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Page 1: Industrial Strategy: building an economy that works for all submission to... · Industrial Strategy: building an economy that ... and robust democracy in the workplace ... employees
Page 2: Industrial Strategy: building an economy that works for all submission to... · Industrial Strategy: building an economy that ... and robust democracy in the workplace ... employees

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Industrial Strategy: building an economy that works for all

April 2017

Requests for further information should be sent to:

Ben Norman, Unite Research Officer: [email protected] or

John Earls, Unite Head of Research: [email protected]

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Contents

Executive Summary …………………………………………………...page 3 Introduction …………………………………………………………….page 4

Unite’s Six Pillars

• Investment………………………………………………………...page 9

• Positive procurement…………..……………………………...page 27

• Skills: reskilling and apprenticeships……………………...page 32

• Automation: the fourth industrial revolution……………...page 37

• Corporate governance……………………….........................page 44

• Working rights and worker voice…………………...............page 50 Applying Unite’s Six Pillars of Industrial Strategy: Food, Drink and Agriculture………………………………………....page 58 Brexit and trade agreements…………………………………….…..page 62

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Executive Summary: the purpose of an industrial strategy Unite is UK’s largest trade union representing over 1.4 million members across all sectors of the economy including manufacturing, financial services, transport, food and agriculture, construction, energy and utilities, information technology, service industries, health, local government and the not for profit sector. Unite also organises in the community, enabling those who are not in employment to be part of our union. This response to the Government’s Green Paper focuses on the central question of the purpose of an industrial strategy. For Unite that means building a strong economy that genuinely works for all – underpinned by secure employment and decent pay and conditions. The omission of trade unions from the Green Paper exposes a fatal weakness in the idea of industrial strategy – the absence of the collective role of working people. To address this, Unite’s submission stresses the importance of worker voice – that being the ability of working people to exercise and advance their collective interests in the workplace and in society. This is represented in the workplace by collective bargaining and in wider society by trade unions, which must be seen as social partners in the creation and implementation of an industrial strategy. Unite proposes ‘six pillars’ which overlap and develop the ‘ten pillars’ identified by the Green Paper. These themes are applicable across the economy and are vital for an integrated and long-term industrial strategy.

1. Investment: in infrastructure projects (including housing, transport and energy), research and development and public services which boosts productivity, creates good jobs, raises living standards and builds a more equitable society. Government must also provide long-term contingency planning to protect employment and communities.

2. Positive procurement: creating a stable, internal market by recognising social value and using public spending to support UK manufacturing and services, and promote and advance equality, fairness and a sustainable environment.

3. Skills: reskilling and apprenticeships: including offering genuine opportunities for advancement through high quality apprenticeships and opportunities for re-skilling and upskilling for the workforce to meet technological changes.

4. Automation: making the UK a leader in the new technologies which will revolutionise

manufacturing, the service sector and transport industries. This must be coupled with policies and workplace protections for workers to ensure that the positive potential of technology is realised for all.

5. Corporate governance: giving people genuine control over their working lives, from the shop floor to the boardroom. Reform must end the endemic short-term culture of UK business, ensure transparency and provide protections for workers and communities affected by takeovers.

6. Working rights and worker voice: Supporting worker voice, strong trade unions and collective bargaining, and ending exploitative practices such as zero hours contracts, blacklisting and bogus self-employment. Government must work with trade unions to create a legal framework for sectoral collective bargaining to ensure strong protections improving wages and conditions for all workers.

This paper also considers the application of these pillars to a strategic sector, addresses the issues of Brexit and future trade deals, and lists a summary of policy suggestions in the conclusion.

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Introduction

Industrial Strategy: building an economy that works for all Unite welcomes the return of industrial strategy to government thinking and with it the tacit acknowledgment that the state has a role to play in ensuring the UK economy brings prosperity for all. In this submission Unite will outline why trade unions and the active participation of working people are inseparable from the success of that ambition. Having reintroduced the phrase, Unite calls on the Government to be bold in its thinking. Industrial strategy must reject disconnected one-off deals and tinkering. Instead it must address the deep and systematic problems which plague the British economy. It must mean the abandonment of austerity and anaemic economic growth. It must mean tackling inequality and a period of wage stagnation unsurpassed since the Napoleonic wars.1 A government serious in achieving these aims must acknowledge the importance of worker voice. This means active and robust democracy in the workplace and a clear role for trade unions in the creation and implementation of industrial strategy – at a local, national and sectoral level. Solving Britain’s productivity problem It is widely acknowledged that the UK continues to face a productivity problem2. Productivity growth remains poor compared to other advanced industrial countries, effectively flat lining since the financial crisis of 2008. Unite rejects any assertion that productivity growth will miraculously rise by trying to squeeze ‘more for less’ out of workers, making the labour market more ‘flexible’ or making work less secure. The productivity problem can only be solved by addressing the fundamental problems in our economy – rising inequality, stagnating pay, lack of investment, and endemic short-termism in business. Any serious industrial strategy will seek to solve the crisis in productivity, but it must begin with dismissing the myth that the problem is caused by lazy or over-paid workers. The evidence shows that full-time employees in the UK work longer hours than the European Union average3. The Institute for Fiscal Studies state that on current forecasts average earnings will be no higher in 2022 than they were in 2007, a “completely unprecedented” fifteen years without a pay rise.4 One of the major causes of low competitiveness can instead be found in the chronic levels of underinvestment – both from the private sector and from government.

1 Budget analysis: UK workers set for worst pay growth decade 'since the Napoleonic wars,' Independent, 9

March 2017, URL 2 UK productivity growth still well below pre-financial crisis levels, Independent, 2017 URL

3 UK employees work longer hours than most EU neighbours, BBC News, URL

4 Spring Budget 2017, Institute of Fiscal Studies, URL

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Source: IPPR, Commission on Economic Justice, 2017

Research from the IPPR exposes that an endemic culture of short-termism has contributed to the rising proportion of profit that UK companies have been distributing to shareholders, rather than reinvesting into their businesses. As the graph above shows, this trend has increased sharply over the last quarter of a century. An increase in saving in response to market uncertainty has also reduced the funds made available for productive investment. The EEF has reported that 53% of UK manufacturers have decided to hold or cancel investment plans in the wake of the 2016 ‘Brexit’ referendum.5 This effective investment strike by the private sector has in turn been compounded by the Conservative Government’s ongoing austerity offensive which has seen a decline in public sector investment. The March 2017 Spring Budget did little to change this. Unite concurs strongly with the TUC that the Chancellor merely repackaged initiatives, such as the £23 billion ‘National Productivity Investment Fund’ which had already been announced. As Unite and the TUC have pointed out repeatedly, even with this fund, government investment as a share of the economy will be lower in this Parliament than it was in the last. The OBR have included downward revisions to government investment in 2015.6 It is clear that an ambitious industrial strategy must be underpinned by economic policy which promotes investment. Pay and inequality: Along with a lack of investment endemic levels of low pay across the UK is a cause, rather than a symptom, of low productivity.7

