New Labour Policy, Industrial Relations and the Trade Unions

S. Coulter

• Publisher: Palgrave Pivot
• Year: 2014
• ISBN:
  9781137495754
• Topic: Politique et relations internationales
• Subtopic: Politique européenne

New Labour was outwardly hostile to trade unions and their concerns. Yet the Blair government worked closely with the TUC on several key employment reforms. Steve Coulter analyses the dimensions of the often fractious Labour-union partnership and shows how the TUC pursued an 'insider lobbying' route to influence the shape of New Labour's policies.

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Introduction: Political Trade Unionism in a Cold Climate

Abstract: Often considered hostile or indifferent to the concerns of trade unions, Tony Blair’s ‘New Labour’ in fact enjoyed a complex relationship with unions based on mutual reliance and suspicion. Far from pandering only to the needs of business, Blair’s government pursued a distinctive social-democratic agenda and gave unions a genuine, if limited, role in the design of this. The introductory chapter to the book sets out several alternative pathways for unions to exert influence over Labour governments and argues that one of these, ‘insider lobbying’ by the Trades Union Congress (TUC), was crucial in steering Blair’s free market agenda in a more collectivist direction.

Keywords: industrial relations policy; insider lobbying; New Labour; trade unions; TUC

Coulter, Steve. New Labour Policy, Industrial Relations and the Trade Unions. Basingstoke: Palgrave Macmillan, 2014. DOI: 10.1057/9781137495754.0003.

This book examines whether, and if so how, trade unions in liberal market economies (LMEs) can influence centre-left governments over employment relations policies. It does this through an analysis of the relationship between the TUC, the UK’s ‘peak’ trade union association, and Blair’s ‘New’ Labour Party from the mid-1990s to the end of Blair’s second term in government in 2005. Much of the academic literature from the industrial relations, political science and political economy traditions suggests that the institutional framework of LMEs negates any trade union influence over policymaking. However, the evidence of political interaction between the TUC and Labour to be presented in this book suggests otherwise.

The problem the TUC faced is that peak labour in highly liberalised economies such as the UK, with ‘majoritarian’ political constitutions (Lijphart 1999) and ‘pluralist’ systems of interest representation, which together insulate governments from interest groups like unions, have very limited mechanisms for influencing governments over policies affecting organised labour. The absence of institutions for coordinated bargaining in the labour market and lack of access points in the political system severely limits their ability to steer government policy in a pro-union direction.

Of course, in ‘normal’ circumstances the TUC could have expected to gain leverage over policymaking by default whenever the left-leaning Labour party was in power. This was the experience of most Labour governments in the twentieth century, particularly during the UK’s ‘corporatist’ period of the 1960s and 1970s, when unions were consulted widely by Labour politicians as part of the highly institutionalised interplay of producer groups and the state (Schmitter 1974). It owes to the quid pro quo which normally prevails between unions and left parties, which is a form of ‘political exchange’, whereby the former provides votes and support in return for labour-‘decommodifying’ policies when the latter are in government (Crouch and Pizzorno 1978, Esping-Andersen 1991). In the UK this relationship was strengthened further by historic links between party and unions which were sustained by an enduring web of institutional ties: the Labour Party had been founded by trade unions in the nineteenth century to provide political representation for organised labour and the two had had a contentious but close alliance ever since (Minkin 1991).

However, the election of Blair as leader of the opposition Labour Party in May 1994 changed this. Blair broke radically with ‘Old’ Labour’s pro-trade union past by publicly distancing the party from organised labour. He made it plain that globalisation made socialism impossible and implied that henceforth employers, not unions, were Labour’s preferred interlocutors: ‘Macro-economic policy must be kept tight, disciplined and geared to stability ... Trade unions will be treated with fairness, but no special favours’ (Blair 1996: 122–123). Many of the institutional ties linking unions with parties were ostentatiously dismantled (Russell 2005). Policy positions espoused by Blair’s ‘New’ Labour in opposition pledged to reinforce, rather than undermine or attempt to fundamentally alter, the liberal market institutions of the UK’s economy, which for various reasons are inhospitable to unions (Crouch 1997: 352). Several close observers of the party-union alliance predicted its imminent demise (Dorey 1999: 203, Ludlam 2001: 129).

