The costs of Labour employment rights
Aquestion mark hanging over Sir Keir Starmer just months from polling day remains how his party will fund its spending plans while maintaining fiscal discipline. In her Mais Lecture last month, the shadow chancellor said a future Labour government would adhere to the same debt target as the current administration, which may severely constrain spending unless taxes increase.
The Opposition has made much of its “New Deal for Working People”, which, in addition to bans on zero-hours contracts and fire and rehire, fewer restrictions on union activity, and employment rights from day one of a new job, will bring in a new system of pay bargaining in adult social care.
The sector is in crisis, with a vacancy rate more than double that of the UK economy as a whole. But while Labour has trumpeted the benefits of its proposal, on the costs, which could be many billions per year, it has been markedly quieter. Local authorities are responsible for publicly funded care; their real-terms budgets have fallen by almost a third in the past 12 years, during which time socialcare pay per hour has slipped behind that of retail assistants. How would Labour meet this shortfall, how much would be borne by those in care, and would higher pay be accompanied by desperately needed improvements to this neglected sector?
Social-care roles were added to the Government’s shortage-occupation list in 2022, and can be filled by overseas workers on wages up to a fifth lower than companies are permitted to pay British staff. Will Labour close off this visa route, given that Sir Keir has described net migration levels as “shockingly high”?
Nor can the practical implications of collective bargaining be easily ignored, with about 18,000 organisations supplying adult social care. Allowing the Government to be closely involved in their wage-setting may lead to inevitable questions over why other low-paid groups shouldn’t also get special treatment. How would Labour resist such demands?
The promise of better workers’ rights overlooks the substantial increase in employment regulation already brought in by successive Conservative governments. The ambition may be to take this further, but Labour needs to explain how this can be achieved without worsening productivity, or taking resources that voters may prefer were allocated elsewhere – including on ensuring that Britain has a social-care system that provides the old with security and dignity.