5 Risk to investment and growth as manufacturers remain 'reluctant' to borrow from banks, EEF, August 2016,

URL 6 Geoff Tily , #Budget2017: Zero out of four, TUC, March 2017 URL

7 Ben Chu, Higher wages could be the answer to our economic woes, The Independent, URL

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Stagnating levels of pay have failed to keep up with the rising cost of living. Half of all UK households have seen no material recovery in their real disposable incomes since around 2005, that is to say the majority of UK households have faced a ‘lost decade’ of income.8 The Resolution Foundation finds that real average earnings are only set to return to the peak before the financial crash by the end of 2022 – 15 years on. The following decade is also set to be the worst for pay growth since 1807, the height of the Napoleonic Wars.9 Unite has long argued that boosting pay and conditions would give UK productivity a shot in the arm. The Institute for Public Policy Research has identified a strong link between low productivity and low wages. It recommends that businesses should establish degree-level apprenticeships for the biggest low-wage sectors – following the model successfully developed for aerospace and other high-growth sectors.10 Analysis by the Equality Trust suggests that the UK became a much more equal nation during the post-war years but, from 1979, the process of narrowing inequality reversed sharply with inequality reaching a peak in 1990. Since then, and during a period of increased globalisation, inequality has stabilised but remained high.11 Efforts to improve productivity should not detract from the important issue of how we share the proceeds of economic growth. Trade unions and collective bargaining have a role to play here, too, through raising wages for all and reducing inequality12. Productivity growth needs to be sustainable and fair, yet there is a ‘wedge’ between productivity growth and median pay growth.13 This ‘de-coupling’ and pay inequality14 are not only matters of social justice, but in themselves have implications for productivity, not least in respect of ‘fairness’ and ‘high trust’. Inequality has manifested itself in many ways including insecurity at work. Official government statistics on the number of workers on zero hours contracts hit a high of 910,000 in the last quarter of 2016, a rise of more than 100,000, or 13%, compared with the same period in 2015.15 Whilst for many the fall in unemployment is good news, if we scratch the surface we see a world of work which is becoming increasingly insecure for a growing number of people. The experience of not knowing if you’ve earned enough to pay the bills has become the unacceptable norm for too many families. This puts paid to the claim by Chancellor Philip Hammond that “over 2.7 million more people enjoying the security and dignity of work than in 2010” 16 and ignores that 3.2 million UK workers (1 in 10) are now in precarious work.17 The UK Government must act to tackle bogus self-employment and follow the example of New Zealand by outlawing zero hours contracts. If we are to build an economy based on decent, secure jobs then insecure work must end.

8 Andrew Haldane, Speech of 30 June 2016, Bank of England, URL

9 Budget analysis: UK workers set for worst pay growth decade 'since the Napoleonic wars,' Independent, 9

March 2017, URL 10

Boosting Britain’s low-wage sectors: A strategy for productivity, innovation and growth, IPPR, May 2016, URL 11

‘How Has Inequality Changed’, The Equality Trust, accessed on 21 February 2017, URL 12

What Influence to unions have? Equality Trust, URL The global economy warrants a dose of caution, The Guardian, URL 13

A recoveryfor all? Resolution Foundation URL 14

Executive pay continues to climb at expense of ordinary workers, High Pay Centre, URL 15

Record 910,000 UK workers on zero-hours contracts, The Guardian, URL 16

Philip Hammond Speech, Spring Budget 2017, URL 17

Living on the edge: The rise of job insecurity in modern Britain, TUC, 2016, URL

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The role of trade unions: partners in productivity The most glaring omission from the Government’s Green Paper is worker voice and trade unions, which must be seen as ‘partners in productivity’ and a frontline resource to help drive up skills, empower workers and boost productivity. One of the ’10 pillars’ identified in the Green Paper is ‘institutions to bring together sectors and places’. Trade unions, collective bargaining and social partnership are precisely the sort of institutions and mechanisms that need to be part of delivering a sustainable and equitable industrial strategy. To quote the House of Commons BEIS Select Committee in its first review of industrial strategy:

“It is crucial the Government’s industrial strategy sets out strong mechanisms for dialogue and collaboration with businesses (of all sizes) and unions (our emphasis), aimed at facilitating consensual agreement on future policy direction where appropriate.”18

When the Government praises the success of the UK motor industry it should not forget the contribution of Unite representatives. During the last economic crisis companies such as Jaguar Land Rover (JLR) worked pragmatically with trade unions to ensure workers and their skills were not lost to the sector and the economy. Unite has also been involved in initiatives to retain capacity and skills during downturns in aerospace and shipbuilding. Improving productivity requires better work organisation and recognition of the importance of strong employee voice, a point emphasised by ACAS.19 Analysis by the National Institute of Economic and Social Research finds evidence that “unionisation may be beneficial to workplaces seeking to improve their performance after the recession…counter to the proposition that firms benefit from a highly deregulated and non-unionised environment”’.20 Furthermore, Unite research conducted with Warwick Business School, Cass Business School and Royal Holloway also shows the positive effects that workplace union representatives can have in improving job quality which can lead to higher productivity.21 Trade unions and collective bargaining also help to reduce inequality22 and this is supported by international evidence including from the IMF which finds that “…less prevalent collective bargaining and trade unions are associated with higher market inequality”23and the ILO24 whose Senior Specialist makes the point that “the strengthening of unions and collective bargaining in the period following the Great Depression was not a historical accident. It was an explicit intention of public policy”.25 Trade unions must be involved in any ‘sector deals’ as proposed in the Green Paper.

18

Industrial Strategy: First Review, BEIS Committee, March 2017, URL 19

Building Productivity in the UK, ACAS (2015), URL 20

The UK’s Productivity Puzzle, Alex Bryson and John Forth (2015), NIESR Discussion Paper No. 448, URL 21

Union representation, collective voice and job quality: An analysis of a survey of union members in the UK finance sector, Kim Hoque, John Earls, Neil Conway, Nick Bacon, Economic and Industrial Democracy. Vol 38, Issue 1, 2017, URL 22

Equality Trust, What influence do unions have on inequality? URL 23

Causes and Consequences of Income Inequality: A Global Perspective, IMF Staff Discussion Note, June 2015, URL 24

Labour Markets, Institutions and Inequality, ILO (2015), URL 25

Want to tackle inequality? Shore up collective bargaining, URL

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Role of the state: horizontal policies vs ‘picking winners’ It is clear that if the problems holding back productivity and economic growth are to be tackled, the task cannot be left to the mercies of the free market. The existence of any governmental industrial strategy is a tacit admission that the state has a role to play in industry and the wider economy. Unite supports new ways of looking at the role of the state in industry - from the social partnership model of industrial strategy which saved 500,000 jobs in Germany during the financial crisis of 2008,26 to what economist Mariana Mazzucato calls the ‘the entrepreneurial state.’27 The Government’s Green Paper proposes that a series of ‘sector deals’ will underpin a new industrial strategy.28 While Unite is in favour of an industrial strategy which works across sectors – from foundation manufacturers to transport, utilities and the public sector – the union would also support ‘sector deals’ provided they are supported by the right institutional framework. Such a framework must include trade unions as worker representatives. Elsewhere in this paper we cite the example of the Welsh Government, which has sought to create a genuine social partnership with trade unions and employers through the Partnership Council for Wales and the Council for Economic Renewal. As this submission has demonstrated, the Welsh Government’s ‘Code of Practice for Ethical Employment’ shows that such partnership has promoted horizontal policies across sectors. Outside of the UK, the German Government’s industrial strategy is underpinned by a strong social partnership with the trade union movement. In contrast to this it is telling of the UK Government’s approach to industrial strategy that trade unions did not merit a single mention in the Green Paper. Any ‘sector deals’ need to ensure the meaningful participation of workers and their representatives from the outset. This requires appropriate institutions and structures. In the automotive sector, there is the Automotive Council.29 Established in 2009 to enhance dialogue and strengthen co-operation between UK government and the sector. The Council is made up of senior figures from across industry and government and meets three times per year. Unite is a permanent member.

