Let us take them, please, at their word. All the senior figures across government tell us that their true north, their lodestar, their central purpose is economic growth. Growth brings confidence, a more relaxed social fabric, the funding for more adequate public services.
There are good arguments about whether GDP is a sensible measure, but the government that brings growth is, these days, by and large a successful government. Its society is more law-abiding, less paranoid, more tolerant.
It follows, therefore, that policies which today could make us less productive as a country are policies the government ought to regard with something between scepticism and hostility.
Which takes us briskly to the question of Labour’s new workers’ rights agenda, a huge theme for the Trades Union Congress (TUC) in Brighton this month, and then at the Labour conference in Liverpool later in September. Keir Starmer, struggling with the parliamentary and trade union revolt over the winter fuel payment, is determined that the conference will be dominated by the Budget, and Rachel Reeves’ further “tough choices” (a phrase he hammered home in a recent interview with the BBC’s Laura Kuenssberg).
But Labour conferences are not, thank goodness, just top-down rallies, and there are sufficient union-backed MPs present to ensure that the rights agenda isn’t manhandled off to a quiet corner.
Let us start by acknowledging that we are living in the tail end of a failed neoliberal experiment on the British economy. Productivity is everything; and during the Tory years, British labour productivity grew at half the rate of the 25 richest countries in the world. Cut taxes! But as Will Hutton has pointed out, despite British tax revenues as a proportion of GDP being lower than most other EU countries, the growth rate of almost all our rivals has been higher.
This is a historical issue, about investment and about training. Total fixed investment in the UK has been dreadful over the past 40 years, and that had a direct effect on real people’s lives. According to the Resolution Foundation’s 2022 report “Stagnation Nation”, real wages grew by 33 per cent per decade from 1970 to 2007, but this rate of growth fell to below zero in the 2010s. Result? “Low income households in the UK are 22 per cent poorer than their counterparts in France,” and “typical household incomes are now 9 per cent lower”.
So, insisting relentlessly on the importance of economic growth and productivity isn’t somehow “right wing”; it’s fundamental to an anti-poverty agenda.
There is the old Tory default position: give workers as few rights as possible, keep union membership and wages tightly screwed down, don’t worry too much about expensive training, exploit migrant labour wherever possible; and on the other side of the corridor, don’t buy that pricey new kit but suck out as much profit for dividends and bonuses as possible… But all this has been tried, tried, tried, ad nauseam. Britain has been one giant experimental lab. And the experiment has gone badly.
That’s the starting point. But it is possible to over-correct. Britain has a work problem. According to the Chartered Institute of Personnel and Development, which covers 6.5 million employees, the average rate of work absence now stands at 7.8 days per employee per year, a big jump from the 5.8 days before the pandemic.
Or put it another way. The Institute for Fiscal Studies says there are now 4.2 million working-age individuals – one in ten – claiming a health-related benefit. That could rise to 5.4 million by 2028-29, more than two million more since 2019-20, “with the rapid increases in health-related benefits cases that began in the pandemic projected to continue”.
Or put this a third way. Yes, British workforce activity has recovered to pre-pandemic levels – but it hasn’t bounced back to anything like the same extent as in Ireland, the Netherlands, Germany, Spain, and many other countries also competing for the same investment we need.
We can blame NHS waiting lists and offer mental health counselling. But is there not a quiet, widespread change in behaviour going on, with many of us choosing to quietly withdraw from the working world? Not everybody outside the workplace is languishing with long Covid; not everyone taking time off because of stress is too stressed to carry out any work that might help their fellow citizens.
Even in the workplace, the lure of a quieter life is growing stronger. Stories from friends in different sectors, including public service, tell of employees instantly taking sick leave for stress if criticised – and then returning, if they do, brandishing bullying claims.
Yes, of course, there is bullying: but is there really a sudden epidemic of it, or is this about fashion? The best governments don’t just pass laws, but nudge behaviour in virtuous directions – and in this case, to be clear, “virtue” means more people working hard to grow the economy.
Now, most of Labour’s new workers’ rights agenda is about basic fairness, and is long overdue. The ban on zero-hours contracts, the ban on fire and rehire, protection against unfair dismissal and lack of sick pay from day one, the ending of unnecessary rules to stop union membership – all good.
And of course, the right to ask for a four-day week and compressed hours doesn’t mean getting those things – but you can see why employers in both public and private sectors are getting uneasy about that, and about the “right to switch off” in a labour market where the atmosphere isn’t exactly Stakhanovite. Many more referrals to many more tribunals is not a recipe for higher productivity, or investment.
But here is where it gets interesting. Ministers involved point out that the commitment to trying to get to the highest growth in the G7 also includes the phrase “in a way which benefits everyone and every community” – in other words, fairer distribution is baked into “growth”.
The pledge from ministers was that the workers’ rights agenda would be legislated for within the first hundred days. That pledge will be fulfilled. But there has been intense cross-government discussion with business about the detail, where the devil famously resides. At a roundtable held earlier this month by Angela Rayner, the Deputy Prime Minister, and the Business Secretary, Jonathan Reynolds, companies such as BT, McDonald’s, Premier Inn and Millets queued up to explain how much of the new agenda they are already implementing.
Some of the alarm among smaller businesses, ministers insist, is the direct result of ideological and hostile media reporting. Is it, they ask, so different from the cries of despair when the minimum wage was introduced? The four-day week does not mean working four days for five days’ wages; nor, ministers insist, will the legislation be cast in a way likely to lead to a flood of tribunal cases.
Labour ministers say that the spread of retail and call-centre jobs replacing heavy industry, and the proliferation of new technological tools, means there is a genuine need for a rethink about hours and workers’ rights. Something similar was promised by both the May and Johnson governments, and never delivered.
But this is a difficult, narrow line for the new government to tread. It must never forget its north star of growth. Yet Labour also needs to break with neoliberalism, even at a time when everything it does will be twisted and caricatured by an intensely hostile media. Keir Starmer faces a tough blooding from the TUC. But he must be the boss, not a supplicant.
[See also: Is Jeremy Corbyn trolling Keir Starmer?]
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This article appears in the 11 Sep 2024 issue of the New Statesman, The Iron Chancellor’s gamble