Labour can win by shaping policies to stem the growing gap between rich and poor | Larry Elliott

Even before the Covid-19 pandemic Britain was becoming a more unequal country. The crisis of the past 15 months has hit poorer blue-collar workers harder than better off white-collar workers but official figures last week showed that the gap between rich and poor households was already wide.

The trend is clear. The Office for National Statistics says the Gini co-efficient – one measure of inequality – has been increasing by 0.2 points a year for the past decade. During that time the incomes of the richest 20% – after tax, benefits and inflation were taken into account – rose by 0.9% a year on average, while those of the poorest 20% fell by 0.3% on average.

The ONS said the main reason for the widening gap was cuts to welfare payments, many of which have been frozen since 2016.

A separate official release last week – this time from the Department for Business Energy and Industrial Strategy (BEIS) – reported that the number of people belonging to trade unions was up in 2020 for a fourth successive year. It is worthy of note, though, that the increase was entirely due to more trade unionists in the public sector: coverage in the private sector fell to just 13% of workers, and to just 10% for the lowest-paid employees. Unionisation is up but at 6.6 million only half its peak level in 1979. Since then, the shape of the economy has changed, with fewer unionised jobs in manufacturing and more non-unionised jobs in the service sector.

Another feature of the UK’s labour market, identified last week by the IPPR, a left of centre thinktank, is the rising number of working people living below the government’s poverty line. Those in poverty are increasingly likely to be punching a clock, rather than drawing a pension. A record 17.4% of working households are in poverty, more than half the total for the UK as a whole, because they are struggling to get by on the wages they earn.

There are other things to throw into the mix too. Earlier this month, the TUC said only 1 in every 218 workplaces had received a safety check during the pandemic. There has been the trend – exemplified by British Gas’s treatment of the company’s engineers – of firing and rehiring their workers on worse conditions. Three quarters of people in a poll for the GMB union said this practice should be outlawed.

Go back a couple more months and Uber drivers won long court battle to be treated as employees, with access to the minimum wage and paid holidays.

All of this makes the current state of UK politics difficult to explain. Traditionally, the Conservatives are the party of the haves and Labour the party of the have-nots, yet a decade of rising inequality culminated in a thumping 80-seat victory for Boris Johnson in the 2019 general election.

On the one hand the UK’s flexible labour market involves millions of people in badly paid, precarious, potentially unsafe employment. On the other, the Conservatives appear to be marketing themselves as the party of working people.

It is not even as if the government has lived up to its promises. At the last election, Johnson promised an employment bill that would make UK labour rights the envy of the world. There were many pieces of legislation proposed in the Queen’s Speech earlier this month: an employment bill was not one of them.

One explanation is that a rift between Labour’s blue-collar and white-collar wings has provided the Conservatives with an opportunity to rebrand themselves as the voice of blue-collar Britain, even though in reality they remain the party of the well-heeled. Seen from this perspective workers are suffering from false consciousness, unable to see what is in their own best interests.

This reading of politics seems to fit with the loss of support for Labour in its former so-called “red wall seats, but doesn’t really stand up to close inspection. As an interesting blog post has revealed, Labour’s loss of support has not been so much among working age voters as among the elderly, who own their homes outright and can live relatively comfortably on their pensions.

Strip out pensioners and the profile of voting is pretty much what might be expected: people at the bottom end of the income scale support Labour while those at the top back the Conservatives. The tipping point comes at just above median income. So while Johnson won decisively in 2019, picking up lots of red wall seats in the process, it was older voters who swung it for him.

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This analysis matters. Firstly, it suggests that red wall seats remain in play. The idea that the deep structural problems of old industrial Britain are going to be solved by some catchy phrases and the politics of the pork barrel is a fantasy. Secondly, it suggests that Labour has no need to panic and should focus on putting together a package of measures aimed at improving the pay and conditions of workers.

In reality, that is precisely what the opposition is doing. Andy McDonald, the shadow secretary of state for employment rights and protection is working on a Labour’s New Deal for workers, with the involvement of other frontbenchers including Ed Miliband and Angela Rayner, and the full support of Sir Keir Starmer.

Ideas being considered include a clampdown on bogus self-employment, bringing together enforcement agencies for the minimum wage and health and safety under a ministry of labour, and legislation to make it easier for unions to organise and bargain collectively. McDonald’s view is that the UK’s labour laws need a complete overhaul, and there are millions of low-paid, shabbily treated, vulnerable workers in red wall seats and beyond who would doubtless agree with him.


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