A ‘New Deal for Workers’: how it was repeatedly diluted

By Andy Ford

The ‘New Deal for Working People’, painstakingly negotiated between the trade unions and Keir Starmer’s leadership team was, if not the jewel in the crown, at least a central plank of the Labour Party offer to the its trade union base

In return for a ‘New Deal’, the leaders of the affiliated trade unions essentially agreed to stay out of the inner affairs of the Labour Party. Their thinking seems to be to ‘leave politics to the politicians’. In the words of the GMB leader, Gary Smith, “I don’t tell them how to do their job…It’s the public who mark their card, not me”.

Once they had the ‘New Deal’ signed off and “set in stone” the affiliated trade unions turned a blind eye, or in the case of the more right wing unions, actually supported – on the NEC and at conferences – for Keir Starmer’s factional and undemocratic manoeuvres in the Party. There have been expulsions virtually for for nothing, indefinite ‘investigations’ over years-old Twitter posts, the blocking of popular local council and parliamentary candidates and the removal of left and socialist MPs. Even Unite, the most ‘left’ of the four big affiliated unions, has barely raised a whimper at the removal of its own stalwart, ex-Regional Secretary, Mick Whitley, in the working class seat of Birkenhead.

Most recently, we’ve had the vindictive removal of Lloyd Russell-Moyle in Brighton Kemptown and Faiza Shaheen in Chingford.  Even the begrudging retreat on Diane Abbott was nothing to do with the affiliated unions, but more a response to widespread public outrage within the party and, most vocally, within the Black community.

Every election pledge of Starmer abandoned

It has been the promise of a ‘New Deal’ that has allowed the union leaders to placate their own union Executive Councils, conferences and activists, in the face of Starmer’s abandonment of every single one of the pledges on which he was elected, and any hint of radicalism in his policies.

Since the early promises of a ‘New Deal’, what is on offer has been considerably changed, so it is worth looking at what exactly it is now. The original ‘New Deal’ was quite far-reaching. It assured the unions that a new Employment Act would be enacted in the “first one hundred days” of a Labour government. As Angela Rayner said as late as September 2023, “The next Labour government will ask parliament to repeal these anti-trade union laws within our first 100 days”, and that an Employment Rights Bill would be brought forward, again in the first 100 days, to include fair pay, workers and  trade union rights.

New measures would include the repeal of anti-union laws passed under Boris Johnson and Rishi Sunak, that is, the 50% threshold rule, the right of agencies to supply scab labour to undermine strikes, and the Strikes (Minimum Service Levels) Act. Other parts of the ‘New Deal’ promised an end to ‘fire and rehire’, abolition of the legal status of a worker as distinct from employee, and employment rights from day one.

There would be Fair Pay Agreements across the British economy and an end to zero hours contracts. All of these changes were supposed to allow the unions and precarious workers to challenge the low-pay, low security, ‘gig economy’ created by the Tories.

The first revision of the New Deal

The first sign of trouble came at Labour’s National Policy Forum (NPF) in Nottingham in October 2023. A revised draft of the ‘New Deal’ had been produced: the only problem was that no-one could read it before voting on it!

Astonishingly, three of the five biggest affiliated unions were agreeable to this wholly unprecedented and undemocratic idea, while the other two, Unite and GMB stood out against it. Allegedly, Gary Smith of GMB was then allowed to see it, and then withdrew his union’s objections, but the Unite delegation could not accept this, and so walked out/failed to attend the dinner (depending on who you believe) and abstained on the document at the final vote.

Unite representatives were right to oppose this blantant manoeuvre, as over the following days, word leaked out that the changes agreed were substantial. The original ‘New Deal’ was itself a compromise with each side giving ground to sign off the final version. Now, the revised version (sort of) presented at the NPF was found to row back on consolidating employment status so that workers had to be either ‘employees’ or ‘self-employed’.

