Churchill, the crisis and a better deal for Britain’s low paid

It was inevitable, perhaps, that the current crisis would result in daily nods to our foremost leader during a time of national crisis. Mr Johnson, a biographer of Churchill, was always going to succumb. And during the PM’s illness a range of lesser known politicians reached for Churchill as they strained to rise to the demands of the moment.

Some may mock but a better reaction would be to accept that if it is our national fate to turn to Churchill during wretched times we should, at least, seek to draw the right inspiration. He has, after all, more to offer us than blood, toil, tears and sweat.

When a proper reckoning finally takes place with the current crisis a chapter of it will feature what has been exposed about the working conditions of many of those that have kept the country in one piece during lockdown. Once the clapping is over will we still care about those who cared for us?

Half of our frontline care workers don’t get paid the real Living Wage and they are four times more likely to survive on a zero hours contract. Four of ten of those working in retail and wholesale get less than the Living Wage and it is commonplace for them to have scant notice of their working hours. Delivery drivers are regularly forced into self-employment, even if they are effectively controlled by an ‘employer’, missing out on sick pay or the minimum wage.  Across the nation’s food supply chain typical pay was £8.59 per hour last year.

None of this should come as a great revelation, though it may be seen in a different light in the wake of the epidemic. It is not confined to a small under-belly of Britain’s job market, it is the story of large swathes of working Britain. Nor can we lay these conditions at the door of troubled economic times, until March something approaching full employment co-existed with widespread insecurity.

It is one thing, though, to talk in grand terms about the need to reform capitalism in light of the crisis. It is quite another to will the necessary, messy, real-world social institutions that might bring this about.

Building something new often involves drawing inspiration from the old. This, perhaps, is where Churchill – in his earlier, liberal, social-reformer phase – might serve a purpose. During the Asquith government he saw glaring social injustice in the world of work and, as President of the Board of Trade, spotted the opportunity to act (even if his record on the treatment of labour is a chequered one).

He was unperturbed by the fact that tackling atrocious labour conditions collided with deeply held Victorian minimalist-state nostrums which, Churchill realised, were already circling the drain of Edwardian history. “It is a serious national evil”, he famously thundered, “that any class of His Majesty’s subjects should receive less than a living wage… It was formerly supposed”, he went on, “that the working of the laws of supply and demand would naturally regulate or eliminate that evil. But where you have what we call sweated trades, you have no organisation, no parity of bargaining, the good employer is undercut by the bad, and the bad employer is undercut by the worst…. Where those conditions prevail you have not a condition of progress, but a condition of progressive degeneration.”

The view that the state should steer clear of the question of wages was held with ‘almost religious intensity’, according to R.H. Tawney, which meant that the shift that Churchill helped usher in constituted ‘one of the most remarkable changes in economic opinion which has taken place in the last hundred years.’  A quarter of a century before radical economist Joan Robinson brought the question of ‘monopsony’ to intellectual prominence, and a full century before it re-emerged as a voguish concept in modern day economics, Churchill intuited the centrality of power imbalances to the operation of the labour market.

Nor was this a case of heady rhetoric divorced from action. The 1909 Trades Boards Act, and much else, followed. It was founded on the insight, still highly relevant today, that in low-wage sectors with powerful employers, little or no effective union organisation and workers with limited choices, the state needs to create autonomous institutions tasked with ensuring the demands of workplace dignity are met. Wage boards comprised of employers, workers and independents were created (a tripartite model replicated nearly a century later in the formation of the Low Pay Commission) with initially tightly circumscribed powers to improve basic conditions in four industries. This generated its own momentum and, in the wake of each of the World Wars and the rising expectations that ensued, the scope and powers of these bodies were dramatically expanded. They became established as a pillar of the mid-20th century social contract: in their heyday around a quarter of all workers, overwhelmingly women, had their terms and conditions regulated by wage councils.

This growth came despite the fact that low pay and insecure work was largely overlooked by Beveridge’s landmark report which provided the blueprint for so much subsequent social reform. Beveridge was certainly familiar with their operations of the early wage boards having worked closely with Churchill during his period at the Board of Trade. He was of the view that a minimum wage was a ‘necessary but not sufficient’ contribution to his Webb-inspired wider call for a ‘national minimum’ when it came to income. But, despite this, his famous report side-stepped the question of low pay and it fell to Ernest Bevin to become the architect of Britain’s post-war wage councils.

Over time Churchill’s and Bevin’s creations became increasingly friendless. They were marginalised by Labour and the unions during the 1960s and 1970s (on the basis they acted as an impediment to the expansion of free collective bargaining); assaulted by the Thatcher government throughout the 1980s (viewed as a barrier to hiring and an infringement of the right to manage); and finally laid to rest in 1993 by John Major. The central argument made in favour of abolition, that employment would rise in the relevant sectors, was found to be wanting.  The main consequence was an increase in wage inequality.

Wage councils are extinct in England and only live on in microcosm in Wales, Scotland and Northern Ireland in the form of the Agricultural Wages Board. Yet out of the public eye, and without much acrimony, these farm workers still have minimum standards agreed by these boards – though this is despite the best efforts of the UK government who tried, and failed, to use the courts to challenge the powers under which they operated.

