centre. It, firstly, demonstrates how the Labour Party mitigated its ideological objectives in gaining the approval and influence of the elite, approval that helped the party win successive general elections. It begins with a critical analysis of existing explanations of the Labour Party’s ‘modernisation’, before outlining what the Wright Mills approach entails. It then illustrates how the elite in Britain influenced the outcome of the 1983 general election and altered the electoral landscape, which consequently encouraged Tony Blair to seek the approval of Rupert Murdoch. It outlines the way in which members of the corporate elite were explicitly co-opted into the party’s policy-making process, when ‘The Commission on Public Policy and British Business’ was set up by the IPPR. It also discerns the influence the elite had on the party in government after their landslide general election victory in 1997, citing most notably the connection between New Labour and the Bilderberg Group, the financial sector – in particular the investment bank Goldman Sachs International – and David Sainsbury’s influence on the party. It also analyses the connection between the Labour Party and the nuclear lobby, deriving from the use of the Wright Mills approach an analysis of how the Labour Party sought to gain the approval of the influential corporate elite, capitalising on their affiliation through favourable media coverage and party funding.
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1. Introduction
The Power Elite is a theory of the state, which argues that those at the top of
the institutional hierarchies – an identifiable and stable minority that control
key financial, communications, industrial and government institutions – hold a
concentration of power and influence (Wight Mills 1956: 19). I will seek to
explain why the Labour Party changed, and my approach will reflect that of
Wright Mills’ – which in turn provided evidence of an elite theory – in his
analysis of the concentration of power in the US that lies outside of the
democratic process: one might refer to it as ‘power without accountability’.
The focus of my research will be concerned with discerning the existence and
the influence of an elite in Britain, and I will argue that because of the
influence of a power elite, the Labour Party had to mitigate their social
democratic principles and adopt a more neo-liberal approach. I will therefore
provide an elite theory perspective as to why the Labour Party moved to the
Centre – in turn, emphasising its relevance as a theory of the state in a more
contemporary context.
Analysis of the transformation of the Labour Party under Tony Blair has, to
date, centred on the premise of an altered political landscape in the wake of
the apparent popularity of Thatcherism. I state that this popularity was only
apparent, as the Conservative Party did not attain more than 50% of the vote
between 1979 and 1992 (Ramsay 2002). Colin Hay articulated this argument,
suggesting that structural constraints were placed upon the Labour Party in
that voters were no longer supporters but consumers, and their traditional
working class base could no longer be relied upon to vote Labour (Hay 1999).
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This dissertation will dispute Hay’s implication that a change in the attitudes of
the electorate led to the transformation of the Labour Party, and to the
formation of New Labour. Whilst this dissertation finds some consensus with
Hay regarding the way in which the spectre of globalisation was used to justify
the creation of New Labour and the economic policies that ensued, it
contends Hay’s assertion that Middle England would only elect a ‘modernised’
Labour Party. Both the decline in support for the Labour Party through
successive General Elections from 1997 to 2010 post party ‘modernisation’,
and the British Social Attitudes Survey have provided a basis for this rebuttal:
51% of respondents supported more wealth redistribution in 1989, and 58%
believed the state should spend more on benefits in 1991. In 2010, after 13
years of a Labour government, 78% believed the income gap between rich
and poor was too large, and more than half supported an increase in the
minimum wage (BSAS 1989; 1991; 2010).
Ed Miliband stated in his first speech as leader to Labour Party conference in
2010, “The old way of thinking said that economic efficiency would always
come at the price of social justice.” However, a publication by the National
Equality Panel, reported by BBC News at the start of 2010, found that the
rich-poor divide was wider than 40 years ago (BBC 2010), implying that the
Labour government’s policies had not worked, and economic efficiency did
indeed come at the price of social justice.
In assessing how – using the Wright Mills theoretical framework – the Labour
Party changed, I will have the benefit of being able to analyse New Labour in
government, as their decisions and actions will provide further evidence to
support an explanation based on elite theory as an approach. It will also
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provide the opportunity to illustrate how Giddens’ Third Way does not fully
explain New Labour’s approach, as the party became “seduced by power and
money” (Reade 2010).
Giddens’ Third Way: the renewal of social democracy, also entails an
explanation as to why the Labour Party had to change to the extent that it did,
citing the decline of traditional Left and Right politics. Whilst this dissertation
will not contend Giddens’ claim with regards to the viability of statism and
traditional social democracy in a globalised, de-traditionalised and reflexive
world (Giddens 1998), it will contend – and with the benefit of retrospective
analysis of the Labour Party in government – his implication that the party
acted only out of necessity, citing various policies that are not explained by his
presumptions, an example of which is their decision to reduce corporation tax
to the lowest level in the G8 once they assumed office in 1997. Whilst the
Labour Party required modernisation, the Third Way does not explain the
nature of the modernisation undertaken by the New Labour hierarchy.
Tony Blair’s New Labour used globalisation to justify their economic policies
(Hay 1999), and this dissertation will illustrate why their approach – despite
globalisation narrowing the parameters of social democracy – was not the
only option available to them. Jon Cruddas argued in a column for the New
Statesman that Tony Blair “failed to grasp the meaning of globalisation”, and
restricted opportunities to the “metropolitan elite” – those that were open to
the world and swift to adapt. However, in the wake of the financial crisis, he
asserted, “Those sections of the population which followed Blair's call have
now discovered that the British economy cannot deliver the dream. Their hard
work and adaptability have resulted in stagnant or falling incomes, debt and
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chronic insecurity. The majority simply did not benefit from the boom in the
way the rich did” (Cruddas 2010).
This paper will contend that New Labour implemented such economic policies
because of the influence of the elite, and this argument is based on there
being, in 1995, more viable, and more social democratic, alternatives than a
continuation of Conservative economic policy, which were disregarded
(Anderson 1997). The most significant of these is contained in Will Hutton’s
The State We’re In (1995), which castigated the demand in the financial
sector for higher rates of return, claiming that it had decimated British
industry. This is echoed by Ramsay, who highlights Heath’s introduction of
Competition and Credit Control, which in turn meant that banks no longer lent
to, or invested in, British manufacturing or industry, but to domestic
consumers and the property market (Ramsay 2002: 15). He cited other
successful economies, such as Germany and Japan, which had devised
institutions to overcome this short-termism, running counter to New Labour
rhetoric concerned with the requirement for “light touch regulation” (Ramsay
1998a). I do not intend to dispute the economic rationality of the financial
sector, nor their potential to move out of Britain. However, if reliance upon a
fleeting financial sector was unsustainable, Labour could have set about
restructuring the economy, taking into consideration Will Hutton’s well-timed
suggestions. However, the party chose to disregard the advice of Will Hutton
and abandoned the call for a more active industrial policy that would have
sought to invest in alternative industries and rebuild the economy after years
of dependence on the financial sector under Margaret Thatcher (Ramsay
2002). This is a sentiment that has been echoed recently by current Labour
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Party leader Ed Miliband, who argued that the Labour Party “acted too late to
create a more balanced economy less dependent on financial services for tax
receipts” (Wintour 2011). I will contend that this inaction was not in the
national interest, but in the interest of the corporate circle, specifically those
that preside over the City of London.
I will therefore seek to provide an alternative explanation for New Labour by
demonstrating that there exists a power elite in Britain – applying the Wright
Mills’ approach to a contemporary and alternative context – and contend that
New Labour was the product of cynical appeasement of the corporate circle,
eventually leading to the party embracing its affiliation with the power elite and
abandoning its social democratic principles. I will therefore demonstrate the
influence of the elite – beginning in 1983 – and illustrate exactly how the
Labour Party gained their support. In order to gain such support, the
parameters of the Labour Party – defined by what the party seeks to achieve
politically – had to shift to the Right.
In order to apply a theory first purported by Wright Mills in The Power Elite – a
sociological assessment of the U.S. in 1956 – to a more contemporary British
context, it is important to state that this dissertation will draw on the Wright
Mills’ approach, but will not compare the power elite in the U.S. and the U.K. It
will discern who the power elite are in Britain, offer an alternative framework
that they fit into, and an explanation as to how they influenced the Labour
Party, suggesting that it was predominantly their influence that caused the
party to move to the centre ground, symbolised by their revision of Clause IV.