Unite is clear that a serious industrial strategy must marshal all options at the Government’s disposal. This must include both horizontal and sector-specific policies, without ruling out the need for direct intervention - part of a proactive industrial policy to create a stronger economy. This submission proposes ‘six pillars’, bringing together policies which cross the economy.

26

Short-Time Work or "Kurzarbeit" : Frequently Asked Questions, German federal government, URL 27

Mariana Mazzucato, A strong industrial strategy has many benefits, Financial Times, URL 28

Building our Industrial Strategy, BEIS Green Paper, URL 29

Automotive Council, URL

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Unite’s Six Pillars of Industrial Strategy Investment: Building a sustainable, high growth economy: Investment is the engine of sustainable economic growth. Under the Coalition and now Conservative Governments state investment has been drastically cut. The result is stagnant and sluggish growth which in turn has led to private investment also stalling. These cuts took place against a low baseline as Britain has long under-invested in its infrastructure. In the last eight years, however, the ‘brutal change’ to the labour market due to austerity should be seen as an extreme acceleration of trends that were already present – namely under-investment, market de-regulation and a long term political project of weakening trade unions. The correlation between the fall in the coverage of collective bargaining arrangements and the share of national wealth going to workers as wages – and the increasingly unequal distribution of that share amongst workers – has been well recognised.30 Jobs growth over the “past 30 years has been in low-paid, low-skilled, low job security occupations…which in turn has contributed to rising earnings inequalities…[with] the overriding labour market policy emphasis in the UK…being a raw focus on transition into ‘any job’, with ‘quantity over quality’”31. It is clear that austerity directly undermines the ability of government to deliver an industrial strategy. For example, despite the Government’s focus on skills in the Industrial Strategy Green Paper, the £170 million announced for greater training will not address the £1.15 billion hole in the Adult Skills Budget. Investing in our country’s creaking and underfunded infrastructure – such as housing, transport, future energy needs, and communications – is necessary to create the sustainable, higher levels of economic growth that will then encourage private investment and be the bedrock that enables an industrial strategy to flourish. Investing in our health, social care and child care systems will stimulate greater economic growth, create high quality and skilled work and encourage more people to enter paid work, One aspect of meeting the challenges in a changing economy is having a comprehensive social security system that supports people in acquiring new skills and good quality jobs and that addresses poverty. We increasingly have a benefits system that is punitive, punishes people, tips them into destitution and damages their physical and mental health through the operation of the sanctions regime. Alongside a decent social security system must sit a progressive tax system that is fair. Reform of the tax system should be part of a greater narrative of building a better, more inclusive and equal society. As part of moving to a more progressive tax system, we believe that the cuts this government has made to corporation tax should be reversed. Unite also believes there should be a commitment to introduce a General Anti-Avoidance Principle as part of strengthening the tax laws, and the current government’s General Anti-

30

Rising wage inequality, the decline of collective bargaining, and the gender wage gap, Labour Economics, 2010, URL 31

David Bailey and Alex de Ruyter, 2015, Plant closures, precariousness and policy responses: Revisiting MG Rover 10 years on, Policy Studies, 36:3, pages 363-383.

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Avoidance Rule called out on the empty gesture it is. HMRC must be properly resourced if tax avoidance is to be tackled and tax evasion to be investigated and prosecuted. Investing to build a sustainable, high growth economy will also provide the necessary revenue and resources for the public services and social security system the country deserves and will support the necessary transition towards a greener low carbon economy as the UK moves to meet its obligations under international climate change treaties.

Infrastructure: There is an opportunity to invest in the infrastructure of the economy in a way that can mean we are not simply undoing the damage inflicted by government under investment, but “aim higher to make the most of the opportunities that could be opened up”32. The investment in infrastructure can ensure that it is built in a way that is coordinated with the needs for an industrial strategy to flourish, for regional balance and, as explored in the sections below, to create decent work and a more equitable society. Industrial strategy must include large scale infrastructure projects to create jobs and sustain a strong, stable internal market for UK manufacturing. Projects such as Heathrow airport expansion, High Speed 2 (HS2) railway and Hinkley Point C power station should be the start of such an approach, working with a specific Ministry for Labour. Future projects may include a UK-wide 5G broadband network or other support for digital utilities. The UK can follow the examples of Norway and Germany, which have invested in the promotion and development of electric cars and associated infrastructure. While in Germany government subsidies made the vehicles affordable, in Norway government investment resulted in over 5,600 public charging stations33, making the country a leader in e-vehicles. National Investment Bank: Unite welcomes Labour’s commitment to a National Investment Bank as part of the policy response necessary to address the long term under investment in this country. Small and Medium Enterprises (SMEs) have long been underserved by the commercial banking sector – a problem identified in economic literature as the ‘MacMillan gap’ since 1931. Overcoming this problem and ensuring that SMEs can access the finance facilities they need are incorporated into other countries’ versions of a National Investment Bank, for example, Germany’s KfW. Unite believes that as well as supporting infrastructure investment a National Investment Bank should provide financing support for SMEs as part of building this country’s strong, diverse manufacturing sector and supply for the future, and supporting services34. Research and development: The UK can also learn from the United States of America. For example, Silicon Valley is often held up as a bastion of free enterprise and entrepreneurship. In reality 80% of inventions, from GPS to touchscreens, voice activation software and autonomous vehicles, either originated from public sector research or were carried out with government funding.35 Silicon Valley serves not as a model of unfettered entrepreneurship, but rather as an example of what economist Mariana Mazzucato calls the ‘the entrepreneurial state.’36

32

Shadow Chancellor John McDonnell MP, speech to ‘State of the Economy Conference’, May 2016 33

Norway’s electric vehicle revolution: Lessons for British Columbia, Pacific Institute for Climate Solutions URL 34

Robert Skidelsky, Blueprint for a British Investment Bank, November 2011; IPPR, Investing for the Future, September 2012 are just some of the many discussion papers produced on this point. 35

Jeff Madrick, Innovation: The Government Was Crucial After All, New York Review of Books, URL 36

Mariana Mazzucato, A strong industrial strategy has many benefits, Financial Times, URL

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Collectively, the EU is the world leader in terms of its global share of science researchers (22.2%), ahead of China (19.1%) and the US (16.7%).37 In turn there is no doubt that UK researchers have benefitted from close collaboration on continent wide-projects. Of the UK’s international collaborations, 80% include an EU partner.