The expectation was therefore that New Labour in government (from May 1997 onwards) would maintain its distance from unions while implementing the market-making policies suggested by its pro-business rhetoric. The TUC would continue to be shut out of the political system with negligible influence over policy outcomes. This would be consistent with the gloomy prognosis for organised labour in highly liberalised economies contained in much of the contemporary literature from the political science and industrial relations tradition (cf.: Ferner and Hyman 1994, Kitschelt 1994, Piazza 2001, Martin and Ross 1999, Scharpf 1991).

This view rests, in part, on the sharp decline in union power which has taken place since corporatism collapsed in the UK in the late 1970s. Membership of TUC-affiliated unions in 1979 had stood at a high water mark of 13.3m, or more than 54 per cent of the workforce. The influence of industry-level bargaining and the wages councils meant that approximately 85 per cent of the working population were effectively covered by collective pay-setting mechanisms. But by 2001 membership was down to 40 per cent or 7.6m and union density was less than 30 per cent (Howell 2005: 131). Weak unions make less attractive bargaining partners for centre-left political parties seeking the votes and quiescence of organised labour, eroding the entire basis for political exchange.

On the other hand the UK is not the only advanced capitalist country that has seen membership of trade unions dwindle since the 1970s: 23 out of 30 countries surveyed by the Organisation for Economic Co-operation and Development (OECD) saw falls in union density over the period 1970–2000, although the UK saw a sharper than average decline in bargaining coverage.¹ Much analysis has therefore focussed on the role of nationally-specific institutions in accounting for variations in political/economic outcomes affecting the environment for political exchange. Two sets of institutions are particularly important.

First, labour market institutions determine the role of unions in the political economy and their ability to act as veto players over labour market reform. The UK’s labour market institutions are those of a LME where wage and other forms of co-ordination between economic actors are left largely to the market (Hall and Soskice 2001), producing decentralised, un-coordinated bargaining. This deprives unions of an important institutional role in the political economy and means that they have to find other issues with which to try and engage politicians.

Countries also vary significantly in the political systems under which they are governed and this has implications for the ability of interest groups to gain access to policymakers. The UK is a ‘majoritarian’ political system, with few veto players and where policymaking is highly centralised by powerful executives in usually single-party governments (Lijphart 1999). It has, consequently, a pluralist style of interest representation where socio-economic groups are kept at bay by government and are obliged instead to seek influence through indirect means.

Effectively, therefore, the UK’s LME-style micro-economic institutions in the labour market should undermine the role of unions in the political economy, while the configuration of its governing institutions ought to limit their ability to lobby politicians to change this. To make matters worse, political exigencies saw New Labour publicly shun the trade union link to court business instead. The outlook for unions under New Labour in the UK should therefore have been significantly worse than for unions in other nations in similar situations: an ostensibly centre-left government indifferent to their demands and seeking to further marketise economic relations. However, three pieces of evidence question this:

1New Labour’s 1997 General Election Manifesto commitments on industrial relations were substantially unaltered from the manifesto on which it fought (and lost) the previous election of 1992, despite the party apparently distancing itself considerably from the unions during the interlude. For example, eight out of the nine industrial relations policies which appeared in 1992 were also present in 1997.² On the other hand, of the 37 separate policy commitments in the economy, industry and welfare sections only 5 appear in both manifestos. According to two leading analysts: ‘Labour moved sharply rightwards with, for the first time in postwar history, a preponderance of right wing positions over left wing ones’ (Bara and Budge 2001: 594). What is striking, therefore, is the degree to which New Labour’s zeal in distancing itself from its more collectivist Old Labour predecessor did not appear to extend to the actual content of its industrial relations program, despite its union-sceptical rhetoric.

2In its first term in government, New Labour’s industrial relations program was enacted in full³ even though its main elements were contrary to the stated preferences of employers. The main elements of its program were: The Employment Relations Act (1999); the creation of a National Minimum Wage (the UK’s first); and signing the European Social Chapter. All of these were opposed, to varying degrees, by employers.