Away from Westminster there are stirrings of interest in reviving this approach. The Welsh government is looking at establishing sectoral bodies to raise conditions, starting with social care. In Scotland, the independent Fair Work Convention, which advises the government, is well placed to flesh out nascent sectoral deals. In Northern Ireland the recent cross-party agreement that restored Stormont, backed by the UK government, committed to acting on insecurity at work such as zero-hour contracts. (Even at the UK level the government’s thoughtful and independent minded Director of Labour Market Enforcement, Matthew Taylor, is pushing for a ‘licensing’ approach to deal with mini-sectors like car-washing in which legal non-compliance is endemic). In the wake of the crisis we shouldn’t be surprised if the smaller nations of the UK use the powers they have in this area, and perhaps some they don’t, until they chafe against constitutional boundaries. Improving working conditions could become a force for political fragmentation, rather than unity.

A substantive move in this direction – whether at a UK level or not – would certainly have to mean something far more than dusting down Churchill’s early 20^th century institutions. Whether it is policing the fuzzy boundary between employment and self-employment, agreeing protocols for the scheduling of insecure hours, setting sectoral wage floors over and above the legal minimum, accrediting new forms of training or countering the growing power of online platforms on labour standards – there is a 21^st century hole to be filled.

None of this is to suggest that creating new labour market institutions magics away trade-offs. More dignity at work for some might mean higher prices or lower dividends for firms – though it could also make it more worthwhile to retain and train a workforce. Nor should we think it would all be straightforward. Building sectoral minimum standards in problem parts of the jobs market would mean confronting thorny issues. There would be messy boundary issues about who is and isn’t covered by an agreement; representation issues about who speaks for workers; arbitration issues about what happens when agreement can’t be reached; and enforcement issues about the consequences of non-compliance. These challenges are neither easy nor unanswerable. Following Churchill, it would be wise to start in a targeted manner – for instance in social care – and then build from that experience.

Pursuing this approach would certainly mean departing from recent conventional thinking about securing higher labour standards in the UK. Essentially these have boiled down to three strategies. One is to rely on across the board legislation to improve universal employment rights, another is to hold out for a resurgence in collective bargaining and union membership, while a third approach relies on more enlightened human resource management from employers.

There is merit in each approach but all face limitations. Legislation on employment rights is vital (indeed modern-day wage councils would need to be underpinned by law) but, even if there were to be political appetite for stronger rights, national legislation can be blunt and fail to deal with the great diversity of employment arrangements, practices and abuses across our economy. Meanwhile, union membership stands at 13% in the private sector overall, 6% in the lowest paid private sector roles, and is lower still among some of the groups where worker voice is most needed. This isn’t to suggest we shouldn’t urgently seek to rebuild union membership – not least through new strategies – but it is to say even in the best-case scenario it will be a very long march back. Finally, those who contend we should rely solely on enlightened corporate managers to lift the plight of the most vulnerable workers are not, perhaps, confronting the full reality of today’s labour standards challenge.

It is remarkable, therefore, how incurious we have been at exploring not just our own past but also the experience of other countries. If we looked elsewhere we would realise that Britain would hardly be unique if it moved in this direction. Other flexible Anglo-Saxon economies characterised by high employment, strong minimum wages, low union membership and widespread employment insecurity are shaping collective institutions to raise the quality of working life. In New Zealand Jacinda Ahern’s government is working with employers and unions to establish proposals for sectoral deals spanning pay, training and employment practices. This has been informed by long-standing Australian experience of using sectoral agreements to establish labour standards and pay benchmarks over and above the legal minimum. Meanwhile in the US, Presidential candidate Joe Biden has picked up on his party’s new-found enthusiasm for sectoral bargaining. British, or perhaps English, exceptionalism looms.

There would, of course, be plenty of opposition to any new initiative.  Employer groups would instinctively shriek, many in Mr Johnson’s own party would be openly hostile, and those segments of the union movement still clinging onto the old-time religion of free collective bargaining at all costs would be suspicious (though the TUC and others would likely be supportive). There will also be scepticism from parts of the policy community. A generation whose minds were forged in the economics departments of the 1980s and 1990s tends not to take easily to social partnership in economic policy institutions (despite twenty years of success in the form of the Low Pay Commission). Allied to this is the problem of a limited historical frame: I’ve often heard it said, with a straight face, that thinking of this sort just runs counter to the traditions of the British model.

Churchill swept away concerns like this and Mr Johnson could, if he wished, do the same today. He is, after all, a leader with room to manoeuvre. The British state is propping up much of the business community and underwriting the national wage bill, at the same time as the Prime Minister is delivering the existential prize of Brexit to his indebted backbencher. He has capital to spend.

Britain would reveal itself as a country desperately short of social ambition if, as employment recovers, a willingness to experiment with measured approaches to raising working conditions is deemed just too much to aim for.

Let’s hope that if the PM looked to his hero for inspiration during his convalescence he skipped the war-time speeches and paused instead on the younger Churchill’s assault on the ‘national evil’ of poverty pay, rampant insecurity and brutish working conditions.

In the wake of this crisis, Mr Johnson should be a true Churchillian and change the rules of the game to benefit the nation’s overlooked workers. Winning the peace, as he might put it, demands nothing less.

A shorter version of this comment piece was first published in the Financial Times.