The Confederation of Shipbuilding & Engineering Unions

How would Churchill kick start the economy?

1 June 2020 / Blog | Economy

The Chancellor has said that he ‘was deeply troubled’ by warnings from the Office of Budget Responsibility (OBR) that the economy could shrink by 35% as a result of the Coronavirus. He’s right to be worried and so should we all. The OBR’s report outlines the scale of the economic crisis facing us. Under current conditions unemployment could rise by 2m with public sector net borrowing increasing to £273bn, or 14% of GDP, while income tax revenues fall by £57bn, VAT revenues by £30bn and public sector receipts by £130bn. At the same time the Chancellor needs to find £42bn to pay for the Coronavirus job retention scheme £10bn for the self-employed income support scheme and £15bn for the small business grant scheme.

It goes without saying that we are in the middle of the defining event of our era. We are in the grip of a holy trinity of catastrophes with the public health crisis exerting a gravitational pull on the economy and social policy which is calling into question almost every aspect of how we organise as a society. A decade of austerity has left the state so hollowed out that when Ministers pull the levers of Government they find that they don’t always work. Don’t forget too, that these crises sit uncomfortably atop our on-going dilemmas about how we deal with growing wealth inequality, precarious employment, climate change and adapting to the threats and opportunities of automation.

The Chancellor went further saying, “this is going to be hard. Our economy is going to take a significant hit and as I’ve said before that’s not an abstract thing. People are going to feel that in their jobs and in their household incomes.” One thing is for sure that the solution to this can’t be more austerity which comedian Alexi Sayle described as “the idea that the 2008 financial crash was caused by Wolverhampton having too many libraries”. It would be impossible now for the Prime Minister who has heaped so much praise on NHS staff to refuse to recognise them as essential workers along with the millions who have kept us going by caring for the elderly, stacking shelves, cleaning wards and getting food to the shops or delivered to our homes.

So what can be done? Firstly, we need the sort of global plan advocated by Gordon Brown who did so much to co-ordinate an international response amongst world leaders in 2008. A decade later this will be harder to do because rise of populist solutions to complex problems has been found wanting, but it still has to be done. Global labor organisations such as IndustriAll and the ITUC are committed to working with national governments and global banks to do what is necessary to keep key industries going.

Closer to home we know that the Prime Minister likes to be seen as Churchillian in his leadership of the nation and the time is right to have a look at, what a modern strategist might call, the Churchill playbook.  In it they’d find that in 1909 Churchill successfully advocated for the creation of Trade Boards to set minimum wages arguing that employees working in sectors without collective bargaining are powerless in the face of an unscrupulous employer or external events beyond their control “where those conditions prevail you have not a condition of progress, but a condition of progressive degeneration.” The Trade Boards went on to form a key part of rebuilding the economy after the Great War and in the midst of the Spanish Flu pandemic of 1918. The Wages Council’s that followed were established by the 1945 Labour Government along with the NHS and once again played a vital role in rebuilding our shattered economy. The Wage Councils were abolished in 1986 by Margaret Thatcher and the last of them, the Agricultural Wages Board, was closed in 2013 by David Cameron as part of what the coalition liked to call the ‘bon-fire of quangos’.

Part of the solution, therefore, must be to look at the role these bodies played in rebuilding our economy in times of catastrophe and replicate it for the digital age. Let’s expand the role of the Low Pay Commission, which advises the Government on the National Minimum Wage, across sectors where there isn’t strong union representation. Beginning with the delivery drivers, freelancers and warehouse workers in the gig economy just as Churchill sought to protect those caught in piecework in 1909 – the  “labourers, tailors, paper-box makers, and the machine-made lace and finishing trades”.

The economy is going to have to reverse engineer its ‘just in time’ approach. Additional capacity can no longer be considered inefficiency and we have come to understand that our thinly stretched global supply chains are only as strong as their weakest link and building in resilience is not an optional extra.  Manufacturing firms are already seeking to onshore and establish local clusters in response to the crisis. This has the potential to feed into the Government’s strategy of levelling up in the regions outside London which must form a key plank of our recovery.

Unions will play a key role in preparing for this new environment and not just on health and safety and pay bargaining but also in terms of how we retrain for the skills of the future and how we manage societal change. One outcome of the virus will be to increase the speed of change following the working from home phenomenon. Flexible working represents an opportunity to improve productivity while creating a better work life balance that offers access to the labour market for older and disabled people. But it has to be carefully negotiated so that tech is not exploited as a means to reduce costs and overheads, nor should it mean that whole industries such as insurance or legal services should be stripped of managerial and technical staff. The answer is that the way we value work and structure the economy across all sectors of industry and the economy must be developed via a tripartite approach from workers, employers and Government. Failure to do so and any attempt by the Government to return to business as normal will miss the point that normal was part of the problem in the first place.