“The biggest question the Labour Party has to answer is what its economic policy is going to be in these difficult circumstances”, says John Monks. This month, the former TUC chief quits the European Trade Union Confederation after eight years as general secretary and returns to London to a seat in the House of Lords as a Labour peer. He has strong views on what leader Ed Miliband should be doing to attract the voters.
“Labour has to recognise that the casino economy was the wrong direction to take. It breeds bad habits. My advice to Ed Miliband and Ed Balls is to look at some European economies – not just Germany, but also the Nordic countries and the Netherlands. How are they running competitive manufacturing economies and balance of payments surpluses, in situations where wage and social costs are higher?”
After 18 years as a trade union leader, Monks has no plans to sit back and take life easy. “I want to continue to be active and this is the best offer I’ve had”, he declares. In the Lords, he aims to focus on Europe, the economy and employment issues. “And there are going to be a lot of those.”
Given the recent turmoil in some European Union economies, Monks’ advice to look to Europe might seem high risk. But industrial production in Germany expanded by 14.8 per cent in February. In contrast, Britain suffered its biggest fall in 18 months. Labour should join the “northern European mainstream”, says Monks, concentrating on rebuilding a manufacturing base, through making funds available and reorienting education back towards practical skills. Policy should promote genuine economic activities rather than financial transactions, as well as greater equality, including higher taxes on the “rich and comfortable” to pay for good social services and schools.
Monks points to two “huge windfalls” that enabled previous governments to ignore the decline and sell-off of manufacturing in Britain: oil revenues in the 1980s and the financial services “bonanza” in the City of London. “That’s gone and it won’t come back. The crisis was a massive accident waiting to happen and we will be paying the price for a generation.
“The broadest shoulders should carry the heaviest burden”, he insists, “and at the moment they’re not carrying very much at
all. Labour should not put up with this or be cowed. Even centre-right governments in Europe have much more generous welfare states than the UK. It’s the social market economies that are in the strongest position and the most liberalised, deregulated ones that are often in the worst. If anything provides a guideline for the future, that should do so.”
Monks might be excused for drawing some satisfaction from the fact that he saw the crash coming before many others. Back in 2006, he was warning about the “new capitalism” and the dangers of risk-taking in financial markets. “I’m not congratulating myself”, he says ruefully. “I was general secretary of the TUC until 2003 and I don’t think any of us knew the scale of what was going on. The main problem was not hedge funds and private equity, but in the mainstream banks. With leveraging, derivatives and so on, they adopted a way of business that was incredibly risky. Why didn’t anybody seem to know more about it in advance, including the Government and even the Bank of England?”
Under Monks’ leadership, the ETUC has led a fierce rearguard campaign against austerity measures in many EU countries and the harsh economic belt-tightening imposed by the European Commission. “Austerity under the coalition will lead to much higher unemployment and very low growth”, he predicts.
“You can see that in Ireland and what’s happening in Ireland is coming to Britain once the cuts come through. It’s not even the end of the beginning yet. These measures will plunge us into a more serious situation and it’s going to be extremely hard. The need to learn the lessons from more successful economies like Germany will be greater than ever.”
He slams the big banks for continuing “business as usual” after the crisis. “Tinkering” with banking regulation has failed to stop traders running operations with all the risks of another “bubble and burst”.
Monks says Britain is now more marginalised in Europe now than it used to be. And he sees little justification for self-congratulation because this country has not joined the single currency. “Devaluation against the euro has been 25 per cent in the past three years – that’s a very big hit – as if it was a great triumph to be 25 per cent poorer against our neighbouring countries. The harsh reality is that we have not been competitive.
“The sense that Britain is better off outside Europe is a false one. I will be encouraging the UK and Labour to be active in the EU and to be rather more positive. If Britain is marginalised in Europe we will be marginalized in the world – and we should not allow that.”
His view conflicts fundamentally with Foreign Secretary William Hague’s recent dismissal of a common EU approach in favour of a renewed emphasis on Britain’s bilateral relations.
Monks foresees hard times ahead for unions, with nationalist and far-right movements on the rise in various parts of Europe. The EU is at risk of deepening economic decline, partly due to its ageing population. “Compared with the rest of the world, Europe looks like an oasis of strong welfare states, public services and trade unions. But the social model is under tremendous pressure.
Everybody is beginning to understand that the workers are going to pay for the mistakes of the bankers. I don’t underestimate how tough it’s going to be for national and European trade unions. But I’m optimistic for the future of the ETUC – there’s still a lot of trade union strength that can be mobilised.” His successor, Bernadette Ségol, will be the first woman to lead the union movement at European level.
Monks is pragmatic about his elevation to the Second Chamber. “I’m under no illusions about the House of Lords and vanity doesn’t come into it. But the Lords can do things that Labour in the House of Commons cannot. While it remains part of the British political set-up, I am pleased to take part.” He admires not only leading Labour peers such as Roy Hattersley and Neil Kinnock, but also Shirley Williams and Chris Patten.
As an avowed pro-European, Monks is fascinated by European history, but determined the region should not become “a museum”. To ensure a strong future, Europe needs more solidarity and social justice. “I get more left-wing as I get older”, he reflects. “I’m immaturing with age.”