3There was an increase in the quantity of contacts between trade unions, particularly the TUC, and New Labour politicians during the party’s period in opposition to the Conservatives from 1994 to 1997 and in its first term in government (Marsh 2002, Marsh and Savigny 2005). Marsh, Richards and Smith have suggested that the TUC was regarded by New Labour as a valuable source of technical advice on labour market issues and was accorded greater consultation rights in return (2001: 207–208). Extracts from the diary of Alistair Campbell, Blair’s communications director, reveal first-hand the extent of contact between union leaders and senior politicians over policy development (Campbell and Hagerty 2010).⁴

What tentative conclusions can be drawn from this? The first is that New Labour in government overcame its apparent reluctance to deliver pro-union policies, otherwise it would simply have dumped these along with the rest of the ‘Old Labour’ baggage from 1992. This, in turn suggests that the TUC, while clearly not enjoying anything like the prominence under New Labour it had with previous Labour governments, nevertheless still had some success in securing union-friendly outcomes as the main lobbyist for organised labour, as these were the policies that it had campaigned for. Indeed, while many trade unionists predictably complained of being sidelined by Blair, the verdict of John Monks (who was TUC general secretary 1993–2003) was that, under Blair: ‘there have been modest gains for unions’.⁵ Research interviews with New Labour insiders carried out for this book show that the TUC leadership was viewed as a trusted insider by the New Labour leadership⁶ and was consulted widely on the design of policy and sometimes on its implementation.⁷

The second is that this ‘puzzle’ concerning the unexpected resilience of union-party cooperation in the UK means the real picture may not after all be a straightforward story of ‘majoritarian’/liberal states blocking political exchange and ‘consensual’/corporatist states facilitating it, but is instead something more complex. Although the institutions governing labour markets and systems of interest representation clearly vary between states, entailing quite different challenges for unions in influencing policymaking, the evidence presented here suggests these constrain but do not ‘imprison’ them, that is, unions retain the capacity to adapt their strategies and organisations to respond to changing political and economic pressures – even in ‘union-hostile’ liberal-market states.

Against this it may reasonably be argued that New Labour’s industrial relations reforms did not go very far in reversing the profound imbalance of power between capital and labour created by the Conservative’s industrial relations reforms. New Labour remained committed to deregulated labour markets with weak institutional foundations for collective employment rights (Howell 2004, 2005). Delivery of reform was marred (from the point of view of the unions) by the government’s underlying commitment to free markets (Smith and Morton 2001). It is also the case that access and consultation tailed off during the second term after 2001, and some employment policy initiatives originating from the European Union and championed by the TUC were blocked or watered down.

Clearly, the UK was not transformed into a corporatist paradise for trade unions by Blair. This does not, however, necessarily mean that limited union-party cooperation was not taking place – merely that it took place under a broad set of constraints which acted to ensure that resulting industrial relations policy worked with, rather than against, the grain of the UK’s existing set of political economy institutions. As argued throughout this book, the liberal market institutions of the UK economy, as well as the structure of the union movement itself, are simply incompatible with the centralised and/or coordinated industrial bargaining systems which prevail on much of the continent. Much as many union leaders might have wished to see these institutions created in the UK, this was simply unrealistic in view of the actually existing UK economic model.

New Labour was painfully aware of the failure of UK corporatism under the previous Labour government (1974–1979). It favoured instead a decentralised style of ‘business unionism’ which made a virtue rather than an evil of cooperation with employers and provided an insurance policy for the party against future industrial militancy. By recognising these constraints, and adapting its goals and strategies to accommodate them, the TUC came...

Table of contents

• Cover
• Title
• 1  Introduction: Political Trade Unionism in a Cold Climate
• 2  The Political Economy of UK Industrial Relations: A Theoretical and Historical Overview
• 3  Loosening Party-Union Ties: Clause 4 and OMOV
• 4  Insider Lobbying in Action: The TUC and New Labours First Term Agenda
• 5  Political Unionism and Political Exchange in New Labours Second Term
• 6  Conclusion: Political Trade Unionism Reconsidered
• Bibliography
• Index