The Labour Partys movement to the Centre: an explanation using the Wright Mills approach

Matthew Zarb-Cousin Contents

Page Chapter 2 9 12 23 31 47 49 Introduction C. Wright Mills Elite Theory David Sainsbury and the 1983 general election Tony Blair and the Opinion Maker New Labour and the Corporate Elite Conclusion 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 Partys 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 partys 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 Sainsburys 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.

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).

This dissertation will dispute Hays 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 Hays 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 governments 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 Labours 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 Blairs 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 Huttons The State Were 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 Heaths 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 Huttons 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

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 Blairs 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 Ramsays 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

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 publics 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 mans 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 Thatchers administration tripling unemployment (Ramsay 2002: 8). The general election in 1983 was an event that catalysed the partys 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 Heaths 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 Heaths 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 Heaths 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 Wilsons 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 Rothermeres relocation to Paris for the purposes of tax avoidance (BBC 1998), one might suggest that he was attracted to Thatchers 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 Mails 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. Murdochs acquisition of the Times and The Sunday Times in 1981, and The Suns 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 Murdochs clear Right-wing agenda that was behind many vitriolic personal attacks on Labour leaders, Michael Foot in particular. The Suns 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 reelection in 1984 only a year later, despite him being four years Foots 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 Thatchers disappointing first term. It would also be possible to contend that commitments in the Labour Partys 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 Thatchers 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. Thatchers 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 publics 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 Labours 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 Partys manifesto in 1983 was a credible document, and one might take into consideration the amount of people that actually read a partys manifesto. This is illustrated by the comparative demand for manifestos in 2010, as Waterstones politics buyer Andrew Lake commented, Ive 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 Waterstones 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 Sainsburys. 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 Sainsburys 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 Sainsburys 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 Davids 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 partys Steering Committee (SDP 2009) meaning that he played an active role in policy formulation and in the writing of the partys 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

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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 Thatchers 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 Ramsays (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 Partys failure in 1983.
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Toynbee highlights the legacy of the defeat, stating that if [the SDP] didnt 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 Partys 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 isnt 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

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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, hes 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 partys need to appeal to the Right, given the altered electoral landscape since the SDPs 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

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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 Britains 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 newspapers 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 Suns editorial did not change until 1997, but it maintained its approach of attacking the Labour government from a Rightwing 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 Obamastyle photo with the headline Our Only Hope, 43% of its readers voted Tory and just 28% Labour, therefore Oslers claim regarding the influence of The Suns 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.

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Murdoch vowed to continue that support but reneged on his promise before the 1979 general election. The Labour Partys opposition to News Corporation animosity derived from Thatcherite fanaticism and Murdochs 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 partys 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
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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 Murdochs 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 Blairs journey to the Hayman Islands came during a conversation with Alistair Campbell, in which he firstly mocked the content of Blairs 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 thats what the fucking leader says Ill fucking tell him too radical my arse. That woman fucking killed people Hes sold out before hes 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
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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 Labours 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 Murdochs News Corporation. He instead attempted to modify the editorial stance of the newspapers owned by the conglomerate so that they were in his partys favour, and he did so successfully. As well as dropping the partys 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

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the economic policies of the outgoing Conservative government, New Labour facilitated Murdochs 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 Murdochs 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
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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 partys 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 tycoons 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
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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 Partys movement to the Centre is the alleged influence Murdoch might have had over Blairs 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 Partys 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. Murdochs view on economic policy is not dissimilar to that of the City (Shawcross 1997), and the next chapter will illustrate how it was New Labours relationship with the elite in the City of London that shaped Browns 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

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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 Britains 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 Britains 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
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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 Were In (1995), which provided a credible antithesis to the supposed Thatcherite consensus that there was no alternative but to embrace deregulation and free-market nonintervention. Huttons argument was centred on the notion that Britains economy had declined relative to other countries because of a long-term economic dominance in the City of London, perpetuated by successive
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Conservative governments allowing a free rein to market forces (Anderson 1997; Hutton 1995). Hutton advocated a reassertion of the states 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 Blairs 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 Browns 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

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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 Labours 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 Huttons 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 Labours economic policies began to emerge in the financial pages of mainstream newspapers (Ramsay 1998a: 106).

