How Tony Blair’s Labour built the ‘New Corruption’

Tony Blair embraced Thatcherism

Once upon a time, revelations that firms recommended by Tory politicians were on a “VIP lane” for Covid-19 contracts would have rocked a government. They would have caused such a massive scandal that any previous administration would have been lucky to survive. There would inevitably have had to have been some resignations, with ministers sacrificed in order to save the prime minister. It would probably have been someone like health secretary Matt Hancock. This would have been the only way to ride the scandal out. 

Similarly, if it had become public knowledge that a housing minister had overruled objections for a luxury development by a company owned by a Tory donor, he would have resigned. The move potentially helped Richard Desmond save a £45 million community infrastructure levy, which would have gone to pay for public services in east London’s deprived Tower Hamlets. Not today. Robert Jenrick is still in post. 

Times have changed. Today we are living in the era of the “New Corruption”. Whether it’s the Greensill scandal, the Dyson affair, the petty sleaze of that posh spiv Boris Johnson or the tasteless refurbishment of Downing Street, they are all emblematic of a corrupt political system. 

There are some who blame all this on Johnson himself. The man is widely acknowledged, even by most Tories, to be a corrupt chancer, someone without any principles, without an ounce of integrity, concerned only with his own advantage. Someone who is constitutionally incapable of telling the truth. But the fact is that Johnson is a symptom of—rather than the cause of—how corrupt the British political system has become. 

Now, of course, there has always been political corruption. And most MPs from all parties, whatever the reason for their going into politics, have invariably ended up looking after themselves. But the uncomfortable fact is that today we live under a regime where corruption is actually central to the functioning of the system. The time is long overdue that we acknowledge this reality. That corruption is an essential part of the British state’s routine everyday operation, that we live under a regime that can be usefully described as the New Corruption. How did we get here?

At the end of the 18th century, politics in Britain was completely dominated by the great landowners. They ruthlessly pillaged the state, staffing it with their creatures and using it both to protect their wealth and power,

and to further enrich themselves. This was known as the “Old Corruption”. 

It was a political system that reflected the enormous social inequality in Britain. There was an enormous disparity between the wealth and power of a tiny handful of aristocrats and the great mass of the British people. This system was dismantled in the course of the 19th century with the emergence of the capitalist class and a professional middle class, and with the rise of the labour movement. 

The aristocracy survived by merging their interests with those of the capitalist class. The great landowners invested in banking, business and property development and the capitalists bought great landed estates and titles.

One good example of how the capitalist class embraced their aristocratic betters is provided by John Gladstone, a successful slave owner with estates in Jamaica and Demerara. The abolition of slavery saw him receive £106,769 compensation for his 2,500 slaves—in today’s money over £10 million. 

He had already bought an estate in Scotland for some £80,000—in today’s money nearly £9 million—was an MP for a number of years, and in 1846 became a baronet. His son, William, a strong supporter of slavery at the time, was the future Liberal prime minister. Clearly the British state throughout the 19th and 20th centuries was a brutal imperialist affair. It was dedicated to looking after the interests of the rich, to suppressing the subject peoples in the colonies and ensuring the continued subordination of the working class at home. But it had embraced a certain middle class respectability so that corruption, while it was certainly still a routine affair, was not central to the operation of the system. And the perpetrators, if caught, had to pay a price and resign. The civil service was no longer in the hands of the rich, but was recruited by examination and maintained a conservative independence.

This began to change in the 1980s with the triumph of Thatcherism. There were two dimensions to this transformation. First, the defeat of the labour movement. And second, the destruction of the coal industry and the deliberate dismantling of Britain’s manufacturing industry. Instead, Thatcherism embraced banking and finance. These were always key sectors of the British capitalist economy, but now the wasting of manufacturing was seen as a way of crippling the labour movement once and for all. 

The defeat of the Miners’ Strike of 1984-85 was decisive. But it is also important to remember the Wapping dispute of 1986, which saw the defeat of the print unions and the rise of Rupert Murdoch. Here was a man who infected the British political system, with politicians from all parties catching the disease. 

Mass unemployment was used by the Thatcher government as a deliberate weapon to hold down wages, weaken union organisation and increase the power of employers. And it was under Thatcher that the privatisation of the British state began. Once again, the British state became an object of pillage by the rich—but in this new era, it was pillage by the capitalist class. The basis for this was provided by the great, indeed historic, increase in the wealth and power of the rich and super rich.

Thatcherism was, of course, decisively rejected in the 1997 general election. Labour came to office with Tony Blair as prime minister and Gordon Brown as chancellor. The problem was that, while the electorate had rejected Thatcherism, the Labour leadership had embraced it. Not only did they not roll it back, they consolidated it and indeed even extended it. Blair actually flew out to a famous meeting with Murdoch on the Hayman Island. He kissed the press baron’s ring shortly before the general election and gave him an effective veto over legislation once in power. And Blair also cultivated a certain Richard Desmond, at the time another press baron. 

