Less focus on tackling economic inequality in party manifestos than the 2019 election, but Labour victory could bring about most progressive reforms to worker and union rights for a generation
It is a happy by-product of the London housing crisis that the HPC team have no lawns to watch grow or freshly painted walls to watch dry (paint to watch peel would possibly be more likely).
Instead, we’ve spent some time reviewing the party manifestos published ahead of the UK general election this Thursday on July 4th, with a particular focus on issues relating to economic inequality, corporate governance reform and responsible business practice.
Labour
Labour are widely expected to win the election so their manifesto is probably the most worthy of attention because the commitments contained therein are not just hypothetical.
The most significant commitment in the manifesto, certainly in respect of the areas we work on, is the promise to implement the party’s ‘New Deal for Working People’ in full.
The New Deal sets out plans to provide day one’ rights for workers protecting them from unfair dismissal, expand provision of sick pay, institute a right to ‘disconnect’ from out of hours work and establish a ‘fair pay agreement’ for sector-wide negotiation of minimum pay levels in the care sector.
There are also some incredibly wise and well-advised commitments to require employers to inform workers of their trade union rights and to include indirectly-employed workers in pay ratio and gender pay gap disclosures. You can read HPC’s calls for the introduction of these policies in our reports on pay ratios and worker voice in corporate governance.
Together these measures would have a non-trivial impact on pay and working conditions in Britain, empowering generally lower and middle-earning workers to secure a fairer share of the wealth that their work helps to create. Additionally, the New Deal for Working People includes vaguer commitments to review parental leave, strengthen collective bargaining and assess how fair pay agreements might benefit other sectors. All policies discussed are subject to the fairly hefty caveat that the Labour manifesto emphasises that they will consult fully with business and other stakeholders before implementation.
Away from the workplace, Labour commits to some degree of progressive taxation on private schools, energy giants and non-doms.
Compared to the 2019 General Election the manifesto is limited in its direct focus on tackling inequality, and either taxing the rich more confidently or instituting measures that would prevent such profound inequalities from emerging in the first place. It’s probably not helpful for those of us who would like to see these kind of policies introduced to pretend the fact that Labour lost the last election empathically when promising them, and is now on course to win by absolutely miles is just coincidence.
Demonstrating the practical benefits of worker representation on boards, more effective taxation of the super-rich and regulations aligning business practice with the interests of wider society in terms of productivity and living standards is going to remain an important but challenging tax post election.
Conservatives
The 14 years of Tory rule have actually seen some reasonably enlightened moves on corporate governance, including the introduction of shareholder ‘say on pay,’ pay ratio reporting requirements and better reporting of directors’ responsibilities to workers, suppliers, customers and other stakeholders as outlined in section 172 of the Companies Act.
But that’s a phase of their life that they no longer like to talk about. This manifesto makes minimal reference to issues such as corporate governance, worker rights and economic inequality. A proposal to ban bonuses for the executives of water companies, if the company has committed a serious criminal breach is a rare exception. Ditto the pledge to continue the implementation of the Minimum Services Act. On tax and low pay, there is a plan to continue to cut national insurance and increase the minimum wage.
Proposals to reduce the burden of bureaucracy on business, potentially include reducing the corporate governance and reporting burden, seem more in keeping with the spirit of today’s Conservatives, and perhaps also with the business zeitgeist. Theresa May’s reforms introducing pay ratios, section 172 reporting and some (admittedly very weak) exhortations to appoint worker directors to boards took place against a backdrop of a myriad of industry-led initiatives promoting “purposeful business” or “stakeholder capitalism.” Today the emphasis, led by the Government commissioned ‘Capital Markets Task Force,’ seems much more on the abandonment of constraints on multi-million pound executive pay awards and a more light-touch approach to corporate governance. It will be interesting to see if big business continues to lobby to this effect in the event of a change of government.
Liberal Democrats
The Lib Dem manifesto contains a number of thoughtful and interesting corporate governance policies. They propose that companies should produce a formal statement of corporate purpose and report formally on their social and environmental impact (as advocated by the High Pay Centre in our recent submission to the Corporate Governance Code consultation. However there’s nothing on worker representation on company boards, which was in their previous two manifestos
On tax, they commit to reforming capital gains tax (40% on gains over £50k and 45% over £100k) and pushing for a global minimum of 21% corporation tax – the principle of international cooperation on tax to avoid a race to the bottom and secure vital funding for public services is a vital one that should be applied more widely, though the Lib Dems themselves don’t say anything about similar co-ordinated action of taxation of super-rich individuals.
There are also a host of employment policy including a new ‘Worker Protection Enforcement Agency’ to enforce rights like the minimum wage, plus a higher minimum wage for workers on zero hours contracts. But no mention in the entire document of anything to do with trade unions.
Green Party
The Green manifesto gives the impression of being the most exercised by extreme concentrations of income and wealth, and makes the boldest policy proposals in respect of these problems. Policies include a maximum 10:1 pay ratios for all private and public-sector organisations, a wealth tax on all people worth £10m or more, equalising capital gains tax with income tax and a stronger windfall tax on energy giants.
As with the Labour manifesto there are pledges to strengthen worker and union rights. In the case of the Green Party this includes introducing a charter of worker rights delivering equal rights for all workers currently excluded from protections, including ‘gig economy’ workers and those on ‘zero hours’ contracts.
Reform
It’s fair to say economic inequality and workers rights aren’t a huge priority for Reform, perhaps not unrelated to the fact that a significant proportion of the party leadership had highly advantaged upbringings, background working in well-remunerated roles in financial services and considerable personal wealth. The party proposes to increase the minimum threshold for paying income tax to £20,000, which would represent a tax cut for low earning workers, but would mostly benefit those on higher incomes. They also plan to raise the plan for higher rate tax to £70,000 and reduce corporation tax from 25% to 20%.
The principal commitment on workers’ rights is to reduce them, by relaxing employment laws. Putting aside the merits or otherwise of this policy, one wonders about the political benefits to Reform. The party and its predecessors have historically drawn most of their support from older voters, but are currently polling quite well with those in their teens and early twenties. There are lots of workers this age in low-paying, exploitative work in industries like catering and hospitality, retail or the gig economy with very little control over their working lives. The fact that these are demographics that don’t vote in large numbers and aren’t represented amongst the type of people that lead, advise or fund political parties ought to make them a fruitful target for Reform’s branding as self-styled outsiders. Perhaps the party are missing a trick by pursuing a fairly orthodox hard right economic programme in the Thatcher/Reagan tradition, rather than a more social democratic approach in line with radical right parties elsewhere in Europe.
Analysis
By comparison to 2019, the three largest national parties – Conservatives, Labour and Liberal Democrats – are all at least somewhat more tepid on what they propose to do in terms of tackling excessive pay and economic inequality. That said, if as predicted and Labour win the election, their manifesto is certainly more ambitious, particularly in terms of strengthening worker and union rights that that of any governing party for at least a generation. Moreover, in areas such as corporate governance reform where Labour is relatively vague in terms of its planned reforms, we hope there is scope for the Party to introduce progressive measures when in government.