Economic Justice Commission

Chi Onwurah Excerpts

Tuesday 11th September 2018 Westminster Hall

[Chi Onwurah (Newcastle upon Tyne Central) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I thank my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne) for securing the debate, for his excellent work as chair of the all-party parliamentary group on inclusive growth, and for starting the debate with such a passionate and comprehensive call for a change to the economy.

I also thank the IPPR for bringing together such an amazing group of commissioners—Justin Welby, Mariana Mazzucato, Frances O’Grady and Lord Kerslake, to name but a few—to carry out such a far-reaching investigation into economic justice and to reach such radical and, at the same time, common-sense conclusions, as we have heard. That is such a contrast with the “same old, same old,” right-wing, neo-liberal policies of this Government and their Tory-led predecessors.

The British people are sick and tired of being told over and over again—largely by the same smug and privileged voices—that there is no alternative to the economy-wrecking, service-slashing, opportunity-destroying, soul-sapping austerity agenda. The Brexit vote and Labour’s surge in the polls in last year’s election were both, in different ways, products of the paucity of economic justice under the current regime.

As my hon. Friend the Member for Ellesmere Port and Neston (Justin Madders) emphasised, we need to address the challenges of Brexit, but also the causes of Brexit. We are experiencing the longest period of stagnant wages for 150 years, with 6% of the workforce on short-term contracts and 3% on zero-hours contracts. UK productivity is 13% lower than the G7 average and we are, as we have heard, the most regionally imbalanced economy in Europe.

My hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) highlighted the plight of retail workers, but we see those kinds of conditions in other sectors across our economy. The commission’s assessment of those problems and of the need for the fundamental reform of the British economy matches the principles of Labour’s transformative economic programme. Indeed, many of the report’s recommendations are already Labour policy: a national investment bank with a regional network, compulsory diversity reporting for companies and a mission-oriented industrial strategy, as championed by leading economist and commissioner Mariana Mazzucato. Other recommendations we will look at closely as we prepare our programme for Government.

Having written before on the need for radical action to tackle our productivity crisis, I was struck by the commissioners’ detailed proposals here; their suggestions on data are a welcome attempt to take seriously the power of this new property that drives the new economy. We have heard that strengthening union participation, as recommended in the report, is good not only for workers but for companies, the economy and, ultimately, the country. On that, as well as a number of other areas, the commission has produced thoughtful and practical recommendations, in stark contrast to the total lack of action on the Government’s part. I hope that the Government will take the recommendations seriously. I welcome the Minister to her role and ask her to commit to publishing a full response to the commission’s report.

Two years ago, the Prime Minister stood on the steps of Downing Street and talked about building

“a country that works for everyone”,

but in reality she has clung to the discredited zombie economics of Mr Osborne. The relentlessly negative and unimaginative election campaign waged by the Conservatives last year was proof of that. Meanwhile, Labour offered a serious critique of our economic model, with positive and practical measures to build a high-wage, high-skilled, high- productivity Britain. It is no coincidence that the publication of our manifesto saw our party soar 20 points in the polls, while Tory support fell dramatically once people saw what thin gruel they were being offered.

I welcome this report as an important intervention in the economic debate that Labour ignited last year. It is a debate in which this Government have no meaningful voice or even ideas; but perhaps that is about to change. Perhaps the Minister will now pledge to give this report the attention it so richly deserves. If not, she should step aside and allow us to do so.

[Mr Philip Hollobone (in the Chair)]

If the Minister would be kind enough to finish her remarks no later than 5.27 pm, that will give Mr Byrne time to sum up the debate.

--- Later in debate ---

[Kelly Tolhurst]

I will make some more progress.

Our corporate governance reforms are driving changes in how our largest companies engage, at board level, with employees and external stakeholders. Significant changes to the corporate governance code will strengthen workers’ voices in boardrooms by requiring boardrooms to put in place robust employee engagement mechanisms, while new laws will require companies to report how they engage with employees and have regard to their interests. Amplifying the voices of employees and external stakeholders will improve boardroom decision making, deliver more sustainable business performance and build confidence in the way businesses are run.

We are also introducing pay ratio reporting, requiring quoted companies to compare CEO pay with average worker pay, supported by an explanation of why the ratio is consistent with pay, reward and progression policies in the wider workforce. Under the revised UK corporate governance code, remuneration committees will have to engage with the workforce to explain how executive remuneration aligns with wider company policy. These changes will help to ensure that boardroom pay is connected with wider workforce pay and not set in an artificial bubble.

[Chi Onwurah]

I thank the Minister for setting out the Government’s industrial strategy proposals. Does she intend to deal with the proposals in the report? Specifically, does she agree with the report’s underlying assertion—that our economy is currently unjust?

[Kelly Tolhurst]

The premise of the report and some of the measures it suggests are already being considered by the Government, and I am outlining the actions we are taking in those areas. I am committed, and so are the Government, to providing fairness and high-quality jobs in the workforce.

The Government are investing. We plan to deliver £20 billion of investment in innovative and high-potential businesses by establishing a new £2.5 billion investment fund, incubated in the British Business Bank, and we will continue to support businesses to grow by accessing international markets. We aim to create a business environment well equipped to meet the challenges and opportunities of new technologies and new ways of doing business.

Across Government we are making huge strides towards rebalancing the economy and empowering local government. Through devolution deals we have strengthened local leadership and devolved powers and funding away from Whitehall, so that they are exercised by those with the strongest understanding of the needs of their communities. We are absolutely committed to this continuing.