This revision committed the party to a “dynamic economy… the enterprise of
the market and the rigour of competition” (Merkel 2008; also quoted in Bailey
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2009). Bailey highlights the mechanism the party used in order to silence
dissenting voices in the wake of their transition, which can be summarised in
an excerpt from Tony Blair’s speech to the NEC meeting in 1997, “You will
have a ready ear in the media to attack the Labour government. But I tell the
Labour Party where that leads. It leads to 20 years of Tory government”
(Bailey 2009; Blair, NEC meeting, 17-11-97). I will claim that this was rhetoric
pedalled by the party hierarchy in order to ensure that the Left of the party did
not re-emerge, alienating the elite, which helped the party win in 1997. I will
not offer speculative claims as to whether the Labour Party would have won in
1997 if it did not court the elite in the way that it did. I will, however, illustrate
how the power elite in Britain helped Labour win, and offer an explanation as
to why the party believed their support was necessary, considering their
influence on the political landscape, and their influence on the electorate.
The analysis will be constructed by drawing on Ramsay’s analysis of the
events that took place leading up to 1983, and of the changes in the Labour
Party that resulted, but will be combined with evidence that will suggest that
the elite initially prevented a Labour victory in 1983, after Margaret Thatcher
had doubled unemployment during her first term (Ramsay 2002). This will
culminate in an explanation that supports an elite theory. The potential for the
elite to alter the political landscape, I will claim, can be referenced in the
formation of the SDP in 1983, which divided the electoral support for the Left,
sometimes referred to as the ‘anti-Tory vote’ (Grice 2010).
This is not to suggest that the party, in their attempts to appeal to the elite,
were simply attracting large donations, which would therefore not go to the
Conservative Party or the Liberal Democrats. I will argue that because of an
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altered political landscape – preventing a Labour victory in 1983 – the party
had no option but to attempt to gain the support of the Right if they were going
to win. In order to gain the support of traditionally Conservative voters, they
needed to appeal to the corporate circle, more specifically the elite that
controls the Right-wing media. In order to do this, the Labour Party needed to
drastically alter its image after losing its economic credibility in 1979 (Ramsay
2002). This, I will claim, led to the party not only mitigating but also
abandoning their social democratic principles, in order to ensure that elite
interests were facilitated. Wright Mills defines The Power Elite as “a set of
groups whose members know one another, see one another socially and at
business, and so, in making decisions, take one another into account” (Wright
Mills 1956: 11). I will also highlight the connection between New Labour – who
became the governing elite – and various members of the power elite in
Britain who occupy other institutional positions.
The argument will draw on numerous sources and culminate in the articulation
of the theory that the Labour Party changed because of a realisation that
without the support of the power elite – members of which I shall identify –
then they would not have been able to achieve the highest institutional
position within the political structure, and become the party of government. It
will also contend that once in government the party became part of the elite –
as elite theory contends – and, as Wright Mills suggests, worked with the
Higher Circles and ensured their interests were put above the national interest
(Wright Mills 1956). I will adopt Wright Mills’ approach insofar as I will analyse
the British power elite and illustrate their influence over the political system,
which will, in turn, offer an explanation as to why the Labour Party moved to
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the Centre, and support an elite theory, both in its application to New Labour
and also to a wider context as a theory of the state.
2. C. Wright Mills’ Elite Theory
It is necessarily to initially outline what the Wright Mills approach entails. In his
description of The Power Elite, he asserts that, “their positions enable them to
transcend the ordinary environments of ordinary men and women” (Wright
Mills 1956). The power elite are “in command of the major hierarchies and
organizations of modern society”, specifically the big corporations, the
machinery of the state and the strategic command posts of the social
structure, in which are now centred the effective means of the power and
wealth that they possess (Wright Mills 1956). Wright Mills identifies
professional politicians as being “below the elite… in the middle levels of
power” and “mingling with them, in curious ways… are those professional
celebrities who live by being continually displayed” and serve to distract the
attention of the public (Wright Mills 1956).
Behind the power elite, and behind, “the events of history” – linking the two –
are the, ”major institutions of modern society” (Wright Mills 1956). These
institutions – of state and of corporations – constitute the means of power,
and “at their summits, there are now those command posts which offer the
sociological key to an understanding of the higher circles,” and all power is
subordinated to both of these hierarchies, and the military (Wright Mills 1956).
Within each of these three institutions, Wright Mills contends, “the process
has become enlarged, it has become administrative, and, in the power of its
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decisions, has become centralized,” and he illustrates this point empirically
with reference to how the economy has transformed, “once a great scatter of
small productive units in autonomous balance – has become dominated by…
giant corporations, administratively and politically interrelated, which together
hold the keys to economic decisions” (Wirght Mills 1956).
The economic elite resides at the pinnacle of the economic domain, and
constitutes the corporate rich, the chief executives. As all three hierarchies
coincide, these domains tend to come together to form the power elite (Wright
Mills 1956).
Wright Mills refers to early capitalism as “youthful competition,” from which
emerged – through mergers and consolidation – “the Big Five, or the Big
Three” (Wirght Mills 1956). The top corporations, according to Wright Mills,
are “not a set of splendidly isolated giants. They have been knit together by
explicit associations” leading to power being exercised by a few large firms,
which is – he contends – “different only in degree and precision of its exercise
from that of the single-firm monopoly” and if corporations compete with one
another they do so “less in terms of price than in terms of ‘product
development’, advertising, and packaging” (Wright Mills 1956), insinuating a
transcendence of the power of the market to make such decisions in what he
refers to as “corporate consolidation”, an interconnection of the corporations
which has led to the rise of “a more sophisticated executive”. The decisions of
such a group “determine the size and shape of the national economy, the
level of employment, the purchasing power of the consumer, the prices that
they are advertised, the investments that are channelled” (Wright Mills 1956).
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Wright Mills states that all official decisions made by the power elite “are
justified as in the public’s welfare, and all formal proclamations are in its
name” (Wright Mills 1956). In an analysis of what constitutes public opinion,
Wright Mills alludes to the out-dated view of democracy, which dictates that,
“discussion circles that are knit together by mobile people who carry opinions
from one to another… the public is thus organized into associations and
parties… the larger forces of social movements and political parties develop”
(Wirght Mills 1956). Theoretically, he contends, out of free discussion
emerges truth and justice, but this view of democracy is not even an
approximation of how the American system of power works (Wright Mills
1956). “The issues that now shape man’s date are neither raised nor decided
by the public at large” and the idea of a community of publics is an ideal rather
than a description of the structure of society. Wirght Mills asserts that the
classic community of publics is being transformed into a society of masses
(Wright Mills 1956), “in the society of publics it was assumed that after
determining what is true and right and just, the public would act accordingly or
see that its representatives did so. In the long run, public opinion will not only
be right, but public opinion will prevail.” This assumption is no longer true,
according to Wright Mills, as there exists a great gap between the underlying
population and those that make decisions in its name (Wright Mills 1956).
Despite The Power Elite being written before the advent of more
contemporary mass media, Wright Mills alludes to the relative unease
experienced by those at the top of institutional hierarchies when considering
the opinions of masses. He asserts, “opinion-making becomes an accepted
technique of power-holding and power-getting” (Wright Mills 1956).
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Applying this to a contemporary context, Wright Mils’ elite theory will inform
the approach insofar as the influence of “opinion makers” – those that control
the media – shall be analysed. The connection the corporate elite has to the
political hierarchy, and subsequent influence it has over the democratic
process will also be illustrated in discerning why the Labour Party moved to
the Centre.
3. David Sainsbury and the 1983 general election
Historical context
In order to explain why a transformation away from traditional social
democracy took place in the Labour Party, it is necessary to go back to the
events that took place between 1970 and 1983. It is these events that will
provide an explanation as to why Labour lost in 1983, despite Margaret
Thatcher’s administration tripling unemployment (Ramsay 2002: 8). The
general election in 1983 was an event that catalysed the party’s eventual
movement to the centre, as the election was lost as a consequence of the
influence of the power elite, and an illustration as to how will be offered
through an analysis of the events that took place.
Ramsay describes the Wilson administration that succeeded Heath’s
government in 1974 as being “an unremarkable, mainstream, social
democratic administration, mired in economic problems not of its own making”
(2002: 21). The credit boom, instigated by Heath’s implementation of
Competition and Credit Control (C&CC) in 1971, caused the economic
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problems that left the Labour government having to deal with 20% inflation.
Despite the Treasury believing that the C&CC proposal from the Bank of
England would lead to inflation, it was adopted as government policy, and this
was “barely noticed by the media, the Labour Opposition or by Heath himself”
(Ramsay 2002: 14). Ending limits on lending, and regulating credit in the
economy through interest rates alone allowed the banks to lend as much as
they liked, and when there was too much credit in the system, put interest
rates up – a system which was effectively ‘bounced’ into legislation, and one
that guaranteed to make the elite in the City of London very wealthy, if
implemented properly (Ramsay 2002: 17). The problems with this were
twofold. Firstly, the banks did not lend to or invest in British industry, as Heath
had envisaged. Instead, they opted for lending to “domestic consumers [and]
to the property markets” (Ramsay 2002: 15). Secondly, as Heath presided
over the domestic boom, by 1973 consumer spending had risen, as had
property prises, and the scarcity of investment in industry meant the balance
of payments went into deficit, putting severe pressure on the pound (Ramsay
2002: 16). This was a consequence of Heath’s refusal to put interest rates up
“as far and as fast as the monetary experts at the Bank of England wanted”
(Ramsay 2002: 16-17), leading to high levels of inflation, a problem inherited
by Wilson’s Labour government in 1975.
