Shadow chancellor John McDonnell has pledged to cut back the working week to 32 hours, with no loss of pay, “within the next decade” under a Labour government.
In what would be a radical transformation of the UK’s labour market, increasing the role of the state in the workplace, McDonnell set out how a Labour government would restore full trade union power and begin collective bargaining, which would include negotiations over hours.
Unions and employers would then “decide together how best to reduce hours for their sector,” he said.
Speaking from Brighton as part of the party conference, the socialist frontbencher told delegates he wanted a world “for everyone to fulfil their full potential”.
McDonnell said: “We won’t build that world overnight. And let nobody tell you it will be easy, or that we won’t face enormous resistance. But I believe our time is coming.”
But his flagship policy flies in the face of advice put forward by a report commissioned by his team.
The report, by Lord Skidelsky, warned that successfully reducing the working week to four days might not be practical.
“Capping working hours nationwide, on the lines of France’s 35-hour working week, is not realistic or even desirable, because any cap needs to be adapted to the needs of different sectors,” the report said.
It also questioned the very method McDonnell appeared to propose, saying: “‘Pressure from below’ cannot simply replicate old-fashioned models of collective-bargaining: outside the public sector, the union muscle no longer exists.”
Labour would also create a Working Time Commission “with the power to recommend to government on increasing statutory leave entitlements as quickly as possible without increasing unemployment”, he said.
A Labour government would also ban zero hour contracts, McDonnell said.
“While millions are exhausted from overwork, there are too many others who can’t get the working hours they need,” he told the conference.
McDonnell, who has been courting the City with mixed success, also told party faithful he would create a National Transformation Fund with £250bn of green government investment, with a further £250bn of lending through a National Investment Bank.
As part of a move to head off the Conservatives’ insurance-based social care policy, McDonnell also announced plans for a new “National Care Service”, which would be funded through tax hikes.
McDonnell said the first building block in this service would be to “introduce personal care free at the point of use in England, funded not through the Conservatives’ gimmicky insurance schemes, but, like the NHS and our other essentials, through general taxation”.
But McDonnell’s speech was greeted with widespread concern among the business community.
Carolyn Fairbairn, CBI director general, warned his policies would harm “the very people they are trying to help” and urged for Labour to “root its policies in reality, not ideology”.
Ideas like the four-day week and inclusive ownership fund “would amount to a tax on workers, pensions and savings”, Fairbairn said. “Add these ideas to mass renationalisation, rising business taxes and ongoing Brexit uncertainty, and we risk hanging a closed sign on the door of our open economy.”
She added: “A growing economy built on fairness can only be delivered if business and government work together. Yet here was a speech from the shadow chancellor with no mention of the huge contribution business makes, its importance to jobs, investment and prosperity. Only through partnership can a net-zero economy be achieved, wages increased, and new technologies harnessed to the benefit of all.”
Iain Anderson, who heads up the City lobby firm Cicero, told City AM: “The shadow chancellor talked of mobilising financial resources to address key problems in our economy and our society, but he didn’t talk of partnership. it sounded more like coercion.
“Labour needs to have a real dialogue with finance to make this happen.”
Adam Marshall, director general of the British Chambers of Commerce, agreed.
“At such an important moment for the UK, a constructive and honest dialogue between Labour and business is needed now more than ever, as are policy proposals that don’t rely solely on firms to shoulder the cost burden,” he said.
“We share the Labour Party’s goal of strong public services, but fear that it sometimes forgets that the taxes to pay for them come from private-sector businesses and their employees – as do the innovations that make those services better,” he added.
“With Brexit and global trade uncertainty to contend with, Labour should be reaching for the carrot rather than the stick in its approach to business and economic growth, in the interests of all our communities.”
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