‘Labour wooing the City is welcome – but workers need a voice too’

Ahead of the government’s autumn statement it is clear that the Labour Party under the leadership Keir Starmer, Rachel Reeves, and Jonathan Reynolds, is fully committed to establish a productive partnership with corporate Britain.

Keir Starmer told City AM, that the City of London is a ‘force for good, stating that Labour’s improved relations with the business community a matter of “personal pride” to him. Rachel Reeves brought together a new British infrastructure council, tasked with ‘unleashing the lifeblood of investment through the industrial arteries of this country’. Whilst Jonathan Reynolds told the CBI that Labour wants to create a ‘Total Business Environment’ – rightly observing that businesses are looking for a government with ambition, commitment, and consistency.

Labour’s commitment to building a genuine partnership with businesses is extremely welcome. However, a Labour government should also look at how to bring business, trade unions and civil society closer together to address challenges the UK is facing. Jonathan Reynolds was right to ask Iain Anderson’s independent business review to explore how business and unions can be brought together with government to discuss common problems

Perhaps the Dutch model of social dialogue could be a source of inspiration here?

The Dutch model, often referred to as the ‘polder model,’ is based on two fundamental pillars. The first is the Social and Economic Council (Sociaal Economische Raad), which advises the Dutch government and Parliament on social and economic policy. The SER also brings together various stakeholders to reach agreements on societal issues, with a focus on the social and economic aspects of these issues.

This structure fits into current Labour Party thinking. The National Policy Forum highlighted the necessity of genuine partnerships, advocating for business, trade unions, the private sector, the public sector, and different government departments working together recommending that Labour sets up a “Council for Economic Growth” in the UK.

The Dutch model’s success was evident during the COVID-19 crisis, enabling swift government response by providing a platform for reaching quick agreements between employers and trade unions, and identifying key stakeholders to consult.]

In my recent conversations with key players in the Dutch social dialogue there are four key lessons which a Labour should take into account:

• Government implementation: To remain relevant, the government needs to implement advice from social partners, be it solicited or unsolicited. Ignoring or rejecting independent advice too often can render the dialogue forums irrelevant and lead to stakeholder disengagement. A commitment from a Labour government that it will consult the Council (i.e. social partners and experts) on key societal and economic questions – similar to Labour’s commitment on OBR assessments – will be important for legitimacy.
• Addressing big societal questions: The social partners need sufficient time to consult and prepare their advice. Clear time frames for government requests are essential. Keir Starmer’s five missions for the Labour Party could provide a solid foundation for the main topics discussed within a forum comprising businesses, unions, and experts.
• Consider diverse voices: While the Dutch model balances employer organizations, trade unions, and Crown-appointed experts, the UK context differs. Special consideration must be given to representing self-employed individuals, young people, SMEs, tech sector workers, and businesses. However, striking the right balance is crucial, as too many organizations at the table can make a Social Economic Council unwieldy.
• Statutory footing: Any structure, such as a council, needs statutory footing and support from the Civil Service.

Clearly Labour is keen to establish business forums – Jonathan Reynolds is promoting an Industrial Strategy Council, Rachel Reeves met for the first time with her Business Infrastructure Council and Keir Starmer has signalled Labour is working on a financial services strategy. But speaking to experts in the Netherlands – Labour should try to avoid the temptation to announce a new Council every week, as they risk ending up like Rishi Sunak’s flagship business advisory council – an ineffective talking shop.

The group met for less than 45 minutes in July and is due to convene just once every six months, limiting the opportunity for detailed discussions.

Certain Iain Anderson’s is well aware of this risk, and I am hopeful his independent business review will not only look at how Labour can best strengthen relationships with the City, but also look at how a Labour government led by Keir Starmer brings society together in dialogue to tackle the challenges we face, and take our future back.