ON WEDNESDAY, Labour’s Chancellor John Healey announced that he has appointed TUC general secretary Paul Nowak to the board of the Bank of England.
Healey appointed Nowak to serve on the Bank of England’s board for the next four years as a non-executive director.
The appointment of Nowak to the board of the UK’s central bank was met with predictable howls of rage from the Tory and Reform parties along with the right-wing press.
Andrew Griffith, Tory shadow chancellor, said: ‘The last thing our country needs is a trade union leader helping to run the Bank of England,’ adding: ‘If it wasn’t obvious who is driving the Labour government’s agenda, this should give you a good idea.’
All this carefully confected outrage is designed to cover up the fact that since the end of the Second World War, the TUC and leading trade union bosses have always been granted a seat on this board.
Nowak is taking over from former TUC general secretary Francis O’Grady, who served on the board from 2013, after being appointed by a Tory government.
Nowak is joining the long line of trade union and TUC leaders who have been appointed to a board that meets six times a year and has no influence over the direction of the Bank of England.
For bureaucrats like Nowak, it satisfies the reformist dream of having a seat at the table along with the bosses.
For the bosses, it means having labour leaders committed to holding in check the powerful working class from rising up and challenging bankrupt capitalism and the rule of the bosses and bankers.
Yesterday, the Bank of England Monetary Policy Committee, which has the power to set interest rates, voted by six to three to hold interest rates at 3.75%.
This was the sixth time in a row that the Bank has held interest rates and it comes at a time of rising inflation stoked by the massive increase in energy costs resulting from the failed US war on Iran.
The typical response of central banks to rising inflation is to increase the interest rates, leading to higher payments on mortgages and loans discouraging workers from spending their money on fripperies like food, leading, in theory, to inflation falling.
This theory is dominating the thinking of the US Federal Reserve and the European Conatal Bank who have both recently increased their interest rates.
The Bank of England governor Andrew Bailey and the majority on the Monetary Policy Committee are scared that an increase would be the catalyst for increasing wage demands from workers to offset the inflationary increase in the cost-of-living, which Bailey claims has not yet reached a crisis point.
Bailey said: ‘So far higher global energy costs have had limited effect on price and wage setting in the UK,’ but warned that the longer the imperialists’ war in the Middle East persists ‘the bigger the impact it will have on inflation, and the more likely it is we will need to raise the Bank Rate’.
The chaos at the heart of the Bank is a direct reflection of the huge world crisis as all the contradictions of capitalism have reached the point of explosion.
One thing is clear, whatever the Bank decides about interest rates, it will not solve the crisis of a capitalist system that in its final stage of imperialist decay can only survive through wars abroad and class war at home to make the working class shoulder the burden of economic collapse.
Nowak’s appointment to the Bank’s board is intended to bolster the trade union bureaucracy and prepare them for the role of propping up collapsing British capitalism, by diverting the working class from taking action against the bosses and bankers.
The only demand that can resolve the crisis, is for the working class to force an immediate re-call of the TUC conference to organise a general strike to bring down the Burnham government and bring in a workers government – a workers government that will nationalise the banks and major industries, placing them under the ownership of the working class and building a socialist planned economy.
This is the way forward.
