McDonnell: We must “reassess how our society and economy operates”

John McDonnell has introduced a bill to block Covid aid being given to bad employers and told parliament today that the UK should “reassess how our society and our economy operates” in light of coronavirus.

In his first Commons intervention since stepping down from the shadow cabinet, the former Shadow Chancellor took aim at companies such as Boohoo, British Airways and Amazon whose behaviour he argued was “not acceptable”.

Under McDonnell’s proposals, employers would be denied Covid support, or even listing on the stock exchange, if they use ‘fire and rehire’ tactics, which Labour recently said should be outlawed, use zero-hour contracts, avoid tax or pollute the environment.

Presenting his ten minute rule bill, the MP for Hayes and Harlington told the Commons this afternoon: “The pandemic has made us all think about what we value in life and to reassess how our society and our economy operates.

“Of course, our main focus has been how we tackle and get through the pandemic but there has been a view expressed by many, including the Prime Minister, that lessons should be learned from the crisis and he and others as we’ve come out the pandemic we must build back better.

“This bill is part of that process of building back better. Within our economy, the pandemic had exposed much of what is good but also regrettably some of what’s just not acceptable.”

McDonnell went on to compare the good practice of companies such as Warburtons – which paid all staff a higher rate of sick pay when they had to self-isolate or shield due to coronavirus – to employers with poor practices.

He said: “Contrast that with Boohoo. A recent independent report uncovered in their supply chain factories people working excessive hours on illegally low pay… without a face mask, in cramped conditions that were described as life-threatening.”

McDonnell also criticised British Airways, which employs many of his west London constituents, for using the furlough scheme to support wages before firing and rehiring employees on worse pay and conditions.

The Labour left MP said “there had been no attempt to influence the behaviours” of companies receiving government support like tax cuts, job support and bailouts thus far, despite many acting in an unscrupulous way.

He added: “If we are to learn lessons and build back better, as the Prime Minister has urged us, we need a system that recognises and celebrates good practice in our economy. And one that certainly does not lend support to those that fail to live up to basic business standards and undercut others that do.”

McDonnell set out various standards that companies would need to meet to get an accreditation, and thus access to support, including a real living wage, pay equality, making an effort to reduce emissions and paying all taxes, among others.

The proposed scheme would be overseen by a ‘good business’ commission, comprising representatives of business, trade unions, environmental groups and tax justice campaigners, which would have the power to impose tough sanctions.

His ideas mirror government policy in Denmark, where companies have been told that they will not be eligible for bailout funds to help them survive the coronavirus pandemic if they are registered in tax havens.

McDonnell’s proposals were put forward as a ‘ten minute rule’ bill, a process that allows backbench MPs to make their case for new legislation in a speech lasting up to ten minutes in the House of Commons.

Below is the full text of the speech delivered by John McDonnell today.

I seek leave of the House to bring in a bill to establish an accreditation scheme for businesses that meet standards regarding the treatment of workers, the payment of taxes and environmental practices; and for connected purposes.

The pandemic has made us all think about what we value in life and to reassess how our society and our economy operates. Of course, our main focus has to be on how we tackle and get through the pandemic. But there has been a view expressed by many, including the Prime Minister, that lessons should be learned from this crisis and he and others have said as we come through the pandemic we must build back better. This bill is part of that process of building back better.

Within our economy the pandemic has exposed much of what’s good but also regrettably some of what’s just not acceptable. I cite the contrasting examples of companies like Warburtons and Richer Sounds contrasted with Boohoo, British Airways and Amazon. Two years ago, the Bakers Union and Warburtons secured a groundbreaking agreement. It provided the workers with long term job security, ongoing skills development, better wages and conditions of employment and put people at the heart of the business. The agreement provided the company with the skills and flexible working needed to compete in a tough market. To deal with the crisis the company has a safety committee involving union reps to monitor and review safety. Warburtons has paid company sick pay to all those shielding or anyone needing to isolate.

Take Richer Sounds, whose owner, Julian Richer, has promoted a Good Business Charter and shared its ownership with his employees. Now they are working hard together in a tough environment to preserve jobs whilst paying a decent level of sick to workers shielding. Of course, it’s tough but people are working together to get through as best they can.

Contrast that with Boohoo. A recent report uncovered in their supply chain factories people working excessive hours, on illegally low pay of £3.50 an hour, working without face masks in cramped conditions that were described as life-threatening. A company, one of whose founders has now been found to have misled a Commons Committee.

Or British Airways that has taken taxpayers money for furloughing and drawn upon government lending facilities whilst it has used the crisis to introduce a policy of fire and rehire of its workforce on reduced wages and terms of employment and its parent company IAG is buying up competitors and awarding its outgoing chief executive an £800,000 golden goodbye.

Or Amazon – notoriously exposed this month in an independent report for endangering warehouse workers put at risk of contracting Covid-19 and retaliating against workers who spoke out about the working conditions. A fortnight ago it was revealed that Amazon also paid only £290m in UK taxes despite a 26% surge in sales to £14bn.

If we are to learn lessons and build back better as the Prime Minister has urged us, we need a system that recognises and celebrates good practice in our economy. And one that certainly does not lend support to those that fail to live up to basic business standards and undercut others that do.

This bill seeks to introduce a system for exactly that by accrediting businesses on their behaviour in a number of key areas: the treatment of their employees, their impact on the environment and the payment of taxes. The aim of the accreditation process is to enable the acknowledgment and celebration of good business practice and good businesses. At the same time, it will provide the basis for judging whether a business is upholding its responsibilities to its employees and the community.

The bill’s aims is to set out the system and process for determining the criteria upon which businesses will be judged. It is proposed that an independent Good Business Commission be established on the model of the Low Pay Commission comprising representatives from business, trade unions, the major environmental voluntary organisations and the tax justice campaign.

This Good Business Commission will have responsibility for determining the criteria by which a business will be assessed as a good business on its employment practices, environmental policies and the payment of taxes. The intention is that businesses will be encouraged to seek accreditation. The award of a good business status has the potential of enhancing significantly the reputation of a business and confidence in its standing. The failure of a business to apply for accreditation or to fail to achieve accreditation will also tell its own story.

In determining good business practice the Good Business Commission would examine for example: on employment, whether the business recognises a trade union, pays the real living wage, bans zero-hours contracts, has gender pay parity and addresses equal pay gaps for all protected characteristics, provides for worker representatives on the board and a pay ratio between the highest and average pay. On environmental impact, whether the company has adopted a strategy for achieving net-zero emissions within 10 years. On tax, whether the company is paying its taxes, not engaged in the use of tax havens and clear tax avoidance schemes.

The bill also charges the Good Business Commission to bring forward proposals on how the business accreditation scheme could be used to incentivise compliance with good business practice and so establish thresholds on employment practice, environmental standards and fair tax payments which will determine access to government financial support and tax reliefs. Thresholds that would be capable of being drawn upon by other bodies in their award of support, access or status to businesses, for example, listing on the London Stock Exchange.

During the Covid-19 pandemic, the government has introduced a number of schemes to support businesses cope financially with the downturn in the economy resulting from the lockdown and social distancing protective measures. There has been a lack of conditions attached to much of this aid. As a result, there has been no attempt to influence the behaviour of these companies, in particular in their treatment of their employees.

Some of the behaviour of these companies has been unacceptable as they have used the pandemic crisis as an excuse to implement their long-held strategy of cutting wages and undermining terms and conditions of employment. A business accreditation scheme would be an effective basis for conditionality in the award of government support established for the pandemic and for use in any future crises. This bill is the start of a discussion about the business standards that we need if we are genuinely going to build back better. I commend it to the House.