Neoliberalism is Decaying

To paraphrase Kenneth Wolstenholme of 1966 World Cup fame, the neoliberals thought it was all over. The final whistle had been blown and the Hayek-Thatcher-Reagan-Friedman team had won. Nothing more to argue about, history’s verdict was in. Sensible leaders on ‘the other side’, like Blair and Brown, acknowledged the result. There was nothing left to do but laugh all the way to the bank, literally in Tony Blair’s case, to cash the cheques that the End of History had written.

They are not laughing any more. The elite is struggling to come to terms with a world in which all it believed was solid starts in its turn to melt into air — free trade, globalisation, the transatlantic alliance, US hegemony, the European Union, capitalist democracy, even liberalism itself. The post-1979 consensus is over.

The 2017 general election was, as Jeremy Corbyn said, ‘the year politics caught up with 2008’. The economic impact of the crash had finally found an electoral expression. Since the shock of the 2017 election, undead neoliberalism has continued to wreak one misfortune after another in Britain. This is the twilight of Thatcherism, to give it the proper British name. But it is not ready to go quietly.

What came in with bombs and bullets in Santiago goes out amid social calamity. As Chilean democracy was being taken down in 1973, Grenfell Tower in west London was going up. In a fire immediately after the 2017 general election, the twenty-four storey public housing block built between 1972 and 1974 was destroyed, with the loss of seventy-two lives. The inferno in North Kensington was an accident, while the coup in Chile was all too purposeful. But they are connected by the threads of neoliberalism. The principles which Pinochet adopted from Hayek and Friedman unwound at Grenfell throughout its forty-three years in occupation. It is a parable of the Thatcherite dogmas of privatisation, deregulation and public penny-pinching, written in ashes.

Each prime minister played a part, dismantling the safeguards in place at the time of Grenfell’s construction. Mrs Thatcher scrapped the London Building Acts of the 1930s, which mandated that external walls have at least one hour of fire resistance to prevent flames from spreading between flats or entering inside. Her 1984 Buildings Act introduced competition into the inspection of regulation compliance. John Major expanded this, allowing different companies to license building inspectors, and creating a competitive market for ensuring that building regulations were met, thereby introducing two perverse incentives — those inspectors who were cheap would be preferred, likewise those who had a record of waving projects through.

Enter Tony Blair. The Economist wrote in 2018 that his task had been to ‘broaden and deepen Thatcher’s reforms’. So it proved in the matter of building regulation. After a fatal fire in Scotland, his government mandated that sprinklers be fitted in all new blocks of flats more than about eleven stories high, but with no requirement to install them in existing tower blocks. Blair also introduced the Regulatory Reform (Fire Safety) Order (RRO) in 2006, which ended the government’s responsibility to certify that buildings had met fire codes, and shifted it instead to self-policing by owners. Those who found this too burdensome could commission private companies, licensed or not, to do the work. Meanwhile, a company marketing non-combustible insulation as a fire-safe alternative to plastic was tied up in several years and millions of pounds’ worth of litigation initiated by the plastic insulation industry.

Under David Cameron, Celotex, the company which would supply the plastic insulation used in the cladding at Grenfell, was included on an advisory panel on revising building regulations to meet targets for lowering carbon emissions. The UK market for plastic insulation doubled, and Celotex profits increased rapidly. Liberal Democrat minister Stephen Williams rejected calls for the installation of automatic sprinkler protection in older tower blocks: ‘I have neither seen nor heard anything that would suggest that consideration of these specific potential changes is urgent.’ Tory Housing Minister Brandon Lewis was blunter, warning that the requirement to fit sprinklers would ‘affect house building — something we want to encourage’. Building homes that are affordable, safe and profitable to the builder was apparently too challenging to contemplate. According to the British Automatic Fire Sprinkler Association, around 4,000 blocks had not been retrofitted at the time of the Grenfell fire — the cost to cash-strapped local authorities appearing to be the main reason.

However, the market that had been created for testing cladding systems had become very lucrative. One client of the privatised Building Research Establishment (BRE) revealed that it was paid £20,000 for each test, and there were dozens each year. By 2014, the quantity of cladding and insulation systems needing BRE certification was so great that a new method of approval was required to speed things up. The trade body for private building inspectors, the Building Control Association (BCA), published fresh guidelines, allowing that ‘if no actual fire test data exists for a particular system’ then the opinion of qualified experts, such as those at BRE, would be sufficient. Private inspectors had determined that the opinions of experts funded by the industry they opined upon could judge that untested combustible materials were safe under government regulations.

Austerity was then piled atop this rackety system. According to the Fire Brigades Union, ‘fire brigade safety officers are struggling to carry out audits’ under Blair’s RRO system ‘because of cuts to their headcount’. By 2016, the number of fire safety officers stood at less than half of the 1,500 employed in 2006. According to Home Office data, 63,021 fire safety audits were completed in England in 2015–16, 18 per cent down on the 2009–10 figure, and representing just over 4 per cent of the 1.5 million buildings identified by fire authorities as subject to the RRO. Nevertheless, 30 per cent of those buildings that were audited were deemed unsatisfactory, indicating that as many as 450,000 across England as a whole may not have been compliant with fire safety regulations.