Brown actually came from the Labour Party’s soft left. As early as 1989, he had complained that “an extraordinary transfer of resources from poor to rich has taken place”. And he said it was “difficult to argue that there remains even a common interest between the top 1 percent to whom Mrs Thatcher has given so much, and the rest of the nation”. He complained bitterly about increasing inequality. By the time Labour came to office, the situation was considerably worse but Brown had changed. He had himself actually embraced Thatcherism. He was also wholly committed to Labour’s client relationship with the union buster Murdoch, competing with Blair for his favour.

What had brought about this change? Brown, it seems, had come to the conclusion that the labour movement was a permanently spent force and that in the modern world any government could only govern if it was at the service of the rich and super rich. Indeed, he achieved a breakthrough in social democratic thinking. He concluded that the only way a Labour government could possibly increase government expenditure was if the capitalist class was in a position to make a substantial profit out of it. This gave birth to the public private partnership (PPP) and the private finance initiative (PFI), which sees private firms build public buildings and then charge extortionate rents and maintenance costs. 

The sheer scale of all this was incredible. By 2003, 34 hospitals, 239 schools, 34 fire and police stations and 12 prisons had been built with PFI finance. By the time Labour lost office in 2010, nearly all NHS investment was being financed by the private sector. Brown time and again proclaimed that Labour was the government of big business and that the enthusiastic embrace of the market was the way, indeed, the only way forward. On one occasion, he actually told the CBI bosses’ organisation that “business is in my blood”. He even went out of his way to praise Thatcher for helping Britain “rediscover a new and vital self-confidence”. And as for the trade unions? Well as Blair told his Alastair Campbell, “They can just fuck off.”  And it was under Labour that private consultants were increasingly brought in to replace the civil service. Whereas in 1995 the Tories had spent some £300 million on private consultants, between 1997 and 2006 Labour spent in the region of an astonishing £70 billion.

What is remarkable is that the Labour Party went along with all this. When Ramsay MacDonald had defected to the Tories in 1931, the Labour Party had not gone with him. When Blair and Brown embraced Thatcherism, the Labour Party went with them, including many on the left. It is worth remembering that Margaret Hodge used to be on the left. And that Chris Mullin, one of left winger Tony Benn’s chief lieutenants, actually supervised the privatisation of air traffic control and was positively enthusiastic about private prisons. Mullin, in particular, was very concerned with how lazy public sector workers were. 

Someone as reactionary as David Blunkett—another former Labour leftie it is worth remembering—would once have felt obliged to defect to the Tories. Now he could quite happily remain in the Labour leadership with his close friendship with union buster Murdoch causing no problems whatsoever. For a while, Blunkett even had a column in the Sun newspaper, worth £150,000 a year. And he was, quite hilariously, at one point to be paid nearly £50,000 a year for advising Murdoch’s News International on social responsibility. 

It is always worth emphasising that it was under Labour that the privatisation of the NHS began. Decisive, however, is the fact that when Blair and Brown took office in 1997, the richest 1 percent had 20 percent of the country’s wealth and by 2004 they had 24 percent. According to one estimate, the richest 1 percent were individually on average £737,000 better off under Labour than they had been under the Tories. The position of the rich and powerful in British society had never been stronger, not since the 18th century. One last point worth making is how Brown responded to the 2008 financial crisis. Its impact in Britain was undoubtedly seriously worsened by his deregulatory regime. But before he lost office, he had made quite clear to big business that if re-elected he would impose a regime of austerity and carry through further extensive privatisations in order to protect the rich and powerful. This was not to be. David Cameron took office and launched his austerity offensive. 

One last aspect of the New Corruption is the welcome extended to the global rich. Tens of thousands of people, many born and raised in this country, have faced the openly racist hostile environment policy. But for the global rich, there has been the golden visa policy, facilitating their settling in the country. Indeed, under the Tories, Britain has become a global centre for money laundering and has proven particularly attractive for rich Russians. 

The Tories’ embrace of Russian money has actually caused some alarm in unlikely quarters. In July 2020, the Times newspaper in an editorial, called “Boris Johnski,” warned about the danger of the Tories being overwhelmed by sleaze. It pointed out that no less than “14 government ministers, including six cabinet ministers, have received donations from individuals or companies linked to Russia”. 

Lubov Chernukhin has given £1.7 million to the Tories since 2011 and another Russian Alexander Temerko has given £1.3 million. These, it is safe to assume, were not charitable donations. It shows how bad things are when even Murdoch’s Times is worried. 

And, of course, Johnson has also given a peerage to another super rich Russian, Evgeny Lebedev. He is now Baron of Hampton in the London Borough of Richmond and Siberia in the Russian Federation. You could not make this up. We have to relentlessly expose and fight the “New Corruption”.