Public sector finances will hang over the next government like a dark cloud, the Institute for Fiscal Studies warns, and it’s difficult to disagree. With growth expected to remain low, getting the national debt down will mean cuts to public spending, or tax hikes. Labour has promised to be fiscally disciplined, so in government it will find itself as shackled to our £2.7tn debt as the current one.
Many of the policies Labour believes in, be that a loosening of the benefits purse, renationalisation, more NHS appointments or fixing crumbling school buildings, may be left in the waiting room until the economic position improves. Funds from the only definite tax raids for now (on non-doms and private schools) have already been earmarked to pay for an additional 6,500 teachers, although less costly proposals such as planning reform could be implemented quickly.
None of these ideas should particularly bother business, but two flagship Labour policies will do.
The first is the party’s onerous clean energy proposals, which could expose businesses to hefty fines and court battles (see here). The second is a package of workers' rights draping significant new responsibilities on the shoulders of employers and tilting power in the workplace away from bosses.
Companies have the ear of politicians – the private sector is after all the ticking heart of the economy – which is why Labour’s original ‘New Deal for Workers’ has already had a few of its sharper edges sanded down and been renamed ‘Make Work Pay’. Leader Kier Starmer has stated the party will consult with businesses, and workers, ahead of laws being put on the statute books.
But the revised proposals retain the power to radically alter the relationship between employers and their workforces, particularly in sectors that value flexibility such as hospitality and retail.
Many large employers already offer better rights and protections than they are required to by law. So Labour’s wish list – including proper contracts, a genuine living wage, flexible working, better parental, sick, carer and bereavement leave policies – may not pose an issue for them. Removing the waiting period for new workers before they can access such rights and protections will also not worry bosses too much. In addition, responsibility for workers’ mental health is to be placed on a par with physical health in the workplace – also increasingly common among large employers.
But the plans will pose a steep challenge for smaller and younger companies, alongside other reforms, such as changes to zero-hours contracts, which were to be banned but will now be permitted as long as contracts are drawn up based on the hours worked in the first 12 weeks. A ban on probationary periods was dropped and new workers will continue to be subject to them, albeit with tighter policing.
Where the real gulf between employers and Labour lies is in the latter’s intention to repeal anti-strike and anti-union legislation, to give unions new rights to organise freely within workplaces and to call strikes without the hindrance of “complicated balloting, notice rules… and unnecessary legal requirements”. For many, this will be a retrograde step. Making it easier to strike will not lay the foundation for a prosperous economy, it could be argued.
Employers will also be duty bound to inform all new employees of their right to join a union and to remind them of this regularly. And because too many people, says Labour, have been unable to get jobs that allow them to raise a family, collective bargaining on wages is another stated ambition, although this will initially be restricted to the care sector.
Labour argues the country’s “lack of worker rights”, low wages and a clampdown on unions have trapped us in a low-productivity cycle. It hopes to achieve a greater degree of equality between workers and employers – with the two sides becoming partners in productivity. But a strong and stable economy is not its only aim – it also wants to drive up living standards and needs to rope employers in to help out.
Strengthening worker rights may be an antidote to the worst type of employers (they do exist – think garment manufacturing in Leicester for example) and driving out exploitation and insecurity is no bad thing. But Starmer’s promise to level up workers’ rights in a way that has “not been attempted for decades”, and drive a step change in how people exercise control over their working lives, will make bosses wince. Envisage more regulations, litigation (a well-resourced enforcement body will be established) and battles with unions.
Labour says it is “turning the page on 14 years of failure” – but is it turning the page forwards or backwards?