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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 BadenBaden, 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 Partys 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

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media company, renaming the group Mills & Allen International. MAI moved into television in 1993 when Meridian Broadcasting, its 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 Blairs 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
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Aerospace, and in 1999 Simpsons General Electric Company sold its defence arm Marconi Electronic Systems - to them for 7.7bn (Janes Navy International 2009), illustrating the close corporate ties between those that took part. The commissions 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 Huttons 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 Labours 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.
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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),

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and his connection with New Labour occurred through Gordon Browns 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
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expensive (Ramsay 2008b). One might derive from the latter that New Labours economic policies favoured the corporate elite in the financial sector, rather than smaller-scale manufacturing enterprise.

Murdochs 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 Murdochs 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 Jamess 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. Murdochs daughter, Elisabeth, married the grandson of Sigmund Freud, Matthew in 2001 (BBC 2001). Matthew Freud is the multimillionaire owner of PR company Freud

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Communications (Harris 2008) and, aside from being Rupert Murdochs sonin-law, British Sky Broadcasting is one of Freuds 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 Freuds 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 Mandelsons 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 Peters Friends in The Sun incidentally a newspaper owned by Rupert Murdochs 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 Domes senior committees (Harris 2008), and he had a significant impact on the arenas content (Guardian 2000). Despite his understanding of politics being described by a Labour insider as not that deep and immature

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(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? Theres no clever way of answering that. No. No. I have expressed my opinions in political circles about, you know Im on various steering groups, some of which report to the Prime Minister (Sanghera 2001). Freud organised the party that celebrated Labours general election victory in 2001, and played a role in recruiting one of his clients, Spice Girl Geri Halliwell, to Labours 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 Freuds 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, Blairs former special advisor Kate Garvey became Freud Communications head of public and social affairs (Harris 2008), and Blairs former health secretary Alan Milburn is paid 25,000 a year to sit on the nutritional advisory board of one of Freuds clients, Pepsi (Harris 2008). It is possible to illustrate Elisabeth Murdoch and Matthew Freuds connection with the financial sector through their friendship with Jacob Rothschild. Shortly after Elisabeth Murdochs 40th birthday party in 2008, Rothschild hosted a dinner at his familys villa in Corfu, where Peter Mandelson was also a guest (Harris 2008). Rothschilds 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 Britains next generation of nuclear power stations (Orange 2005).

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Jacob Rothschild and the nuclear power lobby In order to demonstrate how the British power elite influenced the Labour Partys stance on nuclear power, it is necessary to go back to 1983. It is also worth noting Ramsays observation in his essay Uncle Sams 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 Britains 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 Companys defence arm to BAE, were members of the IPPRs Commission on Public Policy and British Business (Anderson 1997: 39), highlighted earlier. Rothschilds 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

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appointed by British Nuclear Fuels plc to handle the 1bn sale of the organisations nuclear clean-up arm, British Nuclear Group (Pfeifer 2006). David Sainsbury whose role in the Labour Partys 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 OCathain 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 Rivazs more explicit connection with the New Labour government was through Gordon Browns younger brother Andrew, who is EDF Energys 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 UKs nuclear power stations (EDF 2007: 74; Leake 2005). Incidentally, de Rivaz shared corporate ties with David Sainsbury until 2010, as Sainsburys supermarket offered Sainsburys 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
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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 Labours ties with the nuclear lobby heavily influenced policy formulation with regards to energy prioritisation. Mark Seddon, a member of Labours 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 Sainsburys 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 Mandelsons 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

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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 UKs 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

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accumulated 28,419 (Mulholland 2010). With David Milibands 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 Labours 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 Labours 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

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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 Huttons 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 Britains Gross Domestic Product that is derived from the City of London. Ed Miliband, leader of the Labour Party, recently apologised for the former governments failure to act, of course, I am sorry for what happened in terms of regulation. The question is what you do now. And thats why I say you have got to sort out regulation. It wasnt just the failure of regulation that was the problem, it was the banking system, the financial system, wasnt 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.

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