This is also true of EU funding. Approximately 10% of UK public funding for science came from the EU between 2007 and 2014. The UK has also won the most grants from the €80 billion EU Horizon 2020 programme. However, future funding is already in jeopardy38 and the situation of Switzerland shows the potential for significant loss of funding.39

The loss of such funding would have a huge knock on impact on UK manufacturing if it is not replaced. Not only has Horizon 2020 funded research into existing industries such as the ‘green car initiative,’40 it has contributed to new British success stories such as the discovery of graphene.

Graphene, an atom thick material which is 200 times stronger than steel, was first discovered in Manchester in 2004. This ‘wonder material’ is anticipated to be the centre of a new billion pound economy for North West England.41 Its application will boost a range of the region’s manufacturing industries, including aerospace when graphene-modified composites are incorporated into the wings of Airbus planes made in Broughton, North Wales. This research was supported by the EU Graphene Flagship, whose budget of €1 billion (£830 million) makes it Europe’s biggest ever joint research project, with 150 groups across 23 countries. Brexit threatens to cut off this funding, meaning that the Manchester laboratory which first discovered graphene is now facing a £1 million shortfall of EU funding each year.42 While the manufacturing benefits of graphene are already apparent, a lack of funding or access to collaborative research projects could have a chilling effect on thousands of other UK science projects, endangering research which could result in thousands of future jobs. Chris Husbands, the Vice-Chancellor of Sheffield Hallam University told a House of Commons inquiry that his institution’s academics have already been asked to withdraw from three collaborative projects funded by the EU’s Horizon 2020 programme “due to the perceived risk of having a UK partner on the project.”43 Direct support for foundation industries: Unite agrees with the argument put forward by John McDonnell, Shadow Chancellor, that state intervention to support our industries shouldn’t just come as crisis intervention44 – as welcome as that is. It should be part of a proactive industrial policy of investment to create a stronger economy. For larger parts of the manufacturing base the Government must identify and support ‘foundation’ or ‘strategic industries’, including steel, defence manufacturing, energy and digital utilities such as the UK’s broadband network.

37

Unesco Science Report: Towards 2030, 2015 URL 38

Brexit Briefing: Scientists feel the effect, Financial Times, 9 Aug 2016, URL 39

Debunking the myths about British science after an EU exit, LSE, 2016, URL 40

Horizon 2020, Green Car Initiative, URL 41

Graphene City, Manchester University, URL 42

Josh Halliday, Manchester warns funding for 'wonder material' graphene at risk after Brexit, The Guardian URL 43

Richard Van Noorden, Brexit Watch: U.K. Researchers Scramble to Save Science, Scientific American, July 2016, URL 44

Our economy is failing on productivity because the Tories are failing to deliver the investment it needs - John McDonnell MP, 2016, URL

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Unite notes that the Government has divided UK industries into ‘high, medium or low priority’ categories for the forthcoming Brexit negotiations, with the steel, oil and gas sectors marked as ‘low’.45 This demonstrates the Government’s failure to link the issues of Brexit and industrial strategy. Unite is clear that a proper industrial strategy is needed to deal with Brexit and develop the UK’s infrastructure and industrial base for the post-Brexit future. The issue of Brexit is dealt with in more detail later in this paper. Rather than being cast aside, these industries must be the bedrock for a cross-sectoral industrial strategy, yet there must also be contingency planning in place to prevent disastrous closures such as the SSI steel plant in Redcar. Unite proposes ‘four tests’ for the identification of such industries: • Strategic impact: industries which form the bedrock of a nationwide, cross-sectoral and integrated industrial strategy will include steel, energy, defence, digital technology, food and agriculture, and social care. The collapse or removal of one of these primary industries would undermine wider industry, necessitating direct support. • National economic security: like the banking bailout of 2008, some primary industries are simply too important to be allowed to fail due to the wider damage collapse would cause for the economy. Such damage would prove more costly to the taxpayer than the short term cost of intervention. • Community security: from SSI Steelworks in Redcar to BAE systems in Portsmouth, many highly populated parts of the UK rely heavily on single industries. Direct support can be provided where the cost of unemployment and the multiplier impact to businesses in the community outweighs the cost of intervention. • Regional impact: related to the previous point, some UK regions are reliant on manufacturing and suffer disproportionately from offshoring and relocation. Ballymena in Northern Ireland and the planned relocation of Michelin tyres in 2018 is just one ongoing example.46 The ability to offer subsidies, tax incentives and other forms of support should be devolved to the regions where such examples can be identified. A new Foundation Industries Commission By way of precedent, Unite notes that the Government’s own Low Pay Commission was used to establish criteria for where the National Living Wage should be set and applied.47 A new Commission, with involvement from trade unions and industry voices, should be created to develop the proposed criteria for direct support of industry. It is clear that even recent UK governments which have been ideologically opposed to public ownership, have seen the economic necessity of such action. This includes the nationalisation of East Coast Mainline48 through ‘Directly Operated Railways’ in 2009 and the ongoing work of UK Financial Investments, which manages the Government's investments in the Royal Bank of Scotland (RBS), Lloyds Banking Group (Lloyds) and UK Asset Resolution Ltd (UKAR.)49 ‘Direct support’ does not simply mean ‘bailing out.’ Such industries can be supported by

45

Sam Coates, Leak reveals low-priority industries for Brexit talks, URL 46

Michelin Ballymena tyre factory to close in 2018, BBC News, URL 47

Final government evidence for the Low Pay Commission’s 2016 Report, Dept Business Innovation & Skills, January 2016, URL 48

East Coast becomes nationalised express, BBC News, URL 49

UK Financial Investments Limited , URL

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increasing demand via procurement and infrastructure projects; affordable credit, loans, equity and grants via a state investment bank; capital allowance tax credits; subsidies for affordable energy; research and development grants; or incentives and investment for recruitment and skills. Direct support for industry must include protections for the workforce, not just the employer. For example, the potential purchase of Vauxhall/Opel by PSA from General Motors has exposed the lack of support given to UK workers compared to European governments. The French government owns a direct 14% stake in PSA, while the German Opel factories in Eisenach and Rüsselsheim benefit from the Federal government’s short-time working scheme (Kurzarbeit)50. Kurzarbeit was significantly expanded by the Federal government during the crisis of 2008. The scheme’s short-time allowance fund pays workers up to 60% of their foregone net wages if production is temporarily cut. In addition, the Federal Employment Agency provides financial support for further education measures during the phase of short-time work. Employees can thus participate in further education programmes and acquire important additional qualifications during short-time work. The scheme allows employers to temporarily cut production without cutting jobs and is credited with saving 500,000 jobs and holding unemployment to 7.5%, a rise of just 0.2% by 2009. 51 The Government must investigate a similar short-time working scheme for the UK which will offer concrete assurances to workers, such as those at Vauxhall plants, whose jobs are threatened. While this would give Vauxhall workers the same assurances their colleagues in Germany receive, it would also be a proactive measure to protect UK manufacturing from the next economic downturn.

