Economic Justice Commission

Justin Madders Excerpts

Tuesday 11th September 2018 Westminster Hall

[Justin Madders (Ellesmere Port and Neston) (Lab)]

It is a pleasure to serve under your chairmanship, Mr Hollobone. I congratulate my right hon. Friend the Member for Birmingham, Hodge Hill (Liam Byrne) on securing the debate and on his excellent synopsis of the report, which I hope most Members have read. Mr Hollobone, you will pleased to hear that I will not take my full 10 minutes. I prepared for having rather less time, as I expected there to be an awful lot of interest in the debate, such is the importance of the report. It is sad that so few Members took the opportunity to attend, but I hope this is the start of a dialogue about how we change some of the fundamental injustices in our country.

Like my right hon. Friend, I congratulate the members of the Economic Justice Commission on their hard work in the past two years on a compelling report that deserves the attention of all Members. People in my constituency have experienced not just a stagnation but a marked deterioration in their living standards. Average earnings have fallen in real terms while the price of housing has continued to soar, leaving many in my constituency to see home ownership as an unachievable dream, despite the fact that many pay more in rent every month than they would in mortgage repayments.

Many people who live in insecure and expensive accommodation have equally insecure jobs. As we heard, there has been a significant increase in agency and zero-hours jobs, in under-employment and in bogus self-employment, which is a stain on our society that creates many problems down the line for individuals and, ultimately, the state. Even those in permanent employment do not feel secure, due to the erosion of employment rights. For example, workers can now be sacked without any reason during their first two years in a job.

The UK ranks eighth of 140 countries for labour market flexibility. The report states:

“It is now possible for an employer to take on a worker with almost no attached responsibilities on the employer’s part, or rights for the worker, at all…It is this flexibility that largely explains the simultaneous occurrence of high employment levels and largely stagnant wages.”

It also explains the shocking fact that more people in poverty now live in working households than in non-working households, after housing costs are taken into account. Does the Minister think that state of affairs is something to be proud of, or does she agree that it is unjust and unsustainable?

The workers we have discussed also face the brunt of the coming force of automation. My right hon. Friend mentioned a number of statistics that show how those who earn the least will be hit hardest by automation. I have another for him: workers in jobs paying less than £30,000 are five times more susceptible to having their posts automated than those earning more than £100,000.

The report also sets out clearly the geographic inequalities we face. London is the richest region in northern Europe, but the UK as a whole contains six of the 10 poorest regions in Europe. That shocking imbalance comes as no surprise to those of us who represent parts of the north. We have grown accustomed to infrastructure investment being used to entrench rather than tackle that divide.

Even in a time of economic growth, unemployment has not fallen universally. Since the Prime Minister promised two years ago to tackle the burning injustices in our economy, unemployment in my constituency has increased by almost 50%. If that happened during a time of economic growth, when the hard times come—and they will—we will be even further behind. Of course, that is before we consider the impact Brexit may have on large employers, such as Vauxhall in my constituency. We heard today about the potential impact on the car industry if the Government do not get the right Brexit deal.

It is clear that we cannot go on as we are and that the report’s proposals cannot be ignored, but I wonder whether the Government have the political will to respond positively. It is clear from the report that there is a direct correlation between the decline in collective bargaining and the deterioration in working conditions. The only way to reverse that decline is to strengthen trade unions.

[Liam Byrne]

I did not expect to intervene, but my hon. Friend makes an incredibly important point. The case he makes has been rehearsed by the Opposition for some time, but it has now been endorsed by the International Monetary Fund, which reported over the summer that the dismantling of labour protections accounts for a huge slice of the fall in labour’s share of national income. That is not just our view—it is now the IMF’s view.

[Justin Madders]

I did not think I would quote the IMF today, but my right hon. Friend is absolutely right about the share of income that goes to labour. I found that statistic in the report staggering. It is clear that the direction of travel will only continue downwards. We must find a way of reversing that decline. We like to say in this place that economic growth is the answer to all society’s problems, but that growth has to be shared by everyone, and it clear that that is not happening. If we do not solve that puzzle, we will have failed our constituents.

We must also tackle the myth propagated from time to time that an empowered workforce are a barrier to growth when, in fact, as my right hon. Friend said, all the evidence shows that they are an enabler. Many of the countries that outperform us in productivity have better paid workers and stronger workplace rights. The report states clearly:

“If both productivity and pay are to be increased, power will need to be rebalanced in significant ways from employers to workers. This will require stronger labour market regulation and strengthened trade unions.”

Sadly, the Government seem to spend a disproportionate amount of time looking to stifle and inhibit trade union activity.

There has been a lot of soul searching in the past few years about why people voted as they did in the referendum. I think many of the answers are in this report. I always maintained that the arguments advanced during the campaign about the threats to our economic security from Brexit would never work with people who already did not feel economically secure. As the report makes clear, the issues that have created the rampant inequality that fuels division and discontent in this country can be solved only by a Government who are prepared to tackle the root causes of what is a very lopsided economy. The lessons of the past tell us that things will change only if there is a political will to make that change. We will fail this country if we do not take the lessons in the report seriously.