Despite the economic problems facing Britain owing to the legacy of the
preceding government, the Labour Party were the subject of relentless
scrutiny, based on the premise that the British Left were a threat to business,
and even the capitalist system itself, and were accused of being
“spearheaded by the trade unions and manipulated by the British Communist
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Party [which polled 0.1% of the vote at the 1974 general election]” (Ramsay
2002: 21). To explain why the British media took such a negative stance
towards the Labour Party, it is necessary to assess who was in control of the
media, their political views – which would have had an influence on the
editorial stance of the respective newspapers – and through an analysis of the
1983 general election, illustrate the significance of their influence.
The Media Elite
Vere Harmsworth, 3rd Viscount of Rothermere was the Chairman of
Associated Newspapers from 1971 until Sir David English succeeded him in
1992. English was the editor he appointed that was responsible for turning the
Daily Mail into a tabloid, and it soared in popularity under his stewardship.
Rothermere was one of the richest men in the country and spent much of the
year in Paris, where he moved to in 1978 for tax reasons (BBC 1998; New
York Times 1998), he was also a Conservative and an ardent supporter of
Margaret Thatcher, described by Coleridge as “remorseless and effective”
(Coleridge 1993). The Daily Mail supported Margaret Thatcher in 1979, and in
1980 closed the Evening News and bought half of the shares in the new
Evening Standard company (Coleridge 1993). In 1989, Margaret Thatcher
opened the Associated Newspapers’ printing plant, suggesting her closeness
to Rothermere and the Daily Mail. Taking into consideration Rothermere’s
relocation to Paris for the purposes of tax avoidance (BBC 1998), one might
suggest that he was attracted to Thatcher’s ideological stance, which was
arguably influenced by the Institute of Economic Affairs, of which she had
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been a member for nearly twenty years. The IEA was a think-tank founded by
the poultry magnate Antony Fisher, and it proposed less government, lower
taxes and more freedom for business (Beckett 2010). One might contend that
it was the self-interest of Rothermere that drove the Daily Mail’s support of the
Conservative Party and systematic condemnation of the Labour Party in
government and the party in opposition from 1979 onwards.
Rupert Murdoch bought The Sun newspaper from IPC in 1969, assuring them
that in his hands, it would remain a “straightforward, honest newspaper” that
would continue to support Labour (Greenslade 2003). The Sun remained so in
the early Murdoch years, supporting the party at the 1970 general election,
but its support waned in the two 1974 general elections. In 1979, the paper
emphatically endorsed Margaret Thatcher, running the headline “VOTE TORY
THIS TIME”. Murdoch’s acquisition of the Times and The Sunday Times in
1981, and The Sun’s surpassing of the Daily Mirror in terms of its circulation –
which can arguably be put down to an extensive television marketing
campaign – meant that News International owned the highest circulating
tabloid, and the highest circulating broadsheet in the country. His influence
can therefore not be understated; he told William Shawcross, writer of his
biography, that he considered himself to be a libertarian, stating his belief in
“as little government as possible [and] as few rules as possible” (Shawcross
1997). It was Murdoch’s clear Right-wing agenda that was behind many
vitriolic personal attacks on Labour leaders, Michael Foot in particular. The
Sun’s editorial stance focused on his age, leading with front pages such as,
“Do You Really Want This Old Fool To Run Britain?” However, their apparent
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age discrimination did not prevent The Sun supporting Ronald Reagan for re-
election in 1984 only a year later, despite him being four years Foot’s senior.
The influence of the media in 1983
One might contend, therefore, that the media played a significant role in
influencing public opinion throughout Margaret Thatcher’s disappointing first
term. It would also be possible to contend that commitments in the Labour
Party’s 1983 Manifesto, such as their pledge to “reform taxation so that the
rich pay their full share and the tax burden on the lower paid is reduced” and
ensuring “that the richest 100,000 of the population make a fair and proper
contribution to tax revenue” would not have been in the interests of the
corporate elite, most significantly the commitment to discussions with the TUC
about the possible introduction of the minimum wage (Labour Party 1983). For
what has come to be known as Thatcherism to work – an ideology that would
have inevitably enabled the elite to expand their wealth – it needed time, as
having taken office, Thatcher doubled unemployment from three million to six
million, and, “by the end of Margaret Thatcher's first term, unemployment in
Britain was more than three million and it began to fall only in 1986. A large
section of Britain's inefficient manufacturing industry closed down” (Margaret
Thatcher Foundation 2011).
One might contend, then, that the media bought the Conservative Party some
time through their relentless support, arguably a result of Thatcher’s close ties
with Rupert Murdoch, a relationship strengthened by a similar ideological
stance. One might contend that his ownership of a newspaper that targeted
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the traditional working class assisted the Conservative Party considerably in
their success in the 1983 general election, even if this influence on the
electorate was not recognised by News International publicly, unlike in 1992.
Current literature that seeks to explain the outcome of the 1983 election
focuses on both the Labour Party being unelectable – having written,
according to dissenting Labour MP Gerald Kaufman “the longest suicide note
in history” (BBC 2003) – and the jingoism surrounding the Falklands War,
which has come to be known as The Falklands Factor, a phrase coined by
Margaret Thatcher herself in a speech to a Conservative Rally at Cheltenham
(Margaret Thatcher Foundation 2011). However, analysis of the BBC/Gallup
Election Day Poll suggests that this had very little impact on the outcome of
the general election. Of the 4141 respondents, only 24 mentioned foreign
affairs, and only 1.4% claimed that the Falklands conflict affected their vote
(Miller 1984). Analysis by the polling company Ipsos MORI drew similar
conclusions. Whilst there is an acknowledgement that “received wisdom
seems to have it that the Falklands Factor was the political making of
Margaret Thatcher”, the data shows something quite different. According to
Ipsos (2007), “Mrs. Thatcher’s ratings and the Tory poll share had begun to
climb in advance of the invasion not least because of the perceived
improvement in the economy” (emphasis added). They then go on to state
that, “[The Falklands] effect in terms of the British public’s political attitudes is
probably overstated” (Ipsos 2007).
The perception rather then the content of the Labour Party manifesto in 1983,
one might contend, was significant in contributing to their defeat, and this
perception was driven by negative media coverage. The content of the
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manifesto was “not short on left-wing hubris” (Kelly 2003) and most certainly
social democratic in its rejection of neo-liberalism, in pledging that trade union
legislation passed since 1979 to be repealed. However, it was “positively
prescient” on social policy and political reforms (Kelly 2003). The manifesto
offered Scottish devolution, the abolition of the House of Lords, a freedom of
information act and state funding for political parties, all of which were
implemented during Labour’s first term in office under Tony Blair (Kelly 2003).
On social policy, it advocated a ban on fox hunting and reforming marriage tax
allowance so that the state accepted “the wide variety in the type and size of
families”, something Gordon Brown also accepted when he abolished the
allowance in favour of the Working Families Tax Credit (Labour Party 1983;
Kelly 2003).
The contention here is not that there are little differences between old and
New Labour – as economically they differ considerably – but that the Labour
Party’s manifesto in 1983 was a credible document, and one might take into
consideration the amount of people that actually read a party’s manifesto.
This is illustrated by the comparative “demand” for manifestos in 2010, as
Waterstone’s politics buyer Andrew Lake commented, “I’ve worked in books
for nearly 20 years and have never seen such demand for manifestos.”
However, whilst the figures are not in the public domain, a spokesman for
Waterstone’s said sales of all three party manifestos was a “four figure”
quantity (Adams 2010), which is not exceptionally high.
Their electoral failure can, therefore, be put down to two factors. Firstly, the
influence of the media – something that has already been alluded to – and
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secondly the formation of the SDP, which divided the Left (Ramsay 2002;
SDP 2009).
Austrian economist F. A. Hayek contended that think-tanks were the best
medium for effecting change in society (Hayek 2001), a sentiment which
encouraged Antony Fisher to reject a career as a politician and instead
establish 150 think-tanks worldwide, including the Institute of Economic Affairs
and the Adam Smith Institute. This illustrates the influence the elite can have
on policy planning, which ultimately sets the agenda and direction for any
affiliated political party, which in his case was the Conservative Party.
However, what David Sainsbury did in 1981 was to alter entirely the political
landscape in Britain.
