Sixty years ago when Harold Wilson spoke of harnessing the “white heat” of technology to remake Britain, he warned there was no room for “restrictive practices or outdated methods on either side of industry” in his scientific revolution.
As a disciple of Wilson, who readily peppers his speeches with Wilsonian references, Keir Starmer will know the longest-serving Labour prime minister of the 20th century was referring to luddite bosses and militant trade unions. To get Britain moving both needed addressing.
Labour had serious problems in the 1960s with wildcat strikes. Through Barbara Castle’s In Place of Strife reforms, Wilson’s government sought to take on the unions, but lost. Hugh Scanlon’s tanks remained parked on the prime minister’s lawn, setting up a turbulent 1970s packed with painful industrial battles.
Two months on from Starmer’s landslide win, the political right reckons Britain is back in such a moment. The Conservative press reckons it has found an achilles heel to exploit: the Labour party’s links to the unions. Having agreed above-inflation pay deals to break the deadlock with striking workers, the warnings are that “the age of the union baron and statism is back”.
Six decades on from Wilson’s “white heat” speech, however, trade union power has dwindled to but an ember. Starmer isn’t surrendering over beer and sandwiches, but settling reasonable deals to wipe the slate clean after the mess left by the Conservatives.
The balance of power has changed beyond recognition from Wilson’s day. Unions have been left boxed in by the legislative crackdown kickstarted by Margaret Thatcher in the 1980s. This has given the other side of industry the whip hand – to the point where the dominance of capital over labour is causing more damage to living standards than the other way around.
The latest evidence suggests the imbalance of power is among reasons behind Britain suffering the worst period for wage growth since the end of the Napoleonic wars. Wages have barely budged since the 2008 financial crisis after adjusting for inflation, while estimates from the Resolution Foundation show average pay could be 15-25% lower than it would otherwise have been because of the scales being tipped in employers’ favour.
At the conservative end of this estimate, the thinktank warns this amounts to the average worker today losing out on almost £100 a week.
Most economists believe Starmer’s pay deals won’t do much, if anything, to stoke inflation – a point that has also been made by Andrew Bailey, the Bank of England governor. For decades, public sector pay has trailed behind private, while more recent strength represents a catchup to past inflation.
International Monetary Fund research shows wage spillovers from the public to private sector are stronger in countries with larger shares of state employment and union density. But as Sonali Punhani, an analyst at Bank of America, points out, Britain falls below the OECD average on both counts.
“This could mean that public sector wage rises are unlikely to set the tone for the rest of the economy in the UK,” she says.
From a peak of more than 13m in the late 1970s, trade union membership has more than halved, and accounts for less than a quarter of the workforce. There are pockets of strength, including in public sector jobs such as teaching and health, but in others, representation is closer to zero.
To redress the balance, Starmer intends to repeal some union-busting measures and strengthen workplace rights. To the rightwing papers and Tory MPs this is the next phase of Labour’s capitulation to its “union paymasters”. But they have badly misread the room.
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There is a certain irony of Tory MPs standing up as pro-growth champions, on the side of industry, after the flip-flopping and “fuck business” approach taken by the previous government during the Brexit years. The collective amnesia on the blue benches is such that it glosses over Theresa May’s attempts to strengthen workplace rights to tackle the gig economy, and that the party’s own leadership contest would be void under trade union legislation, for using the dangerously proletarian method of electronic balloting.
For the most part, the mainstream of business is fairly relaxed about Labour’s proposals. Good employers know the benefits of a motivated workforce, while the new government has opened the door to work with businesses to ease the implementation of its changes.
This month, the deputy prime minister, Angela Rayner, and the business secretary, Jonathan Reynolds, brought in 25 representatives from unions and business to Downing Street to discuss the changes – a meeting that followed months of similar events held before the election had been called.
There are still worries on both sides, with concerns about the breadth and pace of change, or lack of it. And there are hardliners in both camps, too. Still, those in the room say the new government committed to taking a “phased approach” to its changes, prioritising simple measures, before tackling legislatively complex ones.
“The meeting was very good for tone. The tripartite system [government, employers, unions] everyone agrees on,” says one business attendee. “Both sides know what some of the challenges are. They’re trying to find a landing spot for both of us. If it ends up being really binary then everyone loses.”
After decades where the balance of power has favoured employers, strengthening workplace protections is no bad thing. It could bring benefits for both sides of industry.