Income Equality and Sustainability

Lord Hendy Excerpts

Wednesday 6th May 2020 Lords Chamber

[Lord Hendy (Lab)]

My Lords, I thank the most reverend Primate for tabling this debate, and for citing in his opening remarks the speech of Sir Winston Churchill introducing the Trade Boards Act 1909. A wealth of academic research shows that greater even than the effect of progressive taxation and minimum wage legislation on diminishing inequality is the impact of extensive collective bargaining. That is what marks out the more egalitarian economies of Scandinavia.

From 1909, we had extensive collective bargaining in this country. By 1979, at the end of the most egalitarian decade in British history, when 65% of GDP was in the form of wages, 82% of British workers were covered by a collective agreement. Today, collective bargaining coverage is less than 25%. Consequentially, the wage share of GDP has fallen to less than 50%. Workers have lost their collective voice in determining their terms and conditions, as the current crisis has emphasised.

I urge the Government to take a leaf out of Winston Churchill’s book and, in discussion with the TUC, CBI and experts, reintroduce compulsory sectoral collective bargaining as Churchill did in the Trade Boards Act 1909. The wages councils, as the trade boards were subsequently renamed, were abolished in 1993 and voluntary sectoral agreements terminated and undermined in both public and private spheres. To cope with the transformation needed after this crisis, we need to bring them back to life, as we did to deal with previous crises: after the First World War, in the 1930s after the crash, and during the Second World War.