David Sainsbury and the formation of the SDP
David Sainsbury is the great grandson of John James Sainsbury and Mary
Ann Staples, who established the supermarket chain Sainsbury’s. David
Sainsbury attended Eton College and the University of Cambridge – like many
who occupy the upper echelons of power in Britain – and became the director
of Sainsbury’s in 1966. He inherited an 18% stake from his father, Sir Robert
Sainsbury, and his wealth in 2007 was £2.13bn (Cook 2007). It is important to
note that – unlike in the financial sector – it would be very difficult for
Sainsbury’s to move their operations elsewhere if economic policies such as
the introduction of the minimum wage and increases in taxation were
implemented, such is the nature of the supermarket industry. When Sir Robert
retired, John Davan Sainsbury – David’s brother – succeeded him as
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chairman. Sir Robert believed that John had a forceful, autocratic style of
leadership, and so it was therefore imperative to him that David remained in
Britain in order to maintain an active role in the business at boardroom level.
Sainsbury joined the Labour Party in the 1960s, but in 1983 he influenced
their general election defeat considerably. Shortly after Michael Foot defeated
Roy Hattersley in the Labour leadership contest in 1980, David Sainsbury
played an active role in the formation of the Social Democratic Party. Four
senior members of the Labour Party dubbed “the Gang of Four” – Roy
Jenkins, David Owen, Bill Rodgers and Shirley Williams – left to form the
SDP, bankrolled by Sainsbury who also served, with Dick Taverne and Roger
Liddle, on the party’s Steering Committee (SDP 2009) meaning that he played
an active role in policy formulation and in the writing of the party’s 1983
manifesto (SDP 2009).
The party then formed an alliance with the Liberals, meaning that they would
not stand a candidate from both parties in the same constituency, allowing for
a more pragmatic use of resources. The Alliance therefore attracted support
from the Centre-Left, and whilst it only managed to win eleven seats in the
general election, the influence in terms of their share of the popular vote –
which came within 1.3% of the Labour Party – denied Michael Foot success
in a number of seats.
In the Dulwich consistency, the Labour candidate, Kate Hoey, came within
1,859 votes of the Conservative Party. Dick Taverne, the SDP candidate
polled 8,376, increasing the share of the vote from 11% to 22% when
compared with the Liberal candidate in 1979. One might contend that without
21
the presence of the SDP, Labour would have won the seat. The same can be
said for the Conservative target seat Oxford East, where their candidate
Stephen Norris defeated Andrew Smith of Labour by 1,308 votes. The Liberal
candidate – affiliated, of course, with the SDP and benefiting from the funding
of David Sainsbury – polled 10,690. In another Conservative Party target seat,
Cunninghame North, the Labour Party lost by 1,637 with the SDP candidate
polling 7,268.
The effect of the SDP was to divide support for the Left. Any anti-Tory
sentiment that might have been prevalent at the ballot box after Thatcher’s
disastrous first term was split between the SDP-Liberal Alliance and Labour,
therefore handing the Conservative Party victory. Roy Hattersley made a
similar observation, contending that the presence of the SDP caused a split in
the Centre-Left, which aided the Conservatives (SDP 2009). Hattersley
claimed that the formation of the SDP delayed the movement of the Labour
Party to a Centrist position. However, the contention here is that had the SDP
not been created and a tactical Alliance with the Liberals not been formed,
Labour might not have had to move to a Centrist position, as they did so in
order to appeal to traditionally Conservative voters, required in order to
command a majority.
Whilst one might contend Ramsay’s (2002: 8) assertion that the Conservative
Party “would have been turned out of office in 1983 had it not been for the
appearance, in time for the election, of the Social Democratic Party which
took millions of votes off Labour”, the formation of the SDP – backed by
Sainsbury – certainly played a significant role. It was this – coupled with the
influence of the media – that led to the Labour Party’s failure in 1983.
22
Toynbee highlights the legacy of the defeat, stating that “if [the SDP] didn’t
succeed, we would still win in the end by forcing the Labour Party to turn
social democratic” (Toynbee 1995). One might contend, however, that the
Labour Party in 1983 were still social democratic, as they did not seek to
change the economic system, merely ameliorate it (Crosland 1956). In the
article – titled We lost, but the Son of SDP will win (the ‘son’ being Tony Blair,
a new MP along with Gordon Brown in 1983) – Toynbee appears to contend
that it was the popularity of the SDP which prompted the Labour Party’s
adaptation under Tony Blair, but then contradicts herself in stating that, “Blair
is too tough on law and order and liberal issues, less progressive… On policy,
some old Social Democrats say Blair isn’t tough or brave enough, retreating
rapidly on constitutional reform” (Toynbee 1995; emphasis added). What
Toynbee fails to address is the implication for the Labour Party of an altered
political landscape in the wake of the Centre-Left rivalry that had emerged
(Grice 2010). For this reason, one might contend that Blair had to appeal to a
section of the electorate that usually voted Conservative in order to win a
majority.
It can therefore be contended that it was necessary for the Labour Party to
appeal to David Sainsbury, as he has previously altered the electoral
landscape through his continued financial support of the SDP after he had
founded the party, which helped the Conservative Party to successive general
election victories (Ramsay 2002: 8). The division on the Left – caused by the
emergence of the Centre-Left SDP, later to be formally merged with the
Liberals to form the Liberal Democrats – meant that Labour Party also needed
to appeal to Conservative voters in order to win a majority, and therefore had
23
to gain the support of the elite that controls the Right-wing media. The
importance of having media support was compounded by the altered electoral
landscape. How the Labour Party gained such support will be highlighted in
the next chapter, with specific reference to party actors’ relationships with the
power elite prior to 1997.
3. Tony Blair and the “Opinion Maker”
Everything… tax, health, education, unions, full employment, race,
immigration, everything, he’s totally sold out, and for what? What are we
for?
Neil Kinnock to Alistair Campbell, 1995
The unpopularity of the Conservative Party following Black Wednesday meant
that the leadership election in 1994, which took place after the death of party
leader John Smith, was probably going to decide who the next Prime Minister
was going to be. However, the party were aware of the influence of the media,
and mass circulation newspapers in particular, not to mention the party’s need
to appeal to the Right, given the altered electoral landscape since the SDP’s
formation. Osler (2002: 181) contends that the party saw the media as “a
decisive determinant of voting patterns” but argues that “this is a faulty
premise” as if that assumption were true then there would never have been a
Labour government before. Osler fails to take into consideration in his
analysis of why the party pursued the support of the media elite relentlessly
the altered electoral landscape after the emergence of the SDP. Osler instead
24
claims that Labour had believed The Sun when it insisted that it alone swung
the 1992 general election, and this prompted the party hierarchy under new
party leader Tony Blair to work to galvanise their support. As Osler puts it,
“endorsement from Britain’s biggest circulation tabloid was a top priority in the
1997 campaign, for which Blair was ready to pay almost any price” (2002:
182). Osler underplays the influence of the media, failing to cite the influence
of the changed electoral landscape which required the party to appeal to the
Right, and attempts to denounce its influence in determining voting patterns
through claiming that “a majority of Sun readers have always backed Labour”
regardless of the newspaper’s affiliation (2002: 182).
When Murdoch took control of The Sun, its editorial stance shifted to the
Conservative Party before 1979, and its influence on the 1979 general
election – which took the form of unwavering support for Margaret Thatcher –
directed towards a demographic that usually voted Labour, would have likely
helped the Tories. The Sun’s editorial did not change until 1997, but it
maintained its approach of attacking the Labour government from a Right-
wing perspective, however its editorial arguably secured Labour the support of
its readership. In 2005, when its editorial backed the Labour Party, 33% voted
Conservative and 45% Labour (Ipsos MORI 2009). In 2010, when its editorial
supported David Cameron, picturing him on their front page in an Obama-
style photo with the headline “Our Only Hope”, 43% of its readers voted Tory
and just 28% Labour, therefore Osler’s claim regarding the influence of The
Sun’s editorial stance can be disputed. It is important to note that The Sun is
generally considered a newspaper of the working class, the lowest paid in
society, and had historically been a committed supporter of the Labour Party.
25
Murdoch vowed to continue that support but reneged on his promise before
the 1979 general election.
The Labour Party’s opposition to News Corporation – animosity derived from
Thatcherite fanaticism and Murdoch’s tax avoidance (Osler 2002: 182-183) –
had been the party line until Blair had won the leadership. As Osler notes, “as
late as 1992, the Labour manifesto promised a Monopolies and Mergers
Commission inquiry into the concentration of press ownership” (2002: 183).
