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ESTABLISHED 1828 Labour vs labour Growth, growth, growth: that was what Keir Starmer told us would be his government’s priority in his first press conference as Prime Minister. Nearly three months on, as the Labour party heads into its first conference in power for 15 years, it is becoming ever harder to reconcile Starmer’s promise with the policies that his government seems determined to deliver. With junior doctors voting to accept a 22 per cent pay rise, yet another group of public sector workers has been lavished with financial reward without any obligation to accept or implement more productive working practices. The NHS is in the midst of a pay bonanza at a time when productivity in the health service has been declining. Since the pandemic, ever more employees are delivering significantly fewer treatments. As NHS England admitted recently, productivity in acute medicine is still down 11 per cent on pre-pandemic levels. It is the same issue on the railways, where train drivers – already among the best-paid groups of workers in the country – have been awarded a 14 per cent increase over three years, again with no conditions attached. Where James Callaghan spent much of his time in office reminding workers that pay rises must be earned through productivity gains, and Tony Blair would insist that extra money had to come with reform, Starmer has shied away from the subject altogether. Britain is supporting a sprawling government machine whose employees are no more productive than they were when Blair came to power 27 years ago, according to the Office for National Statistics. The tax burden is the heaviest in modern history and the rising cost of government is one of the biggest pressures facing households. And yet a Labour leader who does not come from a trade union background, and who has made a great show of taking on the left of his party, could turn out to be the most union-friendly Labour prime minister in history. Business Secretary Jonathan Reynolds tells us that people who work from home are more productive. Where is the evidence? And why, if this is so, did we learn this week that Amazon, one of the world’s most successful companies, has ordered all its staff back to the office five days a week? Labour has promised employees flexible working, the right to switch off and so on, but employers are offered nothing but pain. Chancellor Rachel Reeves appears to have stepped back from her original plan to force employers to pay higher national insurance Labour has promised employees flexible working, but employers are offered nothing but pain contributions. Yet it looks as if they will be hit with the obligation to respect more stringent employees’ rights, possibly from the first day of their employment. As employers have warned, such a system would undermine the concept of probationary periods and act as a huge disincentive to create new jobs. If an inadequate employee cannot be fired easily, they are less likely to be hired in the first place. Labour has already begun to offend some of its new-found supporters from the world of business. Three months ago, Richard Walker, executive chairman of supermarket chain Iceland, was chosen to launch the party’s manifesto after switching support from the Conservatives. Yet a fortnight ago he warned the government he helped to elect that it could drive his business to bankruptcy if it proceeded too quickly with workplace reforms or jacked up the national minimum wage too sharply. His turn reveals that Labour’s support 21 2024 . . . from the business sector is flaky at best. Business leaders switched allegiances before the election because they hoped that by supporting Labour they could mitigate against the worst of the new government’s plans. It is far from clear that they will be successful. From an employee’s point of view, the government is damaging the incentive for hard work by threatening higher taxes on savings and investments. We have yet to hear Reeves’s first Budget, but it is expected to contain some constriction on pensions, perhaps limiting tax relief or doing away with the right to take a tax-free lump sum upon retirement. A government with a genuine desire to promote economic growth would not be acting in this way. But then again, very few of Starmer’s front bench have ever run a company or created jobs first-hand. Britain’s relatively flexible labour laws have created comparatively low unemployment in recent years. Why damage that now by emulating France, a country with high levels of job security but where it is far harder to find stable employment in the first place? Labour’s plan to clamp down on zerohours contracts fundamentally misunderstands the role that this form of employment plays in the economy. Not only do such contracts allow businesses to expand and contract their workforces in tune with economic conditions, they also allow opportunities for staff who want to choose their hours. That is genuinely flexible working, by mutual agreement of employee and employer – yet it is an arrangement the government wants to all but ban. Labour, as its name suggests, has always been the party of organised labour. But on current showing, this is turning into an administration which lacks the pragmatism of previous Labour governments. If growth really is the objective, Labour needs to change tack quickly. 3

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