Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Angela Rayner has pushed back against Lord Peter Mandelson after the Labour peer criticised her package of employment reforms, likening his complaints to the “squealing” by business over the introduction of the minimum wage.
Mandelson, co-architect of New Labour in the 1990s and now an adviser to big companies, has urged Labour to consult more closely with business over its package of employment reforms dubbed the “New Deal for Workers”.
Rayner, deputy leader of the opposition party, told the Financial Times that her “message for people like Lord Mandelson” was to remember that before New Labour’s 1997 win “business was squealing about the minimum wage, saying that they’re all going to go out of business and it would bankrupt the country”.
“Well it didn’t, it’s endured, and it’s one of the things that across all political spectrums [people] say that it was actually crucial, and it’s affected millions of workers positively,” she said. The minimum wage came into force in 1999.
The debate is a sign of internal tensions over the worker rights package spearheaded by Rayner, which remains the most transformational policy pledge Labour has retained as it gears up for the general election expected this year. Labour currently leads Rishi Sunak’s governing Conservatives by 20 points, according to the FT’s poll tracker.
The employment pledges are a priority for Labour’s union backers, but have drawn concerns from business groups that leader Sir Keir Starmer has courted.
Mandelson, a former Labour cabinet minister, is now co-owner of Global Counsel, an advisory firm that has served many big corporations including BP, Glencore, JPMorgan and TikTok, according to people familiar with its clients.
In a recent editorial in the Sunday Times, he urged the current party leadership not to “rush” its employment reforms and to consult more closely with business leaders.
“There is a clear case for reform but the case needs to be tested, priorities established and the complexities thoroughly addressed. This must not be rushed but it must be done in consultation with business,” he said in a warning shot to the leadership.
Mandelson’s comments echo misgivings from some business groups and corporate leaders about the extent of the New Deal.
Rupert Soames, president of the CBI lobby group, told the FT in February that the UK needed to avoid a “European model” of employment rights and resist excessive regulation that undermined productivity — in a direct dig at the Labour party.
Some Labour frontbenchers too are concerned about the extent of the reforms, according to people familiar with the matter.
But Rayner told the FT that business needed to swallow their “misconceptions” and get on board with her proposals, which include a “fair pay agreement” in the social care sector, an end to “exploitative zero-hours contracts” and more generous sick pay.
“This idea that you’re either pro business or pro the worker is for the birds,” she said, adding that the proposals she has set out are “more evolutions than revolution”.
“Once people can see what we’re trying to achieve, they get on board and are really happy to move with it,” the deputy leader added.
She said that many businesses were already offering schemes that went further than the deal proposed by Labour, for example on paternity leave and unfair dismissal. Rayner added she and other Labour leaders had been “in dialogue with . . . business” over the plans.
The party has sought to highlight in recent weeks that it would not introduce some of the policies without consultation first. It has also said that while it would give basic workers’ rights from day one of employment, employers would still be able to use probationary periods and dismiss staff for “fair reasons”.
On Thursday Starmer defended the overall New Deal as he launched the party’s local election campaign. “We will scrap zero-hours contracts, we will end fire and rehire, make work pay with a real living wage. This is good for growth,” he said.