One might contend that Blair realised not only the influence of the media, but
took into consideration the apparent need for the Labour Party to appeal to
the Right in order to win a majority, as the Liberal Democrats – the formal
merger between the Liberals and the SDP, which took place in 1987 –
occupied the Centre-Left and were dividing the progressive vote. This might
explain why he was so willing to compromise the party’s stance on the media
conglomerate. In 1992, Labour pledged to “safeguard press freedom” but by
1997, the comparable section of their manifesto justified their new approach in
contending, “the regulatory framework for media and broadcasting should
reflect the realities of a far more open and competitive economy” (Osler 2002:
184), in other words, the Labour Party backed down. Their fierce defence of
Murdoch is perhaps most succinctly illustrated by Blair publicly humiliating
competition spokesperson Richard Caborn when he demanded that the
Tories launch a monopolies probe into BSkyB (Osler 2002: 183).
After numerous meetings with Murdoch, Blair was flown to the Hayman
Islands in order to address a News International conference. The speech
contained reconciliatory undertones, with Blair asserting, “the past should be
behind us” and assuring his audience that, “there have been changes on both
26
sides”, and whilst he stated that policy would not be traded for editorial
support – and both Blair and Murdoch deny striking a formal deal – former
Sunday Times editor Andrew Neil recalled Blair telling him, “How we treat
Murdoch’s media interests when in power will depend on how his newspapers
treat the Labour Party in the run up to the election and after we are in
government” (Osler 2002: 1884). At the very least, an understanding was
reached between the two.
Neil Kinnock warned against such a compromise in a conversation with
Alistair Campbell. The 1992 general election defeat for Labour illustrated the
increased power of the media – their influence perpetuated by the altered
political landscape which divided support for the Left – as Neil Kinnock noted
in the wake of their loss, “the Conservative supporting press has enabled the
Conservative Party to win yet again” (Heath et al. 1994). Despite this, Kinnock
could not understand why Tony Blair would “sell out” and attempt to forge an
alliance with Rupert Murdoch, stating that the party would have to be open to
compromise. His reaction to Blair’s journey to the Hayman Islands came
during a conversation with Alistair Campbell, in which he firstly mocked the
content of Blair’s speech. The tirade is worth noting in full:
“Oh Margaret Thatcher, not too bad you know, not such a bad person, quite
radical, and of course you had to admire her determination and her leadership
– that’s what the fucking leader says … I’ll fucking tell him – too radical my
arse. That woman fucking killed people… He’s sold out before he’s even got
there” (Campbell 2008). It is necessary to determine the reason as to why
Tony Blair valued the support of the Murdoch-owned media to such an extent,
despite a relatively reformed Labour Party being ahead in the polls and on
27
course to win the next general election at the time he assumed the leadership.
One might contend that the same could have been said for Kinnock in 1992,
who then went on to lose after The Sun ran the headline, “If Kinnock Wins
Today Will The Last Person To Leave Britain Please Turn Out The Lights”. It
is possible to argue therefore, that Blair did not want to put his chances of
becoming Prime Minister in jeopardy through creating powerful enemies –
such was the nature of the political landscape. Media influence was even
more important in the context of a general election, as the Liberal Democrat
presence on the Centre-Left meant that the Labour Party would arguably
need to appeal to the Right in order to win a majority. Briefly analysing where
Labour’s support came from substantiates this. In 1997, the Liberal
Democrats gained 28 seats and their share of the vote remained the same,
whereas the Conservative Party under John Major suffered an 11.2% decline
in their share of the vote. Labour won the election in 1997 through gaining the
support of what were Conservative voters, the party had successfully
appealed to the Right. If Blair had not pursued the support of the media elite
and still won a majority – and one can only speculate as to whether this would
or would not have been the case – Labour in government could have then
implemented the 1992 policy of instigating a Monopolies and Mergers
Commission inquiry into Murdoch’s News Corporation. He instead attempted
to modify the editorial stance of the newspapers owned by the conglomerate
so that they were in his party’s favour, and he did so successfully.
As well as dropping the party’s commitment to launch an inquiry into News
Corporation, Blair actively worked to further the interests of Murdoch whilst in
government. Aside from moving the party to the Centre in terms of continuing
28
the economic policies of the outgoing Conservative government, New Labour
facilitated Murdoch’s more specific special interests.
When News Corporation moved to take over Manchester United in 1998,
Secretary of State for Culture Chris Smith opposed the deal, and Secretary of
State for Trade and Industry Peter Mandelson referred it to the Competition
Commission, which ruled against Murdoch (Osler 2002: 185). The Sun then
launched a brutal smear campaign, highlighting their sexuality, and calling
them the ‘gay mafia’ running Britain. Incidentally, a year after the ruling in
2000, the Communications White Paper was published which included
proposals to relax the restrictions on cross-media ownership. The restrictions
had dictated, according to Osler (2002: 186) that “owners of national
newspapers with a market share greater than 20 per cent … cannot own more
than a 20 per cent stake in national or regional television and radio stations.”
Murdoch had been a victim of this, and one might contend that this was a way
in which the Labour government attempted reconciliation.
Osler notes, “for an Australian-born naturalised American citizen, Murdoch is
strangely perturbed by the prospect of Britain joining the euro” (2002: 186). It
would not be sufficient to explain Murdoch’s vehement opposition to further
EU integration because of an ideological objection to it, and analysis of EU
legislation regarding media plurality might provide a more coherent
explanation. In 1994, the EU Parliament voted in favour of the Fayout/Shinzel
Report, which urged the Commission to address the expansion of media
conglomerates across European borders and cross-media through the
introduction of a new Directive on media ownership (Doyle 2002: 158). EU
legislation prevents Murdoch purchasing terrestrial television channels in
29
Europe because of his American citizenship (Osler 2002: 186), and The Sun
newspaper has always been against further EU integration, maintaining a
Eurosceptic editorial line.
According to Osler, a breakfast meeting between Murdoch and Blair in 1998
was arranged in order to come to a compromise on the party’s stance
regarding the EU, although no agreement was reached (Osler 2002: 186).
Subsequently, The Sun ran a front-page headline with a photograph of Tony
Blair under the headline “Is This The Most Dangerous Man In Britain?”
accompanied by an anti-euro commentary. Despite this, the Murdoch owned
newspapers were behind New Labour in 2001, with the Times calling for a
Labour vote for the first time ever, and The Sun maintaining their support.
Incidentally, the Communication Bill was published in May 2002, a year after
the general election dubbed “the quiet landslide”: the Labour Party all but
maintaining its position from 1997, losing just six seats. According to Milmo
(2002): “Under the 263 clause Communications Bill, a newspaper proprietor
who owns more than 20% of the national market will be allowed to buy
Channel 5 or a radio license”, however it still imposed restrictions on the
purchase of ITV. The relationship between New Labour and Murdoch
remained cordial during this time and his daughter, Elisabeth Murdoch, is a
close friend of Peter Mandelson. Murdoch visited Number 10 regularly for
discussions (Osler 2002: 187). Their relationship was so close, that during the
Labour leadership contest, the New Statesman suggested that an inquiry into
the tycoon’s past relationship with Downing Street might have handed David
Miliband victory (Crampton 2010). Matthew Norman writing for the
Independent argued a similar case, contending, “While attacking the Tories
30
over Andy Coulson is justified, he might say, a little light phone-hacking
seems trifling next to allowing Rupert dominion over British policy on Europe”
(Norman 2010). More significantly – but not, however, concerned with
explaining the Labour Party’s movement to the Centre – is the alleged
influence Murdoch might have had over Blair’s decision to go to war with Iraq,
illustrated by the reports from the Press Association – after Liberal Democrat
peer Lord Avery submitted a Freedom of Information request – which noted,
“Tony Blair spoke to the media mogul Rupert Murdoch three times in the 10
days before the outbreak of the Iraq war - once on the eve of the US-led
invasion” (Guardian 2007).
Based on the Labour Party’s willingness to negotiate with Murdoch, one might
contend that Blair knew that he needed his influence if he was to command a
majority in 1997, but by engaging with the elite, the party had taken on a new
identity, placing elite interests above the national interest. Murdoch’s view on
economic policy is not dissimilar to that of the City (Shawcross 1997), and the
next chapter will illustrate how it was New Labour’s relationship with the elite
in the City of London that shaped Brown’s handling of the economy as
Chancellor of the Exchequer.
4. New Labour and the Corporate Elite
The City of London
It is only through critically analysing arguments that seek to explain why New
Labour gave corporations in City of London such prominence that will allow
31
the space for an articulation of an alternative explanation based on the Wright
Mills approach.