Oil and gas: foundation industries and affordable energy It is clear that some regions and devolved nations house industries of strategic importance which cannot be replicated elsewhere. This is particularly the case with the North Sea oil and gas industries. Without serious government intervention there could be an end to meaningful production in the North Sea within years while UK dependence on oil and gas has not been meaningfully reduced. The number of jobs lost as a result of the downturn in the UK oil and gas sector rose to over 120,000 by the end 2016.52 This not only has a devastating impact on local communities reliant on these industries, but raises serious concerns for the energy security of the UK. Unite is clear on the need for immediate action to support the oil and gas sector – supporting a roadmap based upon clear principles which deliver certainty for the industry. Unite needs genuine co-operation between government, industry and trade unions to alleviate the increasing pressure on the sector while protecting employment rights and supporting the transition to a low carbon economy.

50

Opel cuts hours as UK demand hit by Brexit, Market Watch, 2016, URL 51

Short-Time Work or "Kurzarbeit" : Frequently Asked Questions, German federal government, URL 52

Wells to Wheels, Unite the Union, 2017

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Unite supports calls for the UK and Scottish Governments to pull together an industry summit which would regularly meet until the crisis abates but such moves must be tightly monitored and regulated at both Scottish and UK level with employers providing tangible evidence that they are used to protect jobs, conditions and health and safety. Unite is clear that self-regulation of the oil and gas sector is not an option. The investment of public money must come with a public stake in the industry. Similarly public support for private companies must come with strict stipulations that firms will adhere to collective bargaining agreements and oversight by both the government and the workforce. Trade unions representing workers in the oil and gas industry have renewed their call for government investment in vital offshore infrastructure. The Offshore Co-ordinating Group (OCG) brings together Unite, RMT, GMB, Nautilus International and BALPA. The OGC is calling on the Scottish and UK Governments to seriously look at using their borrowing powers to invest in vital infrastructure to keep the industry healthy, support jobs, improve the industry’s environmental performance, and maximise the economic benefits of these natural resources for the country. Such investment must be used to end the race to the bottom whereby contract work is awarded to the lowest bidder, encouraging attacks on the jobs, wages and conditions of offshore workers. Energy companies have to realise that they can’t create a sustainable industry by slashing the number of skilled workers who are the bedrock of their success. The Scottish and UK Governments must also work to support the whole supply chain in the North East and across the country, and to support the export of oil and gas services worldwide. Therefore it was disappointing that the UK Government’s Oil and Gas Workforce Plan, published on 6 July 2016, fell short of arresting a decline in the industry. As part of the transition to a low carbon economy, the decommissioning of offshore platforms which have come to their natural end presents a new opportunity for economic growth in Scotland and North East England. Unite is calling for a National Decommissioning Strategy, which includes the involvement of trade unions, to ensure as much of the work as possible is retained in Scotland and the UK. It is estimated that there are more than 8,200 wells in the North Sea that are active or suspended and awaiting ‘plugging and abandonment’ with the bulk of these located on the UK Continental Shelf which accounts for 61% of wells. Oil and Gas UK report the total amount forecast to be spent on decommissioning on the UKCS between now and 2025 to be £17.6 billion, up from £16.9 billion for 2015-2024. Dismantling structures that requires specialist equipment is hazardous work in a competitive market, which requires strict regulation to set both working and environmental standards. The UK should heed the example of Norway, where decommissioning is regulated by the Petroleum Act which states: ‘throughout all phases of petroleum activities, the industry is required to take environmental concerns into account and show consideration for other users of the sea.’ While the Norwegian Act prohibits disused offshore installations from remaining in place, a UK version of the Act must seek to minimise the risk of environmental damage by assessing if a rig is safe to dismantle. Investment in infrastructure is vital to securing this market. The land-based dismantling of rigs requires the development of deep water port facilities such as Dundee or Nigg.

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The Government must support Unite’s call for a summit of key industry figures and ministers from the Scottish and Westminster governments to produce an action plan to save the offshore oil and gas industry. The Government has failed to address the race to the bottom which Unite members are seeing in pay, terms and conditions and safety, while tens of thousands of jobs are cut. In the longer-term, while new investment can prolong the life of the North Sea oil fields, there must be acknowledgment that oil is a finite resource. Concrete plans must be put in place to re-deploy or re-skill the thousands of workers employed in this sector and in the supply chain.53 Workers in industries that are affected cannot be left to the vagaries of the market. Now is the time to plan for strategic intervention to ensure that workers affected can retrain, and that new high quality jobs are created. This is a huge task, but it is possible. The recent opening of a wind turbine factory in Hull shows that skills are transferable.54 The responsible decommissioning of disused platforms could create up to 20,000 jobs in the Aberdeen area alone, but it must be the first step in a just transition which supports high quality employment. New areas of work which require significant investment to create new jobs include renewable energy, such as offshore wind, wave and tidal generators; and building retrofitting. The do-nothing scenario would mean a steady decline in jobs in the North Sea as oil production declines. Although the mid and downstream sectors can import oil from elsewhere, the industry would still see massive job losses. Other countries with oil and gas reserves are already planning for the transition. The Dutch North Sea is primed to become a major offshore wind energy location. Even Saudi Arabia is planning for the transition, despite owning the world’s largest resources of oil and gas.55

53

Wells to Wheels: Unite Strategy for the Oil Industry, 2017, URL 54

Hull's Siemens factory produces first batch of wind turbine blades, The Guardian, URL 55

Saudi Arabia's attempt to reduce reliance on oil has the world rapt, The Guardian, URL

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Case study: British Leyland, MG Rover and government intervention Conservative administrations seeking to roll back the state through the privatisation of utilities and cuts to public services have long sought to politically tar the phrase ‘industrial strategy’ and with it the view that the state has any active role to play in industry. In that aim British Leyland has become a byword for failed state aid; however, the very same West Midlands car plants also give a warning as to the impact of non-intervention. Headquartered at Longbridge, Birmingham, British Leyland was a partly nationalised firm which constituted 40% of the UK car market and employed 250,000 workers. While initially nationalised by Harold Wilson’s Labour government, it was under Margaret Thatcher’s Conservative government that the plant’s management took an acrimonious approach to the workforce, resulting in the breakdown of industrial relations which has come to epitomise the period. Sections of Leyland were eventually privatised, with the BMW Group purchasing the Longbridge Plant in 1994. Despite the government’s claims that assurances had been made about the plant’s future, BMW used the threat of relocation to wring millions of pounds of subsidies from the state, before pulling out of Longbridge completely. The final result was that a workforce numbering 10,000 in 1994 fell to merely 400 by 2016 – with a devastating multiplier effect on the West Midlands economy. In assessing the failure of government non-intervention, Professor David Bailey, Aston University, writes: “Government failure towards the BMW-Rover affair therefore took a number of forms:

(i) A failure of competition policy, in allowing the sale of Rover to an inappropriate buyer in the first place (i.e. BMW) despite warnings at the time that this was an unsuitable purchaser. This was despite the fact that – at the time – competition policy allowed a ‘public interest’ test which could have been used to block the takeover;

(ii) (ii) A failure to impose adequate safeguards on BMW’s behaviour (e.g. a commitment not to shift Rover production out of Britain or to break up or sell the group);

(iii) (iii) A failure to effectively monitor and follow up BMW’s strategy and investment, with the result that it did not pick up early warning signs and was taken by surprise when BMW announced that it was pulling out.”

