Energy Costs

Lord Hendy Excerpts

Thursday 6th January 2022 Lords Chamber

[Lord Hendy (Lab)]

My Lords, I congratulate the noble Baroness on securing this debate. This year the UK faces what the Resolution Foundation has called a cost-of-living catastrophe. Does the Minister agree with the Leader of the House of Commons that the rise in national insurance planned for April should be scrapped?

Noble Lords have suggested, and will suggest this afternoon, ways of dealing with the rise in energy prices. The impact on pensioners is obvious: the way to deal with it is to raise the state pension and the winter fuel allowance. I wish to focus on those on low incomes. The Resolution Foundation and the Office for National Statistics have shown that the real value of wages has been more or less flat since 2008 and is predicted to fall this year. The pandemic and Brexit introduced fluctuations in some sectors but these have not had a wider impact. Britain is a low-wage, low-productivity economy. Given the Government’s stated objective to reverse this, presumably the Minister will agree with the new year message from Frances O’Grady of the TUC that Britain needs a pay rise.

The question is how that might be achieved. Treating workers as commodities on the so-called labour market, where the price of their labour is fixed by employer demand on one side and mitigated by the need of workers to keep themselves and their families from penury on the other, does not produce a high-wage, high-productivity economy. The Government should look to the real high-wage, high-productivity countries such as those of Scandinavia, and note that the key feature which produces such results is high levels of collective bargaining—levels of over 70% and as much as 90% of workers covered by collective agreements. Even the European Union has now finally recognised the importance of collective bargaining coverage of 60% or more in its proposed directive on the minimum wage. In contrast, in this country, from a level of around 85% of British workers, which ran from the Second World War until the 1980s, collective bargaining coverage has been steadily driven down by government policy and restrictions on unions to something less than 25% today. That means that three-quarters of our workers, some 24 million of them, have no collective say over their terms and conditions, and next to none is in a position where an employer will negotiate with them individually.

Given the UK’s commitment to promote collective bargaining as articulated in the International Labour Organization’s convention No. 87, which was recently reiterated in the trade and co-operation agreement with the EU, and in the UK-Australia free trade agreement, will the Minister consider reintroducing the wages councils legislation, first promoted by Sir Winston Churchill in 1909, which required compulsory collective bargaining across each sector of industry where it did not occur voluntarily? The resulting agreements were binding on every worker and every employer in the sector. It was introduced and functioned precisely to remedy the blight of low wages.

The Minister might also consider developments in New Zealand, where legislation was introduced last year to introduce fair wage agreements, much like those of the wages councils, and in Spain on 29 December, just a week ago, where there was a restoration of collective bargaining, by agreement with the social partners.