Since Heath introduced Competition and Credit Control and removed
restrictions on lending, Margaret Thatcher had continued the high interest and
deregulation that had decimated manufacturing in the 1980s (Ramsay 2002:
130). There is little doubt that the financial sector contributes towards a
significant proportion of Britain’s GDP, although it is difficult to state the figure
exactly, at any point in time (Ramsay 2002). There are a number of competing
and highly varied claims as to exactly the proportion of GDP the City
contributes towards Britain’s economy. In 1996, Alistair Darling, the then
Shadow Economic Secretary with a special responsibility for City affairs,
produced a figure of 18% GDP and rising. However, in 1998 a survey by
British Invisibles concluded that the financial services sector accounted for 7%
of the British economy (Ramsay 2002: 129). Whilst a disproportionately large
financial sector provides jobs, it incurs costs in terms of infrastructure
spending in the City of London – the London Docklands Development
Corporation had received £1.8 billion from 1981 until 2002 (Ramsay 2002:
131) – and in terms of its impact on the wider economy.
One might contend also that the financial sector is an obstacle to social
progression. Its ability to offer the most highly qualified graduates
disproportionately higher economic incentives has led to a deficit of
engineering and physical science graduates, with students perhaps pursuing
degrees that would arguably increase their chances of working in the City of
London. Those that do graduate in the subject areas mentioned do not
necessarily opt to work in their field of study. Lord Sainsbury reported in 2006
32
in response to the depute director of the CBI, John Cridland, that the number
of graduates in engineering and technology had indeed fallen by 10%, and in
the physical sciences by 11% (Andalo 2006). It is for this reason that the
defence of the financial sector, which cites the creation of jobs – around
330,000 work in the City – carries very little weight, as more and more of our
most talented graduates reject a career in a meaningful, more sustainable,
industry such as genetics – which would benefit society – in favour of an
inflated salary. Taking the example of genetics one step further, the science
budget would have to increase significantly in order to compete for talented
graduates, and other industries face the same problems. To summarise the
argument here, its mere existence suppresses growth in other areas of the
economy.
Therefore, together with the more subjective impact on the wider economy,
the financial sector has – as Ramsay rightly points out – had a negative
impact on manufacturing, a consequence of both high interest rates in the
1980s (Ramsay 1998a) and the movement away from traditional lending in
favour of more speculative practice, which ultimately led to the financial crisis
in 2008.
The unsustainability of an economy centred on the City of London was
something that Will Hutton alluded to in The State We’re In (1995), which
provided a credible antithesis to the supposed Thatcherite consensus that
there was no alternative but to embrace deregulation and free-market non-
intervention. Hutton’s argument was centred on the notion that Britain’s
economy had declined relative to other countries because of a long-term
economic dominance in the City of London, perpetuated by successive
33
Conservative governments allowing a free rein to market forces (Anderson
1997; Hutton 1995). Hutton advocated a reassertion of the state’s role in
managing and regulating the economy, in reform of the financial system to
encourage long-term investment – shifting the focus away from short term
dividends, and a social partnership model of industrial relations based on the
German ‘social markets’ model, with – as Anderson succinctly puts it – “a
moderately expansionist Keynesian macroeconomics underpinning it”
(Anderson 1997: 38). ‘Stakeholder capitalism’ differed from Blair’s vision of a
‘stakeholder society’. Hutton contended that firms should have obligations that
are codified in law, not simply to shareholders but to suppliers, the financial
sector, consumers and their staff – as well as social and community
responsibility, and environmental consciousness (Anderson 1997: 38).
Criticism of Hutton stemmed from the apparent failure of the German model to
produce substantial growth, and Gordon Brown put this down to inflexible
labour markets (Anderson 1997).
However, it is possible to articulate a critique on Gordon Brown’s approach to
the economy in comparison to the relative success of Germany post-financial
crisis. Will Hutton noted shortly after the crisis hit that, “Gordon Brown
lectured Germany for not following the British example, not embracing
financial deregulation and the American business model. The hubris and
concessions to daffy free-market fundamentalism that justified all this is
mocked in Germany, and you can hardly blame them for some
schadenfreude” (Hutton 2008). As Hutton advocated for Britain in 1995,
Germany sought to base their economy around industry – with firms such as
ThyssenKrupp, Siemens and BMW – rather than the financial sector, which
34
ultimately left Britain vulnerable when Northern Rock and HBOS collapsed
(Hutton 2008). The financial sector required an £800 billion bail-out and
caused a recession, mitigated only by the revert to Keynesianism by the then
Chancellor Alistair Darling, who kept up public spending and injected a fiscal
stimulus into the economy to prevent the onset of a depression (Macnab
2010). One might argue that New Labour’s economic policy was
unsustainable in the long-term, and the contention that there was no
alternative other than to pursue Thatcherite economic policies is coherently
contended here. The core of neo-liberalism – that the private sector was to be
viewed positively, and the public sector negatively – was a central theme once
Blair and Brown took office, promising no income tax increases, not to raise
public spending, no government intervention in the economy and therefore no
plans to re-nationalise assets that were privatised under the previous
administration (Ramsay 2002: 87).
The Bilderberg connection
The Labour Party began its courting of the elite in the City of London during
what became known as the “prawn cocktail offensive”, and in 1995 Blair and
Brown “did all they could to distance themselves from Hutton’s ideas”
(Anderson 2007: 39). It began with John Smith and Gordon Brown attending a
meeting of the Bilderberg group in 1991 – omitted from his 1998 biography by
Paul Routledge – and subsequently, articles in praise of New Labour’s
economic policies began to emerge in the financial pages of mainstream
newspapers (Ramsay 1998a: 106).
35
The Bilderberg meetings take place annually and comprise of 140 guests who
attend only if they are in receipt of an invitation. Those who participate are
usually people of influence in the fields of politics, banking, business and the
media, although the conferences are closed to the public and no press
releases are issued (Bunting 2001). The 1991 meeting took place in Baden-
Baden, Germany and Rupert Murdoch was in attendance with Andrew Knight,
who was both the executive chairman and editor of News International and
director of News Corporation (Bilderberg 2011).
The Commission on Public Policy and British Business
The Labour Party’s infatuation with the corporate elite – particularly the
financial sector – is illustrated through an analysis of those that participated in
the Commission on Public Policy and British Business. The commission was
set up in 1995 by think-tank IPPR, an organisation that was founded by then
leader of the Labour Party John Smith in 1992 (Anderson 1997: 39), and
according to Anderson, “the very involvement of the IPPR was a signal that its
findings would be taken seriously by Blair” (Anderson 1997: 40). The
commission sought to “investigate the competitive position of the British
economy and the role that public policy should play in it” (Anderson 1997: 39).
The spokesperson for the commission was Clive Hollick, who funded IPPR
and was a Labour Party donor (IPPR 2011). Hollick had been a director of
Hambros Bank before becoming the chief executive of the JH Vavasseur
Group, a merchant bank that had been caught up in the 1973 secondary
banking crisis (McDonagh 2000). Hollick rebuilt the bank into a successful
36
media company, renaming the group Mills & Allen International. MAI moved
into television in 1993 when Meridian Broadcasting, it’s subsidiary, won the
ITV franchise for South East England, and the following year it purchased
Anglia Television. By 1995 it was a major shareholder in Channel 5
(McDonagh 2000).
In March 2006, MAI merged with United Newspapers – publishers of the Daily
Express and Daily Star. Hollick then became the chief executive, and within
18 months, the Daily Express underwent a radical shift in its editorial stance.
Having supported the Conservative Party since its formation, the Express
became a supporter of Tony Blair’s New Labour (McDonagh 2000). After the
1997 general election, Hollick became a special advisor to Margaret Beckett
and Peter Mandelson, who were Ministers at the Department of Trade and
Industry (Westminster Parliamentary Record 2011).
Other than Hollick, the commission – chaired by the principal of the London
Business School, George Bain – was “heavily weighted towards business”
(Anderson 2007: 39). The only member of the commission from the workers
side of industry was John Monks, the general secretary of the TUC (Anderson
2007: 39). The commission included Bob Bauman, the chairman of British
Aerospace, now BAE Systems; Sir Christopher Harding who was the
chairman of Legal and General; and George Simpson, the managing director
of General Electric Company, who had also been on the board of British
Aerospace since 1990 (Financial Times 1990). David Sainsbury was also on
the commission, having switched allegiance to the Labour Party, pledging £1
million of financial support the very same year the commission was formed
(Bentley 2008). Bauman and Simpson were connected through British
37
Aerospace, and in 1999 Simpson’s General Electric Company sold its
defence arm – Marconi Electronic Systems - to them for £7.7bn (Jane’s Navy
International 2009), illustrating the close corporate ties between those that
took part.
