The Guardian view on Labour’s business deal: higher immigration for more workers’ rights
If the next election were simply a referendum on the Conservative record since 2010, voters would evict Rishi Sunak from No 10. The next national vote won’t be a referendum, of course. It will be a choice between the two big parties. But economic slumps shunt most other policy issues to the margins. The Organisation for Economic Co-operation and Development’s warning that Britain will suffer a period of stagnation that no other leading industrialised country will experience in the next two years should see Labour even further ahead in the polls than it is today.
The Treasury and the Bank of England are cutting public spending and raising interest rates to cut demand in the economy. This will, both these institutions think, bring down inflation, but at the cost of increasing unemployment and poverty. Yet inflation has probably peaked. With workers unable to force up their real wages, there is no way of perpetuating the supply shock wave caused by Russia’s invasion of Ukraine beyond its initial blast. The Office for Budget Responsibility predicts that Britain will experience deflation for two years from 2024.
The pain that people will suffer could be alleviated by government action to lower the cost of moving goods through the supply chain and to reduce household bills. The Tories are capping charges for each unit of energy. But Mr Sunak, who uses private schools and private medicine, puts more faith in market mechanisms than in the actions of government. This is why energy support is being made less generous next year. But even worse than a donothing government is an apparently do-nothing opposition. On Brexit and austerity Labour seems, superficially, to be offering Tory-lite policies. Alas, this caution so far also appears to extend to schools and the NHS. There is also, regrettably, very little analysis by Labour of the causes of Britain’s high levels of inequality – for fear of exposing itself to questions of ownership and control in the economy.
Nevertheless, Sir Keir Starmer’s speech to the Confederation of British Industry was not one that a Tory prime minister would give. His offer of a partnership between trade unions, government and business is a good idea. Labour has also been fighting ministers’ reckless post-Brexit plans to let many workplace protections and environmental safeguards lapse next year. Sir Keir understands that many employers do not favour the free movement of people, they favour the free movement of people without rights. Hence his pitch to business: in exchange for being able to import skilled labour, employers should give workers more training as well as better pay and conditions, and invest in new technology. Labour’s plans to enable collective bargaining across swathes of the economy is potentially a decisive break with a failed economic model. There is more to Sir Keir than meets the eye; it’s just less than one would hope for.
Labour’s leadership might think the political cost of showing its hand is higher than the political cost of not doing so. But with support for nationalisation and redistribution at record levels, Sir Keir is missing an opportunity to shift politics on to favourable Labour territory. After a decade of austerity, the rising costs of an ageing society and the escalating demands of a green economy highlight the need for a bigger, more activist state. Sir Keir’s soul-searching about “sound money” when so many face a bleak economic outlook risks infecting the body politic with cynicism, to the detriment of Labour – and the country.