MG Rover proves that a lack of serious government oversight was fatal to Longbridge. While the current government may remain opposed in principle to direct intervention in industry, it is vital that the lessons of Longbridge are heeded. The letter of assurance issued by Secretary of State Greg Clark to Nissan appears to acknowledge that the Government does have a role to play in bringing stability to the automotive industry. However, as with BMW, the complete lack of transparency caused by the Government’s refusal to publish the letter raises serious doubts over any assurances secured from Nissan.

56 57

56

David Bailey, Re-examining the BMW-Rover affair: a case study of corporate, strategic and government failure?, International Journal of Automotive Technology and Management, URL 57

Nissan Brexit letter deemed too sensitive to make public, Financial Times, December 2016, URL

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Intervention and regulation: ports and waterways: The UK’s docks, ports and waterways are vital to an integrated transport system and should be recognised as such in the development of investment plans to develop our transport infrastructure. As part of ensuring a safe transport system there must be the repeal of the weakening of Health and Safety legislation and enforcement by the HSE that has been experienced in recent years. As part of strengthening our commitment to safety the UK should ratify ILO Convention 152 Occupational Safety and Health (Dock Work) and Unite believes that ILO Convention 137 on Dock Work provides an important addition to strengthening our employment standards in dock work. The need for such investment in facilities across Britain’s gateway ports has been exposed by the 800 Unite members in the Port of Liverpool who have been protesting about the inhuman conditions endured by shift workers and lorry drivers. While the Port of Liverpool’s Seaforth container terminal has received private investment, it exposes the need for proper scrutiny and regulation of facilities and conditions.58 Meeting the climate change challenge and a ‘just transition’: Unite recognises the importance of meeting the challenge of climate change, providing energy security and delivering a sustainable environment. A central part of the move to a sustainable economy must be the creation of new jobs in industries such as low impact agriculture, forestry, science and technology, construction and environmental services. Meeting the climate challenge requires a balanced energy policy and a ‘just transition’ to a low-carbon world that ensures workers are treated decently and that promotes high quality jobs.59 It is clear that without strong trade union and government intervention there will be no natural or fair transition from high to low carbon jobs. Such a transition must be managed justly, with genuine opportunities for redeployment, reskilling and talent retention. Such training must form part of a national vocational education system which is freely available and open to all. Unite supports:

• Investment in renewable and low-carbon energy • New build homes to be fully energy efficient • Appropriate incentives to improve home and business insulation • Businesses to audit their energy use to be as efficient as possible • Support for trade union representatives to promote energy efficient workplaces and

meet the climate change challenge. • Investment in upgrading public sector infrastructure can be part of the solution

helping stimulate and drive the rest of the economy to a more sustainable future. Unite supports investment in renewable energy and condemns government cuts in support to the renewables sector. We - with many others - support a balanced energy policy that provides security of energy supply. This includes investment in Carbon Capture and Storage and nuclear. The Green Investment Bank should not be privatised. Rather it should remain in public hands and be given additional borrowing powers.

58

Dock workers and lorry drivers protest over lack of facilities at the port of Liverpool, Unite the union, URL 59

Meeting the Climate Challenge, Unite the Union, URL

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Case study: solving the housing crisis

Britain is in a housing crisis and the Government has acknowledged that the housing market is “broken”. Everyone should have a decent, warm home they can afford with security for the future. Unite organises members across local authorities, housing associations, the construction and finance sectors – each of these areas must be marshalled in an integrated and long-term industrial strategy to achieve this ambition. The current housing crisis is fundamentally the result of a lack of investment and leaving the provision of a basic human and social need nearly solely in the hands of the private market. An ambitious programme of new build, high quality, environmentally sustainable housing, including social housing and council homes would help address this crisis, create thousands of jobs, and prevent the loss of important skills. A local government house building programme could boost employment across the UK’s regions, while also providing high quality apprenticeships. As Unite’s work with local authorities in both Wales and Scotland demonstrates elsewhere in this submission, construction work procured by local government must be linked with high employment rights, providing a secure alternative to bogus self-employment and blacklisting. Improving the energy efficiency of homes is crucial to achieving carbon reduction goals and helping to reduce fuel poverty. There needs to be investment in a ‘retro-fit’ programme of existing homes providing basic insulation measures which would also create jobs. Research from the House Builders Federation shows that for each home built 1.5 direct jobs are created with estimates ranging from between an additional 2 and up to 4 jobs created in the wider supply chain.

Housing has a high multiplier effect in the economy – for every £1 spent on housing construction an extra £2.09 is generated in the economy. This scales up so that for every £1 billion spent on housing construction an extra £2.09 billion is generated in the economy. Given that for each £1 generated it is estimated that 56p returns to the Exchequer this would amount to £1.1704 billion returned to the Exchequer using the figures above. This means that if the Government were to have made the original £1 billion investment, it would receive a return of £170.4 million on its original investment. The economic returns from investing in housing construction are therefore significant. These gains can then be re-invested in a range of positive benefits for society. Importantly, not only does the Government receive the full benefits of the investment made if it builds the required homes, but where they are retained in public ownership to provide homes for social rent the public sector gains assets (in the form of the homes built) but also an additional income, in the rental stream provided by current and future tenants. As a result of low investment there is now little social housing stock available for rent in London and other major cities. Instead government spending has focused on schemes such as the flawed ‘Help to Buy’, which is not helping those in greatest need of housing. The public sector also gains an increased tax take from council tax (from the extra households), corporation tax, income tax, and VAT from the extra jobs created and the multiplier effect on spending and activity throughout the supply chain. To ensure long term security for tenants and home owners, low cost, high quality housing, must be linked with rent controls and no privatisation of housing associations. Banks must provide secure and affordable mortgages and other forms of responsible financial support. Unite has outlined our agenda for housing in more detail in our Housing Charter.

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Case Study Footnotes: 60

, 61

, 6263

Social Care: a strategic sector

The concept of a strategically vital industry should not be limited to the private sector or traditional heavy industry. It has been well documented that the UK population is facing a demographic challenge that the austerity ravaged welfare system simply cannot meet.64 While life expectancy in the UK continues to rise the social care sector is already in crisis with an estimated 1.86 million people over the age of 50 in England having unmet care needs. Unite represents 100,000 health sector workers and it is clear that an industrial strategy must include support for this essential public service. In short, the Government must support carers as well as the cared for. This can be achieved by properly integrating health and social care within a wholly publically owned and funded National Health Service. While government Sustainability and Transformation Plans (STPs) have been given the task of integrating care is being jeopardised by health cuts. Similarly the ongoing austerity inflicted upon local authorities continues to dramatically reduce access to social care across the UK.