The commission’s report was launched in January 1997, titled Promoting
Prosperity: A Business Agenda For Britain. It endorsed a significant amount of
New Labour policies (Anderson 1997: 40), such as a low minimum wage,
tougher competition policy, tax incentives for long-term investment and strict
adherence to a tight fiscal and monetary regime (Anderson 1997: 40). The
report made clear that significant changes were not required in the way the
system worked, and it “gave wholehearted endorsement to the Tory market
liberalizations of the 1980s” (Anderson 1997: 40), despite Hutton’s assertion
that this was the root of failure in what he called “British capitalism” (Hutton
2005).
At the launch, Blair gave the report his full support, offering a “new deal for the
future… we leave intact the main changes of the 1980s in industrial relations
and enterprise” (Anderson 1997: 40). Blair insisted that New Labour’s
affiliation with the corporate elite was about creating a constructive
partnership with business rather than collecting endorsements and support
(Anderson 1997: 40). However, a partnership would have entailed the Labour
Party and corporations working together, perhaps negotiating and settling on
a series of compromises, rather than giving some of the wealthiest people in
the country the power to dictate policy. As Anderson asserts (2007: 40), “the
participants in the IPPR commission were by no means the only enthusiasts
for New Labour in the business world.”
38
As Andy Burnham - the former Labour government Health Secretary - stated
in an interview with The Mirror during the Labour Party leadership contest in
2010, “When we won power in 1997 we were right to be pro-business but we
ended up being seduced by power and money. I'm proud of Labour's record
but I think this obsession with wealth goes back to before I became an MP in
2001. I was merely a low-ranking official at Millbank during the early days and
I didn't like what I saw. We went over the line. There was too much
arrogance, too much infatuation with courting elites. We should have backed
the rights of people in the workplace but instead we listened to the voice of
business too much. It meant that when the recession came, people thought
we were on the side of the bankers. It gave people the belief that we didn't
know who we were any more” (Reade 2010). Such insight highlights the
importance of analysing the subsequent influence of the corporate elite on
members of the Labour government, in order to depict exactly how the Labour
Party remained tied into elite circles after 1997.
Gordon Brown and Goldman Sachs
Gavyn Davies joined Goldman Sachs International in April 1986 and was a
partner between 1988 and 2001, where he was paid £2 million per year (BBC
2011). In August 2000, he made £15 million selling 219,000 shares in
Goldman Sachs, and his total shareholding in the year 2000 was worth £85
million (Davies 2000). Former head of BBC News Richard Sambrook
estimates his personal wealth to be in the region of £150m (Snoddy 2006),
39
and his connection with New Labour occurred through Gordon Brown’s office
manager Sue Nye, who is his long-term partner (Ramsay 1998b).
In an essay for Variant Magazine, Ramsey alludes to the conflict of interest
between the financial sector and manufacturing with regards to economic
policy, more specifically the value of sterling. “Immediately after the Labour
election victory in 1997 [Gavyn Davies] dismissed concern about the damage
the rising pound was doing to British exporters” (Ramsay 1998b). Ramsey
describes his claim that the City is not directly affected by the exchange rate
as, “an extraordinary lie or self delusion” (Ramsay 1998b). The higher the
exchange rate, the more the financial sector benefits both from the cause of
such – specifically, increased interest rates – and the effect, in terms of higher
purchasing power. The City wants higher interest rates and freedom from
regulation, whereas the manufacturing sector would benefit from low interest
rates, state controls on the use of credit and more economic planning
(Ramsay 1998b), all of which are irreconcilable with the demands of the
financial sector. The value of sterling rose as interest rates increased
perpetually from 1997 through to 2001, after Chancellor Gordon Brown
granted the Bank of England independence (Ramsay 1998b), a move that
inevitably led to an exhibition of self-interest. In the decade leading up to the
financial crisis of 2007, “the pound was even more expensive than in the early
1980s, when the over-valuation of the exchange rate helped wipe out a sixth
of manufacturing capacity” (Elliott 2010).
Having handed the “most powerful single economic tool” to the City of
London, Gordon Brown then stated his concern that the 20% appreciation of
the value of sterling would damage industry, as it made exports more
40
expensive (Ramsay 2008b). One might derive from the latter that New
Labour’s economic policies favoured the corporate elite in the financial sector,
rather than smaller-scale manufacturing enterprise.
Murdoch’s connection with the financial sector
Wright Mills illustrated the way in which the elite work together, are
interconnected – both socially and in business – and therefore take each
other into account when they make decisions (Wright Mills 1956: 11). Once
the Labour Party had discerned the importance of having those that control
the media, the opinion makers, on their side, their decision to weight
economic policies in favour of the City of London might be explained by an
analysis of how Rupert Murdoch is connected with the financial sector.
Lord Jacob Rothschild was appointed to the board of British Sky Broadcasting
in 2003 as Senior Independent Non-Executive Director and Deputy Chairman
of Murdoch’s organisation (Shah 2003). Rothschild has a corporate interest in
the financial sector, having co-founded Global Asset Management and J
Rothschild Assurance, now part of the St James’s Palace Group. Having
graduated from Oxford University, he joined the family bank N. M. Rothschild
& Sons before leaving in 1980 to pursue his own interests in the financial
sector (Shah 2003). Aside from a direct connection Rupert Murdoch has with
the financial sector in his association with the Rothschild family, a more
indirect connection is evident through his daughter. Murdoch’s daughter,
Elisabeth, married the grandson of Sigmund Freud, Matthew in 2001 (BBC
2001). Matthew Freud is the multimillionaire owner of PR company Freud
41
Communications (Harris 2008) and, aside from being Rupert Murdoch’s son-
in-law, British Sky Broadcasting is one of Freud’s clients (Sanghera 2001). In
1997, Freud Communications is listed as a Labour Party sponsor, donating a
sum in excess of £5,000 (Aisbitt 1998). Freud had previously sold Freud
Communications in 1994, when it was known as Matthew Freud Associates,
and he continued to run the company until 2001, when he bought it back with
money from the directors, Barclays and Neil Blackley – a Merrill Lynch media
analyst – illustrating Freud’s connection to the financial sector (Sanghera
2001). It is also worth noting his clients, which include Pepsi, KFC, Asda and
Nike (Harris 2008).
Peter Mandelson, Minister without Portfolio from 1997 until 1998 when he
became Trade and Industry Secretary, acquired responsibility for the
Millennium Dome. Despite opposition from most of the Cabinet, Blair decided
that the project would go ahead (Carrell 2000). The Millennium Dome was
granted £400m of lottery money, and British Sky Broadcasting were among
an array of corporate sponsors (Carrell 2000). Prior to Mandelson’s
appointment as Secretary of State for the Department of Trade and Industry,
Freud allegedly set about galvanising support for him in the press, placing the
story Peter’s Friends in The Sun – incidentally a newspaper owned by Rupert
Murdoch’s News Corporation – which stated that Mandelson was a friend of
various celebrities, including Tom Cruise, whom he had never met (Guardian
2000). Mandelson subsequently appointed Freud to work on one of the
Millennium Dome’s senior committees (Harris 2008), and he had a significant
impact on the arena’s content (Guardian 2000). Despite his understanding of
politics being described by a Labour insider as “not that deep” and immature
42
(Harris 2008), he had significant influence over Tony Blair (Sanghera 2001).
The Financial Times quotes him as saying: “Have I ever given the Prime
Minister advice? There’s no clever way of answering that. No. No. I have
expressed my opinions in political circles about, you know… I’m on various
steering groups, some of which report to the Prime Minister” (Sanghera 2001).
Freud organised the party that celebrated Labour’s general election victory in
2001, and played a role in recruiting one of his clients, Spice Girl Geri
Halliwell, to Labour’s party political broadcast in 2001, and persuading Chris
Evans to campaign with Tony Blair in 2005 (Harris 2008). According to John
Harris (2008), “it is the Freud’s talent for hosting high-powered get-togethers
that underpins their bond with Blair.” One well-placed source that had
observed Blair commented, “he just loves hanging out with celebs” (Harris
2008). In 2005, Blair’s former special advisor Kate Garvey became Freud
Communications’ head of public and social affairs (Harris 2008), and Blair’s
former health secretary Alan Milburn is paid £25,000 a year to sit on the
nutritional advisory board of one of Freud’s clients, Pepsi (Harris 2008).
It is possible to illustrate Elisabeth Murdoch and Matthew Freud’s connection
with the financial sector through their friendship with Jacob Rothschild. Shortly
after Elisabeth Murdoch’s 40th birthday party in 2008, Rothschild hosted a
dinner at his family’s villa in Corfu, where Peter Mandelson was also a guest
(Harris 2008). Rothschild’s interests extend beyond the financial sector. In
2005, the newspaper Sunday Business reported, “N.M. Rothschild, the
London merchant bank, is leading an initiative to finance, build and manage
Britain’s next generation of nuclear power stations” (Orange 2005).
