Benefit and immigration cuts won’t make a single person better off. And voters know it

As Labour's Chris Bryant struggles, the party must realise it can't win on Tory terms and should instead fight for decent wages

'Chris Bryant is compelled to turn what ought to be issues of fair pay and social justice into ones of who we allow in to the country.' Photograph: Richard Gardner/Rex

It is wonderfully convenient both for the Tories and for employers in general that, when a Labour frontbencher talks about low wages he can be accused, first, of thinking Dagenham is in Kent and, second, of jingoism and bigotry. Then he ends up praising Next and Tesco, which has a distribution centre in Dagenham, Essex, as fine upstanding patriots. But it isn't just because he's shadow immigration minister that Chris Bryant is compelled to turn what ought to be issues of fair pay and social justice into ones of who we allow in to the country.

The Tories want to talk about immigration, how Labour opened the floodgates, how British workers miss out on jobs because foreigners will work harder for less. They also want to talk about benefits, how Labour lost control of them, how high benefits price people out of jobs and how cruel it is to "trap" them in poverty in this way. They also like to bring the conversation round to how Labour gains from high benefits and high immigration (immigration of burger flippers or hop pickers, that is, not immigration of spin doctors or bank governors) because both create a demographic that is more likely to vote for it.

Labour should ignore all this and let the Tories, as the tacticians say, "own" issues such as immigration and benefits. It should talk about the very things the government doesn't want to talk about: low wages and declining living standards.

Under this government – and, it must be said, New Labour did its bit to help the trend – Britain is being turned into a low-wage economy with a casualised, compliant workforce (or "flexible workforce", to use the too commonly accepted euphemism), alongside levels of wealth and income inequality unseen since the Edwardian era. Those accustomed to low-wage, low-employment economies, whether they are Poles, Romanians, Somalis or Bangladeshis, will inevitably be at a competitive advantage against Britons who look for higher standards.


Bryant is right to say that employers want to recruit workers at the lowest possible rates. That doesn't make them, as Bryant also says (or planned to say before he foolishly leaked the draft of a speech to Sunday newspaper journalists), "unscrupulous". They are just behaving in what is now a normal commercial fashion: driving down costs, squeezing suppliers (think of how supermarkets treat farmers), maximising profits and management bonuses.

As new figures from the House of Commons library show, the real value (discounting inflation) of hourly pay rates has declined by 5.5% in Britain since the beginning of the recession, one of the largest falls in the European Union, with only the workers of Greece, Portugal and (by a narrow margin) the Netherlands faring worse. But the issue of falling wages isn't confined to Europe, nor did it begin with the recession.

In the United States, average wages have been more or less stagnant for 40 years; the inflation-adjusted value of the minimum wage is 15% below what it was in 1979. The best way to improve living standards, according to the conventional narrative, is for people to acquire more education and more skills. But as a paper last year from the Centre for Economic Policy and Research in Washington DC, pointed out, the US workforce, like Britain's workforce, is better educated than it was 40 years ago. In both countries, more people stay in school until 18 and more go to university. The suggestion that inadequate education is the main cause of low wages doesn't stack up.

Nor do the justifications at the other end of the income scale. Top pay rises, we are told, as firms compete globally for the best talent. In fact, as the High Pay Centre recently reported, only 0.8% of the chief executives of Fortune Global 500 companies were poached from another company in a foreign country and 80% got their jobs as the result of internal promotion. Besides, though the gap between rich and poor has increased somewhat in all countries since the 1970s, it has grown far more rapidly and become far wider in Britain and America than it has in continental Europe or Japan.

The truth is that ordinary working people, whether highly educated or not, take too small a share of the cake while management, shareholders and financiers take too much. That is simply because the latter control the money, and there aren't enough restraints – political, legal, social or cultural, to stop them keeping most of it for themselves. It isn't just that trade unions have become weaker thanks largely to the anti-union laws of the 1980s, alongside privatisation of publicly owned industries and outsourcing of state services. It is also that management began to act according to new cultural norms. "Management," the late JK Galbraith wrote in 1967, "does not go out ruthlessly to reward itself – a sound management is one expected to exercise restraint." He added: "With the power of decision goes opportunity for making money … Were everyone to seek to do so … the corporation would be a chaos of competitive avarice."

Now competitive avarice rules. That is what Labour should address because it is a problem to which other parties have no answer. Ed Miliband says he wants to do a Thatcher in reverse: to change the British soul. He will fail if he enters, on enemy terms, debates on immigration and benefits. Bryant should demand British jobs with decent pay, not British jobs for British workers. Liam Byrne, the shadow social security minister, should demand higher wages, not compete with the Tories on who can best "control" the benefits bill. The bill will control itself if wages improve.

Labour should ensure that the next election is fought on living standards. The centrepiece of its campaign should be how to compel employers to pay more, or how to create the conditions in which workers can claim more for themselves. It should discuss how far the minimum wage can be increased, or the merits of restricting top pay, perhaps by linking it to a multiple of a company's median wage. It should discuss how best to legislate against abusive "zero-hours" contracts. Cutting benefits and keeping out immigrants won't make a single Briton better off and, in their hearts, the voters know this. Recalling that it was set up to improve the condition of people who worked "by hand or by brain", Labour should go into the next election with a credible programme to reverse the long decline in wages.

Guardian