As the economy languishes in a double dip recession, and more and more economists advise the Government to change course, it is clear that the coalition’s ideological agenda is losing support.

The economic failure of austerity – as predicted – has come to pass. The government’s response is more cuts, more privatisation, more deregulation and more tax breaks for the rich and big business. Yet this is a weak government with no mandate for its policies. Its internal fragility has been underlined by the huge split over constituency boundary reform, the Lib Dems' retaliation for the Conservatives’ dumping Lords reform. Increasing numbers of backbenchers from both governing parties are openly voicing their discontent. Opinion polls show voters too have had enough. But replacing this government with Labour committed to a programme of cuts would achieve little. People need fundamental change. Despite some initially good policies, the decision of the Hollande government in France to stick to the Merkel-Sarkozy austerity programme has seen its popularity plummet in recent weeks.

Union leaders have a duty to give confidence to their members at this time, when the weakness of the government can allow workers to make real gains. The mobilisation for the anti-austerity demonstration on 20 October should be massive, tapping into the growing opposition and anger at this government.

The 2012 Congress, meeting in Brighton in the second week of September, will debate some key policies like the public ownership of the banks, rail renationalisation, and tackling the housing crisis. But the major decision is this: does the union movement want to smash the pay freeze with a credible programme of action or has it only the appetite for a set-piece protest?

The pay fight goes to the heart of austerity. There can be no economic pickup without pounds back in people’s pockets. Whether it’s the public sector pay freeze or private sector pay restraint to bolster profit margins, workers are taking a hit while taxes are cut for the rich and corporate profitability increases. Pay is a crucial battle in defeating austerity and re-establishing organised labour back as a force. Are unions up to the challenge?

This is a time – like never before – to educate, agitate and organise. That slogan featured in the resolution that brought this magazine into this new era. Labour Briefing readers voted to transfer to the Labour Representation Committee (LRC) because all the education and agitation in the world is transient unless it can be organised.

Our job, as the labour movement, as the left and as party members, is to rebuild a Labour Party worthy of the name – to convince those trade unionists, and even trade unions, that had walked away that there is a fight and we can win.

RMT general secretary Bob Crow on the space opening up for debate on the public ownership of rail

The sorry spectacle of Virgin’s Richard Branson and First Group boss Tim O’Toole at each others’ throats over the right to siphon cash out of the West Coast Main Line threw a fresh spotlight on the troubled rail industry. In the blinkered eyes of the bulk of the media, the spat boiled down to a beauty contest between rival entrepreneurs offering to pay billions to the Treasury to run a key spinal rail route. The tragic reality though is that rail franchising is a mechanism not for injecting private cash, but for transferring huge sums of taxpayers’ and farepayers’ cash into shareholders’ bank accounts.

Six years ago, the Transport Select Committee damned the franchising system imposed by the last Tory government as “fundamentally flawed” and its then chair, Gwyneth Dunwoody, said that it could deliver “only fragmentation and short-term thinking”. Since then, the East Coast franchise has collapsed twice in the hands of privateers, only to be rescued by the public sector and, incredibly, put up for lease again. When National Express defaulted on the East Coast it was even allowed to retain its other franchises. That scandalous trend was continued when First Group handed back the keys to the Greater Western franchise, neatly sidestepping an £800 million payment to the Treasury, but was allowed to hold on to its other rail contracts – and now finds itself favourite to run the West Coast line.

Nearly a decade ago the South Eastern franchise was run, very successfully, in the public sector for more than two years after the original franchisee, Connex, was sacked – only to be hived off once more.

Franchising’s defenders say that the private sector pours massive investment into the industry, but this is bunkum: private cash accounts for only one per cent of rail investment, and the rest comes from taxpayers and passengers. In fact, there is a net drainage of some £1.2 billion a year from the rail industry as a result of privatisation, and the cost to the public purse has tripled. But if franchising was already fundamentally flawed, it has become a weapon for implementing brutal cuts and fares hikes thanks to the McNulty report, now adopted as government policy.

Roy McNulty, commissioned by new Labour, noted that Britain’s railways were more expensive than those elsewhere in Europe, but conveniently failed to consider that those more efficient railways were publicly owned. So rather than look to stem the flow of public cash out of the industry, his perverse conclusion was to slash up to 20,000 jobs, abolish guards, close ticket offices, cut platform staff, water down and fragment maintenance and cut ‘unprofitable’ routes – while imposing inflation-busting fare increases year on year.