43
Jacob Rothschild and the nuclear power lobby
In order to demonstrate how the British power elite influenced the Labour
Party’s stance on nuclear power, it is necessary to go back to 1983. It is also
worth noting Ramsay’s observation in his essay Uncle Sam’s New Labour,
where he stated that in 1986, Tony Blair was a member of the Campaign for
Nuclear Disarmament (Ramsay 1998b).
In 1983, the Labour Party manifesto included the policy of nuclear
disarmament, which would have entailed the closure of nuclear power stations
(Labour Party 1983), and the removal of Britain’s nuclear weapons.
Incidentally, BAE Systems Submarine Solutions, a wholly owned subsidiary of
BAE Systems, operates one of the few shipyards in the world capable of
building nuclear submarines (Naval Technology 2011). Both Bob Bauman, the
chairman of BAE Systems, and George Simpson who had been on the board
of the same company, and sold the General Electric Company’s defence arm
to BAE, were members of the IPPR’s Commission on Public Policy and British
Business (Anderson 1997: 39), highlighted earlier.
Rothschild’s involvement in nuclear power was centred on his ambition to
“dominate the next phase of nuclear power development” (Orange 2005).
British Nuclear Fuels plc is an international company owned by the
government, involved in all stages of the nuclear process: designing reactors,
manufacturing fuel, decommissioning reactors and dealing with radioactive
waste (British Nuclear Fuels 2006). In 2005, Rothschild assembled a plan for
British Nuclear Fuels plc suggesting the means for funding nuclear power
through the private sector (Orange 2005). In April 2006, Rothschild was
44
appointed by British Nuclear Fuels plc to handle the £1bn sale of the
organisation’s nuclear clean-up arm, British Nuclear Group (Pfeifer 2006).
David Sainsbury – whose role in the Labour Party’s election defeat in 1983
has already been illustrated – had, by 2003, donated over £11 million to the
Labour Party (Brennan & Hastings 1998). In October 2005, having been made
a Labour peer, he declared his support for nuclear energy in the House of
Lords, saying, “Lady O’Cathain offered me the opportunity of… agreeing that
nuclear is a renewable energy source – it clearly is so” (Mortished 2005). One
month later, Vincent de Rivaz – Chief Executive of EDF energy, which has at
least two contracts with British Nuclear Fuels plc (British Nuclear Group 2011)
– called for the relaxation of planning and licensing laws, arguing that if this
were to happen, new nuclear power stations could be built within ten years
(Parliament 2005). De Rivaz’s more explicit connection with the New Labour
government was through Gordon Brown’s younger brother Andrew, who is
EDF Energy’s Head of Press. Andrew Brown previously worked for Weber
Shandwick, where Philip Dewhurst – now Director of Corporate Affairs at
British Nuclear Fuels – was the UK Chief Executive (Private Eye 2006).
Weber Shandwick also provided consultancy services for British Nuclear
Fuels plc in 2005 (Register of members and clients 2005).
In 2009, EDF energy acquired British Energy, which owns and operates two
thirds of the UK’s nuclear power stations (EDF 2007: 74; Leake 2005).
Incidentally, de Rivaz shared corporate ties with David Sainsbury until 2010,
as Sainsbury’s supermarket offered ‘Sainsbury’s Energy’ in a partnership with
EDF (Williams 2011). The former Labour government Housing Minister,
Yvette Cooper, also has links to the nuclear industry through her father, Tony
45
Cooper, who is the former chairman of the Nuclear Industry Association and is
currently the director of the Nuclear Decommissioning Authority (Wheeler
2010a). One might conclude that New Labour’s ties with the nuclear lobby
heavily influenced policy formulation with regards to energy prioritisation.
Mark Seddon, a member of Labour’s National Executive Committee, referred
to Sainsbury in an interview with the BBC, in which he said, “in any other
country I think a government minister donating such vast amounts of money
and effectively buying a political party would be seen for what it is, a form of
corruption of the political process” (Brennan & Hastings 1998).
David Sainsbury and Progress
Labour Party think-tank Progress declared their support for nuclear power in
an article titled, “End of the Honeymoon?” in 2010, in which it quotes Nadhim
Zahawi, “We missed the trick in the 1980s not adopting nuclear like the
French, and now they lead the world where we should have a competitive
advantage” (Marcelin-Horne 2010).
David Sainsbury’s influence over the Labour Party encompasses the Blairite
think-tank, Progress. Sainsbury has provided the organisation with substantial
funding, most recently in 2008 when he donated £250,000 (Progress 2011).
Derek Draper, Peter Mandelson’s former aide, founded progress shortly after
Tony Blair became the leader of the Labour Party.
In September 2009, Murdoch refused to endorse Gordon Brown and switched
the editorial stance of his newspapers, supporting the Conservative Party led
46
by David Cameron instead (The Sun 2009). The outcome of the general
election was a hung parliament, which eventually brought the Conservative
Party and the Liberal Democrats together in a formal Coalition (Barnett 2010).
Following the resignation of Gordon Brown as Prime Minister, the ensuing
Labour leadership contest witnessed both David Miliband – the former
Foreign Secretary – and his brother Ed – the former Secretary of State for
Climate Change – compete against each other (Burns 2010). Ed was often
seen as being to the Left of his brother, illustrated by support from the UK’s
largest union, Unite (Elmhirst 2010) and endorsements from former Labour
Party leader Lord Kinnock (Wheeler 2010b).
Progress endorsed David Miliband (Ferguson 2010), offering him the platform
as keynote speaker at their Annual Conference in May 2010 (Progress 2010).
David Miliband was the only candidate that supported the so-called ‘Darling
plan’ to halve the deficit over four years (Parker et al. 2010) which would have
seen cuts of 20% to all non-protected departments (Eaton 2010), whereas
other candidates – including the eventual winner, Ed Miliband – said that the
Brown and Darling pledge was only a “starting point” (Parker et al. 2010).
Prior to the general election in 2010, former Chancellor Alistair Darling
announced tougher measures to tackle the deficit (Elliott 2010), the impact of
which would have been to push up the value of sterling, potentially hindering a
rebalancing of the economy in favour of manufacturing and exports (Elliott
2010).
Incidentally, David Miliband received £185,265 more in donations to his
leadership campaign than the second highest candidate, Ed Balls, who
47
accumulated £28,419 (Mulholland 2010). With David Miliband’s position on
the economy in mind, it is worth breaking down the donations. Silvergate
Investments Ltd donated £50,000 to his campaign (Bowcott et al. 2010), and
David Claydon of UBS – the investment bank based in the City of London –
also donated £50,000. David Sainsbury donated £31,188 including the use of
office space (Mulholland 2010), and Progress staff and volunteers made up a
ninety-strong team of ‘DM4Leader’ activists (Mulholland 2010).
During the campaign, Matthew Norman suggested that David Miliband was,
“too attached to his mentor, Mr Tony Blair” (Norman 2010) and that
announcing an intention to launch an inquiry into New Labour’s relationship
with Rupert Murdoch might win him the contest (Norman 2010). No such
announcement was made.
5. Conclusion
I intended to illustrate the significant influence of the elite through an analysis
of the 1983 general election, when both the media and the corporate elite –
specifically Rupert Murdoch and David Sainsbury – contributed significantly to
Labour’s defeat. It was such influence, one might contend, that prompted the
Labour Party to seek the approval – and ultimately the influence – of those
that occupy the higher circles of power.
Whilst party donations are vital, I wanted to discern the level of political power
the elite had in Britain other than through robust financial means. This
48
manifested itself in an analysis of the Murdoch family, their connections and
their influence, all of which the Labour Party evidently held in high regard.
The influence of the corporate elite, illustrated by the Commission on Public
Policy and British Business was explicit, and although there is scope for
corporations to work with the government to ensure that economic conditions
are pragmatic, the Labour Party gave the chief executives of the largest
corporations an unprecedented amount of influence over decisions regarding
policy, whilst refusing to acknowledge Will Hutton’s advice on the economic
restructuring Britain needed. Neglecting comprehensive regulation of the
financial sector ultimately left the country open to the financial crisis, such is
the level of Britain’s Gross Domestic Product that is derived from the City of
London.
Ed Miliband, leader of the Labour Party, recently apologised for the former
government’s failure to act, “of course, I am sorry for what happened in terms
of regulation. The question is what you do now. And that’s why I say you have
got to sort out regulation. It wasn’t just the failure of regulation that was the
problem, it was the banking system, the financial system, wasn’t doing
enough to support those future industries” (Green 2011). Evidently there was
an alternative.
Whether the Labour Party reverts back to a more social democratic approach,
given the anticipated decimation of Liberal Democratic support, remains to be
seen. Less reliance upon support from Conservative voters – and therefore
the elite that controls the media – suggests that this is plausible.
49
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