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WHICH WAY FOR BRITAIN? HIGH ROAD OR LOW ROAD?
In the first section of the 2017 Conservative Election Manifesto, entitled ‘A strong economy that works for everyone’, one of the highlighted pledges was that: ‘Theresa May’s Conservatives will deliver … fairer corporate governance, built on new rules for takeovers, executive pay and worker representation on company boards’ (p11). A pledge to provide for ‘worker representation on company boards’ had also been made by May in the Tory leadership campaign in summer 2016, but by November of that year, following CBI and other business lobbying, she had u-turned on the idea, clarifying that there was no intention for legal compulsion upon employers to create positions for workers on boards. May is, however, still repeating her claims to do something in this area: writing in the Financial Times in May 2017, she said: ‘I will ensure that there is representation for workers on company boards …’.(2) At the time of writing, though, no plans for any legislation have been forthcoming. Similarly, the Tory manifesto’s weak gestures towards a UK industrial policy have also not been translated into any noticeable policies.
The Chartered Institute of Personnel Development (CIPD), which has a recent history of cogent comment on industrial strategy and skills development, set out the dilemma involved:
'In essence, the Government’s vision incorporates a deep-seated tension between very different models of competitive strategy. These are:
A "high road" model of competitive advantage wherein highly skilled workers deliver sophisticated high-specification goods and services that are sold on the basis of their quality rather than their price and where firms come to the UK because this is our model.
A "low road" model of competitive advantage, wherein a disposable workforce produces relatively standardised goods and services that are primarily sold on the basis of low price, and where firms come to the UK because it is a cheap place to do business and taxes are low. (3)
(3) ‘Industrial strategy and the future of skills policy’, CIPD 2014, p5: www.cipd.co.uk.
As long ago as 2003, the Porter Report, which was commissioned by the then Labour government to investigate the productivity gap between the UK and its competitors, had argued for a change in the UK approach, away from competing on costs and towards better management of manufacturing, by both private industry and the government - in short, the ‘high road’ option. But the report had little effect on business, and not much more on the government. The ‘high-road’ view lost out to a free-market or liberal, ‘low-road’, model, and, under Cameron, commitment to a ‘flexible’ labour market became even more strident - as seen, for example, in the 2011 Beecroft Report. (4) Beecroft’s approach, under the guise of reforming the labour market to boost employment levels, proposed cutting employment red tape by stripping labour rights and making it easier for firms to sack under-performing staff. In the same vein, in 2012 five new-generation Tory MPs published Britannia Unchained, offering further political support for the ‘low-road’ model. (5) Theresa May’s government clearly recognise that there needs to be a shift from this model, but lack the political will to make a real break.
(4) See www.gov.uk/government/publications/employment-law-review-report-beecroft.
(5) Kwarteng et al, Britain Unchained: Global Lessons for growth and prosperity, Palgrave Macmillan 2012.
The result is that the UK is currently far from taking the ‘high road’, where people are seen as the critical asset; where skills are seen as the source of competitive advantage and sophisticated work organisation; and where the role of worker participation in enhancing worker commitment, creativity and productivity is understood. But the choice between the high and low roads has clear political consequences: and it seems that the recognition of the value of workers that is involved in the high-road option, however much it makes economic sense, goes against the deepest instincts of many within the Tory leadership.