Working people must not pay the price of leaving the EU
The result of the referendum is, of course, a disappointment for the TUC. We campaigned hard for Remain, because we believed that was the best option for working people’s jobs, wages and rights.
But the British people have spoken – and they have voted to leave the EU. As the representatives of 6m working we people, we respect their decision.
Now, the government’s first priority must be to minimise any negative impact on the economy. We need an urgent national strategy to save British jobs, involving unions and business. And for the longer term, we need a clear plan to retain access to the single market.
The government needs to heal the wounds in the country – not just those in the Conservative party. Working people are fed up with paying the price for globalisation and the financial crisis it caused. We should all reflect on the anger and disaffection of many voters, expressed at the ballot box, and think about how we rebuild confidence, common purpose and fellow feeling across the UK.
Throughout the coming years, the TUC will continue to advocate policies that meet the needs and aspirations of working people.
The TUC has four immediate concerns.
Defending the pound – and our standard of living
In the next few days, the government needs to take steps to shore up the pound or at least limit its fall. We must prevent prices soaring for basic goods. The UK imports 40% of its food – and price rises will inevitably hit the cost of the weekly shop. The cost of goods manufactured abroad such as phones and white goods and components for manufacturing in the UK will also rise.
The pound was worth $1.60 when polling opened yesterday, having recovered from $1.40 where it had been for some time. But it fell back during the night, and if it fell as far as $1.20, many foreign imports would cost considerably more – representing a catastrophic cut to our standard of living. The TUC argues for a floor to be put on sterling’s drop, probably at $1.30.
Supporting British industry, jobs and wages
The impact of reductions in the value of the pound – and the stock market implications – will take time to affect the UK manufacturing sector. Components already on order, and investment decisions, are already in place, although they have been affected by the uncertainty caused by the referendum campaign.
But there is still a need for urgent action by the government to shore up confidence. We need an early decision to show the markets and businesses that the government intends to support manufacturing and the economy as a whole.
Unions have a role to play: the involvement of employers and unions in the German response to the global financial crisis from 2008 onwards was a key factor in Germany’s earlier recovery than the UK’s. Unions and employers can help prevent investors from fleeing the UK, for example.
There also needs to be a change from monetary easing to fiscal expansion, as the OECD has proposed. A further cuts or austerity budget is precisely the wrong solution at this time. Instead, the government needs to signal that it will intervene – giving the go-ahead to a new runway at Heathrow, announcing Crossrail 2, underwriting loans for future investment and spending on information and communication infrastructure. They should also set out a big programme of public works – especially building homes, as well as schools and hospitals. And the government could use public procurement to signal its support for British jobs.
But the chancellor also needs to strengthen demand (and make it possible for working people to afford higher prices) by encouraging pay rises in both the public and private sectors. Working people’s wages are an average of £40 a week less than they were when the global financial crisis began. Higher wages would not only stimulate the economy, they would address the anger felt by many at their falling living standards, which played out in this vote.
The government should abandon the 1% cap on public sector pay rises, and private sector employers who can pay more should be forcefully encouraged to do so. Ideally this would be done through promoting collective bargaining, but in the shorter term, the IMF have just advised Japan to require profitable employers to ‘comply or explain’ against a target of 3% wage increases in the private sector. Scrapping the public sector pay cap would give private sector employers the confidence to raise wages.
Rebuilding tolerance, healing divisions
Healing isn’t just needed in the Conservative party, it’s needed in the country. The UK was deeply split during the referendum campaign. People made their own decisions based on what they considered best for the country – and we need to move on from that disagreement without rancour or recriminations.
The TUC has consistently argued that it is not racist to be concerned about immigration. We now need a proper debate about how we manage immigration in the interests of Britain. The government should reintroduce the Migration Impacts Fund so that the benefits of migration are shared fairly with the communities and public services in the areas of highest immigration and highest pressure. And the TUC wants firmer rules and tougher enforcement to prevent unscrupulous bosses using migrant workers to undercut local labour.
We need to act against division and in the interests of unity. That means we have ensure migrants integrate into their local communities, making sure everyone gets help to learn English, promoting modern British values, and supporting volunteering and community activities. A strengthened border force would give people more confidence that migration is being managed better. But at the same time, politicians need to stop making promises they can’t keep, and stop blaming migrants for things that government can control, like under-pressure public services.
In the short term, the government needs to clarify the status of British people living and working in the rest of the EU, and of EU citizens in the UK.
Our relationship with the EU: where are we going?
The British people have been clear that they want the UK to leave the European Union. The task for the UK’s leaders is to work out how that can be achieved as swiftly and painlessly as possible.
The TUC does not support a prolonged transition as years of uncertainty will be catastrophic for investment. That would leave working people unable to plan their own futures. Investors will postpone job-creating investment until they know the UK’s future path, and people will put off major life decisions such as whether to marry, change jobs, start a family or buy a home.
The government must urgently bring together a team of people to plan Britain’s next steps. The team must be cross-party, and have members from the Northern Irish, Scottish and Welsh administrations and regional government, as well as representatives of business, unions and civil society.
The top priority is to protect access to the EU’s single market, to which nearly half of our manufacturing and much of our services are exported. Polling the week before the referendum suggested that 57% of voters – including half of those planning to vote to Leave – would favour the same relationship with the EU that Norway has, rather than the looser, less beneficial arrangements of countries like Canada and Switzerland. That relationship would guarantee jobs and rights at work. There is a growing consensus that it would make more sense than any other arrangement, while respecting the wishes of the electorate to leave the EU.
Regardless of the path chosen, we also want to see the workers’ rights that politicians from both sides defended in the referendum campaign protected. The government could start by committing not to repeal any of the rights which are guaranteed by the EU.