Local authority social care budgets were cut by £5 billion between 2010 and 2015. The £2 billion of funding announced in the 2017 Spring Budget fails to compensate for this. Furthermore, attempts to plug this gap through council tax and local business rates will only serve to deepen inequalities of care across local regions.65 In the context of an industrial strategy, health and social care must been seen as a strategically essential sector which needs support and investment. The UK currently spends the second least on health care as a proportion of GDP of all the G7 countries, above only Italy when social care is included.66 Like housing, there is strong evidence that spending on health and social care has a significant multiplier effects on the economy that stimulate further positive economy activity across the economy and create jobs. Research has shown that across countries, the average multiplier effect of public health care spending has been about 3.6 – larger than almost all other categories of spending. That means for every £1 the Government spends on health, we get £3.6 back through increased economic activity.67 A report by the Joseph Roundtree Foundation and Kings Fund in 2014 estimated that the economic multiplier effect of NHS spending is in the range of 2 to 4. The OECD also points to a wide range of health and economic benefits derived from increased healthcare spending. Government must support carers as well as the cared. On top of professional carers and health staff over 6.6 million family members and friends currently provide unpaid care in the 60

Unite Housing Charter, URL 61

Estimates from the House Builders Federation 62

Figures from Shelter and KPMG 63

Better-off cashing in on Help to Buy scheme, research finds, BBC News, April 2017, URL 64

A world without retirement, The Guardian, 2017, URL 65

Social care: A system in crisis, Women’s Budget Group, 2017, URL 66

EU study reported ranking 27 EU nations health systems, URL 67

The Kings Fund and JRF - Tackling poverty: Making more of the NHS in England, URL

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UK and 58% of these are women68. In terms of scale this informal industry accounts for double the workforce of the entirety of UK manufacturing in 2017.69 This not only reveals the gap in the number of professional carers which are needed; it also asks serious questions about the wider support needed by workers and families across the UK who have care obligations. This should include support for the Real Living Wage and flexible working time practices to ensure workers can to meet their family obligations. As automation across the economy continues apace, consideration should also be given to the potential of a Universal Basic Income and shorter working weeks without loss of pay. These ideas will be mentioned again later in this submission.

Offshoring and reshoring: The ability of multinational companies to relocate production from the UK to drive down wages remains for many working class communities the most visible threat posed by globalisation. From the 1990s onwards, a substantial proportion of the UK’s manufacturing production and its financial services were outsourced to China and the countries of South Asia, especially India and Bangladesh. In 2000, multinationals were able to lower their labour costs by 77% using factories in China instead of the UK.70 A 2008 survey found that over a fifth of manufacturers had offshored production to replace UK capacity and another fifth were planning to do so in the future.

71

Unite members working for the most iconic of British brands have suffered. In 201372, Ford Europe relocated production of Transit Vans from Southampton to Kocaeli, Turkey with a loss of 500 jobs. The site had employed workers since 1939. Similarly, despite reassurances from Kraft, Cadbury's Somerdale plant was closed just one year after the takeover, with machinery and production offshored to Warsaw, Poland.73 The site had made chocolate since 1919. For many working class communities the constant threat of offshoring is often the reality of globalisation outside of London. This has not been limited to manufacturing. The finance sector has suffered waves of offshoring, particularly of call centre, IT and support functions, since 2008. This process has accelerated throughout 2016, resulting in over 1,700 jobs relocating to so-called ‘low cost environments.’74 Banks and major insurers have relocated work out of the UK, predominately to the Far East and Poland. This has impacted workers from Sheffield to Brighton, Gloucester, Leeds, Halifax, Wolverhampton, London and Edinburgh.

68

Social care: A system in crisis, Women’s Budget Group, 2017, URL 69

Social care: A system in crisis, Women’s Budget Group, 2017, URL 70

Marcus Gibson, Bringing Manufacturing Back, Civitas: Institute for the Study of Civil Society, 2014, URL 71

David Merlin-Jones , The Boomerang Economy, Civitas: Institute for the Study of Civil Society, 2012 URL 72

As the UK returns to growth, Ford axes Southampton Transit plant, Business Vans, 2012, URL 73

Unite Response to Takeover Panel Consultation, URL 74

HSBC to cut 600 jobs in Sheffield, BBC News, 2016, URL

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Protections against offshoring: The Government must investigate all potential protections to prevent or mitigate the impact of offshoring in the service sector. This should include measures to force companies to recognise their responsibility to both the workforce and the community. If offshoring cannot be prevented, the employer must provide a genuine offer of redeployment. As a contingency, a regional fund should be established to provide support for communities impacted by offshoring. Encouraging reshoring: Bringing manufacturing back to the UK must be a priority for any long-term industrial strategy. The ‘localisation of production’ not only retains and develops UK capacity, it could reduce the UK’s trade deficit by a third while increasing manufacturing employment by 100,000–200,000 over the next 10 years.75 An industrial strategy must incentivise new investment, while removing barriers to further re-shoring of the manufacturing supply chain. Tax options include increasing capital allowances, rather than cutting corporation tax, following the example of President Obama’s ‘Blueprint for U.S. manufacturing’ in 2012.76 Unite has set a 40% minimum benchmark for UK-sourced materials for manufacturing and has worked with manufacturers, such as Jaguar Land Rover (JLR) to help achieve this. Since 2012 JLR has committed to spending an additional £1 billion in the UK supplier contracts77, and as a result the level of UK-manufactured parts for the firm's vehicles is now as high as it had been before the UK automotive industry went into decline in the 1980s.78 By 2016 locally sourced content for UK manufactured vehicles had risen from 36% to 41%79. It is clear that there is great potential for further re-shoring, which will lessen the potential impact of Brexit. For example, Ford manufactures components in the UK; however, vehicles are assembled in Cologne, Rhine-Westphalia, and the company fears the impact of tariffs. While the Ford Fiesta is manufactured in Cologne, it is the bestselling car in the UK, with 7,990 registered in July, and 71,823 since the start of the year. It is clear that even in the worst case Brexit scenario, it would make financial sense for Ford to follow its old maxim and build their cars where they sell them. Removing barriers to reshoring: The Government must remove potential barriers to reshoring which have been identified to include energy and raw material costs, access to finance, and a skills gap which can be addressed via investment in apprentices.80 The removal of barriers to re-shoring through investment in a highly skilled workforce, energy incentives and other forms of support must be a central part of a new industrial strategy. Access to affordable energy is cited as a barrier to re-shoring and new investment, not only by automotive employers, but also by the British Ceramics Federation and the Chemical Industries Association. The UK has the most expensive electricity in Europe, mostly due to