On top of this, ‘half the fire cover within four miles of Grenfell Tower has gone in the past four or five years’, according to the General Secretary of the Fire Brigades Union, Matt Wrack — fewer engines, fewer crews within easy distance. Against the background of this incremental collapse of the inspection and regulation regime under successive governments pressurized by private profit, the renovation of Grenfell Tower was undertaken. Combustible decorative panels were fitted to the building’s exterior. It has yet to be definitively determined, as of early 2019, whether or not the cladding conformed to UK regulations. It is believed that the panels may have contained a flammable foam equivalent to 30,000 litres of petrol. Sprinklers were not retrofitted. As the work was being finished, the BRE was paid by the government to tell them if tower blocks were safe. In April 2016 it found that ‘there is currently no evidence . . . to suggest that the current recommendations . . . are failing in their purpose’. So building safety control was deregulated, privatised and marketised all the way to 14 June 2017, resulting in the cutting short of seventy-two lives.

Austerity’s Wake

We are always advised not to ‘politicise’ tragedies. But the people of Grenfell Tower were not victims of a lightning strike. Every step towards the catastrophe was prodded by political decisions based on the orthodoxies of the neoliberal state. Grenfell was the worst, but not the only, calamity. The collapse of outsourcing giant Carillion in January 2018 was also emblematic of this rotten regime. The company had grown fat on state contracts for carrying out work which, a generation earlier, would have been done by the public sector itself. MPs charged with investigating Carillion’s bankruptcy found ‘recklessness, hubris and greed’ on the part of top management and the board.

The victims of the collapse included at least 2,000 workers made redundant, a pension scheme with a £2.6 billion hole in it and 27,000 retired workers facing payment cuts, something the Pensions Regulator had failed to address. All this while huge dividend payments and management bonuses continued to be paid unimpeded, and £2 billion was owed to small business suppliers. Since Carillion went bust, there has been a 20 per cent rise in the number of building firms going bankrupt as the repercussions rippled outwards.

In water, privatised companies have mainly passed into the hands of avaricious hedge funds which have loaded them with debt while costing consumers £2.3 billion more than when they were in public ownership. Even the Financial Times was obliged to acknowledge that water privatisation had ‘failed’. It editorialised:

Prices have risen faster than inflation. The regulator has been ineffective at imposing efficiency improvements . . . When Thames Water spilled billions of litres of excrement into public waterways in 2013, its chief executive was not sacked. He later received a 60 per cent pay rise . . . Management incentives are based entirely on financial delivery. Almost all the industry’s post-tax income is paid out in dividends, while capital expenditure is financed by borrowings, which now stand at £42 bn. There was no debt burden at the time of privatisation.

Our railways suffered much the same fate: the fragmented network, with control divided between track owner and train operator (not neglecting sundry banks, building firms and an armada of railway lawyers), costs the public more than two billion a year in net subsidies to private companies whose failures are legion. Even the Tories have been forced into the role of reluctant re-nationalisers as the franchisees for the premier East Coast Main Line have gone belly-up for the third time. Opinion polling, meanwhile, has shown huge public support over many years for restoring the railways to public ownership.

Securing any sort of place to live has become an impossible aspiration for millions. This, too, owes to a privatisation — in housing. Social housing has been radically reduced, as far more council-owned homes are sold off than are being built new. Instead, councils are having to fork out small fortunes in payments to private landlords to accommodate homeless families, often in deplorable conditions. Councils have to buy back properties they have had to sell, at a huge mark-up.

Targets for affordable housing in new developments are consistently diluted or evaded by the developers — often new properties are immediately sold to foreign investors who wish to hold them, empty, as a store of value rather than a home.

In local government, councils are edging towards bankruptcy — a neoliberal novelty — as the funding necessary to deliver community and social services is reduced by half or more. The first council over the cliff was Northamptonshire, a Tory-run county which had burnt through its reserves with ill-considered outsourcing schemes, a dogmatic refusal to raise council taxes and the hiring of expensive consultants.

So, neoliberalism limps towards the twilight, trailing the homeless, the impoverished, the indebted and the immolated in its wake. Its economic model is broken, its political project exposed as an exercise in the assertion of class power by and for the rich. Politics stands at a turning point analogous to 1945, when the election of the first majority Labour government laid the basis for thirty years of social-democratic governing norms; or to 1979, when Thatcher began the reversal in the name of the assertion of classical liberalism. This is a moment made for an alternative agenda.

The end is everything, the movement nothing, to invert the famous formulation of German SPD leader Eduard Bernstein in the ‘revisionist controversy’ of 120 years ago. The aim of the left is not merely to secure the leadership of the Labour Party, nor even just to win a general election. Those steps are only way-stations — on their own they do not improve many people’s lives, still less rise to the scale of the challenges facing the world.

The aim of the left, in Britain as elsewhere, is a new society. It is now once more respectable, after a lengthy hiatus, to call that society socialism — and relevant to debate once more is what ‘socialism’ might mean. One thing has definitely changed already — the political weather. Combined with the advances since 2015, this creates possibilities, but only that. The left’s progress has been fought every step of the way so far, and that combat will only get more intense.