This is crucial, because at present, in British law, people at work are either employees (the usual and well understood status), workers (like Uber drivers or Deliveroo riders), or truly self employed. Those who are merely ‘workers’ lack many of the basic employment rights that employees possess. Around 3.7mn working class people are trapped in this ambiguous contractual position where they can be got rid of at will – not even ‘sacked’, they just don’t get contacted – and they are therefore super-exploited. Even more unfairly, HMRC does not recognise them as ‘workers’ but taxes them as if they are employees!

A writer close to Andy MacDonald, the previous Labour Employment spokesman, correctly described the single status of employee as ‘”load-bearing” for the rest of Labour’s employment rights package. If the intermediate category of ‘worker’ was allowed to continue, then even if Labour gives better rights to employees, unscrupulous bosses will be able to get round those rights by creating contracts that define their staff as ‘workers’ and not employees.

Gig economy workers and the ever-growing ‘precariat’

This is not just a problem for the gig economy workers. The ever-growing ‘Precariat’ on Uber-style contracts undercuts the unionised jobs in the sector that still has employee status. Most of the unions have simply left the precarious employees to their own devices, concluding that they are too difficult and too expensive to organise. A few independent, syndicalist-influenced trade unions like UVW and IWW have tackled the issue, with some success, but are they working against the odds in a rigged legal and contractual landscape.

There were also changes to allowing trade union access to the workforce in non-union companies, simply to offer membership. As Sharon Graham correctly pointed out, none of this would cost a penny to public expenditure, which was the stated reason why Reeves and Starmer refused all but the mildest reforms at the NPF. They had their ‘fiscal stability’ to think about. “So it has to be down to business lobbying”, according to Sharon Graham.

The New Deal is watered down yet again

Then, just as the election campaign began, yet another ‘revised’ version, now rebranded as “Labour’s Plan to Make Work Pay’ was emailed to the leaders of the affiliated unions. This time most of the unions, not just Unite, expressed their extreme dissatisfaction with the previously agreed document being revised again. This was hardly surprising, since in the trade union field an agreement is exactly that – an agreement binding on both sides. Employers cannot just go away and rewrite the agreements they have made with any union, even the most right-wing and bureaucratic. But this was exactly what Starmer had done.

A ‘summit’ between the Labour leadership and the trade union tops was hastily arranged, after which all was declared to be sweetness and light, although in a clear danger signal, no lay member of any union was permitted to see the latest version. Almost straightaway a Financial Times journalist printed screenshots of the actual document, and they make worrying reading.

Fire and rehire effectively NOT banned

Where fire and rehire was to be banned under the agreed version, the unilateral re-write now says that companies need to be able to “restructure to remain viable and preserve their workforce when there is genuinely no alternative”, a formulation that would allow a repeat of the P&O debacle. “No alternative” was indeed the logic that P&O bosses used – their duty to keep P&O viable (or profitable) simply outweighed any fair treatment of their own workforce, and even the law. They said themselves that they decided there was “genuinely no alternative.”

The truth is that companies have always had an ability to restructure – it is called redundancy. Most companies have agreed redundancy payments, and for those that don’t, there is a statutory minimum. The difference with ‘fire and rehire’ is that it gives one party to the contract, the employer, the right to simply rip up a contract and impose a worse one, and with no right to redundancy. It is contrary even to the capitalist laws of contract, which views a contract as an agreement binding on both parties, and it is banned in many European countries.

Labour’s promise of a strengthened “Code of Practice” is entirely inadequate to deal with hard-nosed people like the P&O board, despite the ‘Plan to Make Work Pay” promising to “end the scourge of fire and rehire” just a few lines earlier, in fact it does nothing of the sort.

Employment rights from day one – also watered down

The agreed version of the New Deal said that “Labour will give all workers day one rights on the job…by ending the qualifying periods for employment rights “. ‘Employment rights’ in Britain really means the right to go to an Employment Tribunal if you are unfairly dismissed – a meagre right indeed. But Starmer’s rewrite now says that the New Deal does not interfere with the right of employers to make ‘fair dismissals’ – including during probation. So employees could still be dismissed in the first six months or year of employment, provided there was a probation period in the contract.

