TWO MEN were forced to testify before a government committee last week after being accused of stashing away £100 million. It should be branded as one of the biggest scandals of New Labour's government. The two, John Towers and Peter Beale, are the bosses of Phoenix.
New Labour rushed to greet them as the 'saviours' of the Rover plant in Longbridge, Birmingham, after it was threatened with closure four years ago. And Towers has been an 'enterprising' businessman since then, the sort that New Labour praises.
He 'restructured' Rover to hive off the most profitable parts. Phoenix's four directors stand to make £31 million on top of the £100 million if the car business collapses, according to a Guardian investigation. Already each is guaranteed £3.5 million on top of their salaries and pensions. The scandal is not just the scale and speed of their enrichment. Towers' fortune came after a massive popular revolt in Birmingham to stop the closure of Longbridge.
Anil remembers the announcement by owners BMW in March 2000 saying they wanted to close the plant. 'I had worked at Longbridge since I left school. We felt like we were finished.' There was widespread shock. Tens of thousands of workers would be hit by the closure. But shock turned to anger and within weeks Birmingham had its biggest demonstration in living memory.
Up to 100,000 workers and their families, trade unionists and supporters poured onto the streets from across Britain. 'The demo gave us hope,' says Anil. 'It was a wicked turnout. The demo was the only thing that stopped BMW from just shutting the place down and walking away. 'But it was clear then that the government had no intention of stepping in.' The closure threatened to open up a real crisis for New Labour.
Blair had been elected just three years earlier saying he supported workers and supported bosses. Who would he support when the bosses sacked the workers? Stephen Byers was at the centre of the Rover crisis as trade and industry minister. He was one of Blair's most aggressive pro-business figures. The head of policy at the Institute of Directors, Ruth Lea, was quoted at the time saying, 'He is our minister, our representative in the cabinet.'
Byers was part of the pro-Blair team that had junked the party's commitment to public ownership in 1995, and championed 'competition' and 'enterprise'. New Labour wanted to send a signal to all workers that the government, just like the Tories before them, would not 'interfere' with the free market. If thousands lost their jobs, so be it.
New Labour relied on its supporters in the trade union leadership to ram that message home. Blair's strongest union supporters, Sir Ken Jackson and Roger Lyons, were then at the head of two of the unions, the AEEU and MSF. Bill Morris, also a Labour supporter, was head of the TGWU. Tony Woodley, now leader of that union, was the TGWU's national official for the car industry at the time.
All of them spoke about the need to save jobs. But none of them were prepared to lead a fight for those jobs and all agreed they would not rock the boat for New Labour.
'We just wanted some guidance,' says Anil. 'It was the time to start picketing. And everyone at the demo would have been out at the gates every day. Longbridge was very strong at that time.'
This from a workforce that had not struck for 12 years and accepted every rotten deal from BMW to work harder, for longer hours. Some of the stewards and workers at Longbridge were angry and frustrated at the lack of a fight.
But the union officials argued against strikes. BMW had lined up the asset strippers Alchemy to take over. Union officials wanted to encourage an alternative bidder. So when John Towers appeared on the scene New Labour and the union leaders jumped at the opportunity to 'end' the crisis at Rover.
Towers was a millionaire former boss at Rover. His pitch was that he would cut thousands of jobs from the 9,000 workforce but it would be fewer than Alchemy, the asset strippers. To many at Longbridge, desperate to keep their jobs, it seemed like the only option. That is exactly how New Labour and the union leaders portrayed it. One worker at the time said, 'The works committee are putting everything into the Phoenix bid. They are jumping for joy. I still want renationalisation but we are not being allowed our say.'
When BMW finally signed the deal with Towers, Blair rushed to grab the credit. 'I hope people will recognise the contribution of Stephen Byers, who ensured the government did what it could to bring this about,' he said. MSF leader Roger Lyons gushed, 'This is wonderful news. Our campaign and support for the Phoenix bid has saved jobs.'
Sir Ken Jackson of the AEEU said, 'Manufacturing has gone through a turbulent period but an upsurge in public opinion has turned in our favour. The demonstration over Rover in April achieved the result the workers wanted.' Bill Morris of the TGWU said, 'I think we will work well together,' and Woodley added that he was 'absolutely over the moon'. The terms under which Towers bought Longbridge were a scandal.
He paid just £10 for the Rover plant, free of debt and with around 60,000 unsold cars. On top of that BMW handed over a 'dowry' of £500 million which ended any liability over redundancy payments. First Union, one of the biggest banks in the US, gave Phoenix another £200 million.
But a 'Phoenix insider' told the Guardian in May that year just what Towers had in mind: 'The atmosphere of crisis at Longbridge and relief among the unions over its survival should enable management to push through changes and job cuts which would not have been possible under normal circumstances.' That is exactly what happened.
Anil says, 'This was supposed to be the deal to save Longbridge. But most of the workforce has gone. When I add up the figures I don't believe there are more than 3,000 of us left here.' By August there were new rumours of job cuts at Longbridge and even the threat of closure by spring 2001.
When workers in two sections held stoppages over cuts the union officials rushed to get them back to work, saying they endangered future production at the plant. By November Towers had pushed through an extra hour on the working week on a narrow vote among the workforce.
Anil is still angry about the way the crisis over Rover was handled: 'Blair and Byers were full of shit. They backed away from the promises they made. They backed Towers. He's done the same as Alchemy would have done, only a bit slower. Has this whole thing just been about lining the directors' pockets? We have had threats every year since that if we don't accept deals the place could close. Rover is still in the news today and still the government haven't done anything. We were an embarrassment to the government then and we still are.'
Now Anil has decided to challenge New Labour at the polls: 'I'm standing as a candidate for the Respect coalition because I see workers' rights violated and I think we need our conditions to be under our control. I feel strongly about the war and other issues but trade union rights are an important thing for me. Management are always bullies. I wasn't bullied at school and I didn't intend that to happen where I worked. The more I have seen, the more resentment I feel. There are always demands on workers. No one ever puts any on management. During the firefighters' strike I tried to get support by taking round a petition and collection sheet. They were workers who risked their lives and the government told us they were being greedy for wanting a pay rise. I want to help make Respect stronger. It's about kicking Blair in the face-not personally obviously!-but it's about showing there is an alternative out there.'
FIGURE IT OUT
£10 was all the Phoenix consortium needed to buy Rover from BMW
On top of their yearly salaries of £282,000 and their pension arrangements, John Towers and Phoenix's four other directors are each guaranteed... £3,500,000