The latest round of fare increases rightly sparked anger among passengers, and we know that passengers, particularly women travelling alone at night, want to see more staff on stations and trains, not fewer.

We know that our environment needs a policy that encourages people to use trains more rather than pricing them back into cars.

RMT will not stand by and watch our industry wrecked, but this is an attack on passengers as well and we need a united campaign alongside rail users, transport and environmental campaigners and trade union councils. Together, all the rail unions and the TUC, have launched Action for Rail, a campaign that aims to build opposition to the government’s plans and to pose the alternative of a people’s railway, playing a vital and growing role for the economy and the environment.

We owe it to the generations to come to prevent a blow to the railways that would take decades to put right.

• Get involved in Action for Rail, visit www.actionforrail.org

There is a growing disconnect between the elites and the people. For millions of ordinary people, there is the daily reality of Britain’s double-dip recession – job insecurity, rising homelessness, public service cuts and lost pension entitlements. For the elites, it’s party time: an opportunity to offer to lunch bloodstained dictators as part of the Queen’s Jubilee celebrations and to prepare for the big rip-off – the white elephant of the Olympics, now priced at a staggering £24 billion. And this too has become an opportunity to ratchet up the pain as greedy landlords demand treble the usual rent from tenants for the duration, or face eviction.

This disconnect is nothing compared to the chasm now opening up across Europe between the people and the economic elites. Everywhere that the people have been given an opportunity to speak, they have rejected austerity. In France, a Socialist President has been elected for the first time since 1988, committed to renegotiating the European Stability Pact. Even in Germany, voters in state elections have rejected Angela Merkel’s monetarist policies.

It is in Greece where developments are most polarised. The two institutional parties that have dominated politics since democracy was restored polled less than a third of the vote between them. Anti-austerity parties made a huge breakthrough and could get a majority in fresh elections in June.

None of this registers with the unelected European Commission, IMF or European Central Bank – the Troika, which continues to impose the harshest austerity measures across Europe on the people who can least afford them in order to safeguard the banks. In Greece, 90% of the bailout is to protect interest payments on the country’s debt – virtually nothing is going to help the economy itself. It is this crushing diktat that the radical left coalition Syriza is rightly demanding be renegotiated. The intransigent response of Europe’s elite shows its contempt for democracy. Its open preparation to expel Greece from the euro is a gun to the head, encouraging capital flight and bankrupting the economy.

While the Con-Dems’ austerity may seem mild by comparison, there is no doubt that, as the recession worsens, the cuts will deepen – the death spiral. It doesn’t have to be this way. Jonathan Portes, Director of the National Institute of Economic and Social Research, wrote recently, “With long-term government borrowing as cheap as in living memory, with unemployed workers and plenty of spare capacity, and with the UK suffering from both creaking infrastructure and a chronic lack of housing supply, now is the time for the Government to borrow and invest. This is not just macroeconomics, it is common sense.” Noting that “public sector investment –spending on building roads, schools and hospitals – has been cut by about half over the past three years and will be cut even further over the next two,” he calls for a £30 billion investment programme. Others, like the Financial Times’ Chief Economics Editor Martin Wolf, are demanding more.

Is it just crass stupidity that keeps the Con-Dem Government determined to pursue a failed economic policy? Not at all. There are broader political considerations at stake – a golden opportunity to use the downturn to drive down workers’ living standards, force through privatisation, deregulate the economy and destroy public sector trade unions.
Where they can, people vote against such attacks. If the traditional parties are unable to mount effective opposition, the Greek experience shows they may be swept aside.

Here Labour needs to get off the fence and articulate a clearer opposition to the Government’s policy. Public support for such an approach is clearly there, as May’s local election results underline.

People will continue to take to the streets to fight for their rights. Here too there is growing polarisation. But protest alone will not be enough. It is necessary to propose a political alternative. Investment in jobs, affordable housing, infrastructure, health, education and renewable energy is part of the answer – but people will rightly ask how it’s all to be paid for.

Radical redistribution is unavoidable. We need a wealth tax, a Robin Hood tax on financial transactions, a Land Value tax, a higher rate of income tax on the biggest earners and a clampdown on tax evasion and avoidance – all ideas discussed by John McDonnell MP in this issue. We need to cut the defence budget and to end the costly and immoral intervention in Afghanistan. We also need a political expression for such ideas. They must be put forward for adoption at every level of the trade union and labour movement if we are to stand any chance of success.

The choices are stark: an economy where the banks take everything and people are increasingly reduced to penury, or a socialist alternative that confronts the power of capital and puts humanity first.