Zero hours contracts, not banned as promised

Everyone is aware of the plague of zero hours contracts, where the worker is expected to hang on at the end of a phone line waiting for a day’s work, which may or may not come. And then, once at work in the warehouse or factory, if it goes quiet, they can simply be sent home without further pay. It offers zero stability, and very little chance for trade unions to organise, but huge opportunities for profit-making.

The original agreed version of the New Deal said, “Labour will ban zero hours contracts and contracts without a minimum number of guaranteed hours.  We will also ensure that anyone working regular hours for twelve weeks or more will gain the right to a regular contract to reflect those hours normally worked”. This has now been watered down in the ‘Plan to Make Work Pay’ to “banning exploitative zero hours contracts” and giving everyone a right to switch to a minimum hours contract”. Whether contracts are “exploitative” or not, depends on whether you’re a boss or a worker. There is no ban.

Fair Pay Agreements

The unions thought they had agreed on a system of ‘Fair Pay Agreements’ across the British economy. The agreed draft says, “Fair Pay Agreements would be negotiated through sectoral collective bargaining…Worker representatives and employer representatives would be brought together to negotiate Fair Pay Agreements…that would be binding on all employers and workers in the sector.”

These would operate like the old Wages Councils that set pay and conditions in sectors that are relatively poorly organised. The last one to survive Thatcherism was the Agricultural Wages Board. Even Winston Churchill noted that “Where you have what we call sweated labour…the good employer is driven out by the bad, and the bad employer is undercut by the worst”.

Disregarding the advice of their patriotic hero, Winston Churchill, the Starmerites have retreated on this too. Their new version only commits to a Fair Pay Agreement in the adult social care sector, with a vague aim to “assess how and to what extent FPAs could benefit other sectors”. The choice of sector is interesting, and may reflect some influence from Unison and Angela Rayner, whereas those sectors organised by Unite are left out in the cold. Even Starmer’s favourites, USDAW, has been frozen out, with the non-inclusion of retail.

Employees, ‘workers’ and the self employed

British law recognises three legal categories of employment status. These are employee, worker and self-employed. Which category you fall into determines your employment rights and obligations. Some employment rights, such as the right not to be unfairly dismissed, sick pay, maternity, and redundancy apply to employees only. Others, like the right to paid annual leave and the right not to be discriminated against, apply to both employees and workers.

Instead of the straightforward commitment: “Labour will create a single legal status of ‘worker’ for all but the genuinely self-employed” the unilaterally changed policy now on offer only says that “…we will move towards a single status of worker. We will consult in detail on a transition to a simpler two-part framework that differentiates between workers and the genuinely self-employed.”

As stated earlier, the single status of an employed worker is the reform which unlocks all the other reforms. That is the reason why Unite could not sign up to the version sprung on the unions at the NPF.

The ‘wave’ of insourcing has disappeared

From an agreement to “oversee the biggest wave of insourcing of public services in a generation”, the watered-down version now only says that once in government Labour “… will choose to do business with companies that treat their employees well, recognise trade unions, and have provision for collective bargaining”. On close reading, this is exactly opposite to what was agreed. From a “wave of insourcing” to ‘doing business’ with ‘good companies’, actually means that these companies will still be in private hands, not insourced at all.

The right to disconnect and have time off

This is where the watering down is actually at its worst. The commitment was originally a promise to “… bring in the ‘right to switch off’” – which most workers would see as perfectly reasonable. But it has been changed to wishy-washy words like “Giving employers and workers the right to have constructive conversations and work together on bespoke workplace policies.” Any trade union negotiator can spot this from a mile off as mere words that aren’t worth a carrot.

The change to a single category of employed ‘worker’, would potentially give the current ‘workers’ a big upgrade in rights and protections. For example, they would get a right to sick pay, maternity pay, redundancy pay, flexible working and protection against unfair dismissal. That would be great for workers – but not so good for the shareholders of Uber and Deliveroo. No wonder they have been lobbying the Labour leaders.

The single employment status of an employed worker would not just benefit the gig economy workers, it would prevent the gig economy undercutting the properly employed sector and it would remove the incentive to replace employees with casualised labour. It is of fundamental importance. Now this change is going to be subject to a torturous consultation, where doubtless the employers will deploy an army of lobbyists and lawyers to thwart what was democratically agreed at the NPF.

The lobbyists’ wording on fire and rehire sees it as a tactic to “preserve their workforce”, as if the ‘workforce’ benefit from fire and rehire because “at least they still have jobs”. No! It is far better for the ‘workforce’ if they stay on their old rates of pay and conditions, and if some workers are lost, then they are made redundant, voluntarily, and on agreed terms.

Fire and rehire is a one-way street to a low wage, low productivity, low investment economy and it is an indication of how parasitic the British capitalist class are. For instance, at present nearly half of Deliveroo riders’ time is spent just waiting for work, and not being paid. No wonder the British economy has a serious problem – far worse than any of its competitor economies – with productivity.

The way it happened

What is most worrying is the way that Starmer has repeatedly presented the unions with one fait accompli after another, as the lobbyist’s influence on the Shadow Cabinet has unwound one commitment after another. But the behaviour of most of the union leaders is simply to moan and complain in private. What they ought to have done is to stand up to Starmer and ‘tell it how it is’. Their failure to do this has enabled continuous bad faith from the Labour leadership, who clearly have the measure of the union ‘leadership’.

Worse still, the union leaders have hidden the whole process from their own members, activists and even, it would appear, their lay member executives. For a whole two weeks the Financial Times had the revised wording, presumably so it could be circulated round the bosses and the City of London; while the senior lay members of the affiliated unions has nothing except snippets from press leaks. One HR consultancy was even touting to sell access to the changes for £65!

So what is left?

‘The Plan to Make Work Pay’ does still include some reforms, and for which it is still worth voting Labour. It will make it easier to get off zero hours and onto a contract with at least some hours specified. There will be better remedies for workers ‘fired and rehired’ even though it will still be possible to do it. It will be harder to get rid of workers in their first two years at work, although a clever company can get round it with probation periods.

There will be a consultation about the three-tier employment status, but where that will go nobody knows. The rights of freelancers will be strengthened. Adult social care will get sectoral bargaining, but no-one else. The time limit for Employment Tribunals will go to six months, from just three, but nowhere near the six year limit for other contractual disputes.

Labour has promised to abolish the age bands that apply to the Minimum Wage, although of course in the modern economy, relatively few 16-20 year olds are actually in work. The last three anti-union laws will be repealed, but not the rest.

‘Pro-worker’ and ‘pro-business’ is a contradiction

Many phrases come to mind when contemplating the behaviour of Keir Starmer and the narrow clique of supporters around him in the parliamentary Labour Party. One is that they are ‘Having their cake and eating it’. They want the support and money of the unions; they want – and have got – their complicity as they have reneged on all the other policies and conducted a vicious factional war on the left. But they also want to cosy up to big business and The City.

In the words of Labour’s ‘Plan to Make Work Pay’, “Labour is pro-worker and pro-business“. That is impossible and that particular contradiction will unwind once Labour is in office. The foundation of the Starmer/Reeves economic strategy is to manage capitalism better than the Tories, but above all to preserve it. They have no socialist perspective and not a socialist bone in their bodies.

Given the dire economic crisis faced by British capitalism they will be forced to implement cuts in services – which they will no doubt call “unavoidable hard choices” – and they will expect the trade union leaders to accept this as a quid pro quo for a second-rate New Deal.

The trade union leaders – most of them, at any rate – will be inclined to accept the “hard choices” Labour makes. But their members will not, and it is in that contradiction that the future of the trade unions – and the Labour Party – lies in the next year or two. We can already see the outlines of a new opposition to Starmer in Unite’s refusal to endorse the Labour manifesto. But what is true of Unite today, will be true of more trade unions tomorrow.