75

Making at Home, Owning Aboard: A strategic outlook for the UK’s Mid-Sized Manufactures, Lloyds Banking Group, RSA, 2013, URL 76

Blueprint for an America Built to Last, The White House, 2012, URL 77

Jaguar Land Rover success provides UK supply with 300 new jobs, The Manufacturer, May 2012, URL 78

Jaguar Land Rover buying more parts within UK than ever before, Birmingham Post, June 2014, URL 79

UK car manufacturing hits 17-year high - JLR and Nissan rank top, Autocar, URL 80

David Bailey and Lisa De Propris, Manufacturing reshoring and its limits: the UK automotive case, Cambridge Journal of Regions, Economy and Society, 2014, URL

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lack of capacity. Sweden and Germany have introduced energy compensation schemes which could be used as a model to overcome this barrier. This should be part of the Government’s planning to improve energy security, along with support for renewable energy. Attracting reshoring must not simply be about encouraging firms to ‘buy British.’ Nor must the marginal gains and cost reductions come simply from deregulating the labour market or offering tax cuts. Unite is clear that attracting new reshoring must be a vital part of the UK’s response to Brexit. As addressed in the ‘Brexit’ section of this submission many companies based in the United Kingdom are Pan-European in outlook, dependent on the currently frictionless UK-EU supply chain. It is vital that any future trading relationship between the UK and the European Union does not erect more barriers to reshoring. Ethical supply chains: Where a UK company has a collective bargaining agreement with a trade union, the conditions enshrined in this agreement should be promoted throughout the supply chain. This corresponds to Unite’s ongoing campaign for a Living Wage, which calls for companies to not only adopt the real Living Wage for direct employees, but for all contracted out services and agency workers. As stated in the ‘Positive procurement’ section of this submission, local, regional and central government should also consider their own supply chains. Public bodies should award tenders which strengthen and support collective bargaining and promote strong working rights, raising living standards and equality and fairness. Many UK industries, from manufacturing to construction and retail, have global supply chains, of both goods and workers. As a trade union Unite has an internationalist approach to workers’ rights and would support measures to ensure all companies have ethical supply chains. This should not be limited to ‘Fair Trade’, but should see the genuine promotion of workers’ rights. A supply chain should be deemed ‘unethical’ if the company is involved in human trafficking, modern slavery, sweatshop or child labour. Companies should disclose their supply chains and efforts to ensure suppliers adhere to ILO labour standards as a minimum in annual reports. While Unite is calling for all companies to disclosure their supply chains, in line with the Modern Slavery Act, it is clear that this cannot be a voluntary. The Gangmasters Licensing Authority/Gangmasters and Labour Abuse Authority should be strengthened in order to monitor and enforce standards in the supply chain. The licensing system can play a vital role in addressing ‘the race to the bottom’ – protecting workers and preventing employers with better standards from being undercut through exploitative practices.81 Lessons from Germany: Mittelstand In contrast to the UK, the German government answered the 2008 financial crisis with an industrial strategy which protected and grew its manufacturing base. Germany’s manufacturing sector is now twice the size of Britain’s – 23% of national GDP, compared with 11%, according to the World Bank.82 The post-crisis stimulus package of 2009, entitled ‘Pact for Employment and Stability in Germany to secure jobs, strengthen the forces of growth and modernization of the country’ resulted from the German partnership model and incorporated both the interests of industry and the trade unions.

81

Unite Submission, BEIS Inquiry Tackling exploitation in the labour, URL 82

World Bank Data, 2016, URL

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The package included a car scrapping scheme similar to the UK’s and public investment spending of €14 billion in kindergarten, school and university buildings, hospitals and urban infrastructure, as well as a credit package for small and medium enterprises.83 While short-time work was expanded as production slowed, the German government budgeted €5.1 billion to replace the lost income of over 1.4 million workers. The OECD has reported that this measure saved 500,000 jobs during the years of recession,84 a move which helped retain experience and skills within industry. While this ‘social partnership’ approach helped to protect strategic German industries, it also provided support for the bedrock of the economy, the so-called Mittelstand companies.85 These firms are highly focused and export-oriented small to medium sized manufacturers which benefit extensively from Germany's apprenticeship system. Typically, Mittelstand companies work closely with universities and researchers, and cluster themselves around big manufacturers. Many of the most successful Mittelstand companies combine a cautious and long-term-oriented approach to business, placing an emphasis on long-term profitability in contrast to larger, publically-listed firms which chase quarterly targets. The UK can take much from the German approach of working with industry and the trade unions to support strategic industries, while also encouraging the development of SMEs, particularly in the supply chain. One example of this integrated industrial policy in action is that of apprenticeship schemes. The Federal government incentivises large firms such as BMW and Volkswagen to train more apprentices than they need so that young, skilled workers can be released to Mittelstand companies throughout the supply chain.86 Unite notes that the UK automotive industry has already begun to take these lessons on board by supporting a 'clearing house policy' to help young people obtain skilled apprenticeships in the industry and the supply chain.

Regional investment and regional rebalancing: Unite is of the view that an industrial strategy must be centrally coordinated and overseen by a Minister with cabinet status. This is to ensure that the strategy involves all sectors of the economy, from manufacturing to transport, utilities, services and the public sector. Nevertheless it is impossible to consider a UK-wide industrial strategy without taking devolution and regional rebalancing into consideration. In principle, Unite is not opposed to devolution. Properly accountable and resourced devolution can present opportunities. These include the potential for:

• sustainable regional growth, development and investment; • secure, decent public sector jobs; • public services more responsive to local need; • better control and regulation of fragmented services (e.g. local bus services);

83

Peter Starke, Wunderkind or Average Guy? Germany’s Social Policy Response to the Financial Crisis in Comparative Perspective, ECPR General Conference, 2013, URL 84

Employment Outlook 2009 – How does GERMANY compare? OECD Report, URL 85

Aerospace Shipbuilding & Ship Repair Sector, Germany – Mittelstand Best Practise, Unite Guide, 2015, URL 86

Germany exports its apprenticeship model, Financial Times, 24 Jan 2014 URL

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• stronger, more inclusive communities. However, Unite recognises that without safeguards there are threats posed by devolution such as:

• using devolution to pass responsibility for central government spending cuts to local authorities;

• the potential to weaken employment standards, terms and conditions, collective bargaining and national agreements;

• further fragmentation, outsourcing and privatisation of public services; • potential impact on job security as a result of shared services; • damaging competition between and within regions for resources; • increasing local and regional inequalities; • Problems with democracy and accountability; the democratic accountability of a

devolved regional mayor. Unite is committed to work with relevant groups, including unions, community groups, combined authorities and businesses, to ensure any moves towards local devolution promote a positive and progressive agenda. This to include:

• a fair funding settlement for local authorities and sufficient resources for devolution to work;

• properly funded public services; • a fully transparent, democratic and accountable process; • genuine stakeholder engagement – including trade unions and collective bargaining

– in any new devolved bodies; • devolution to be part of an overall national economic development strategy that

ensures a reduction in regional and local inequalities; • promoting secure and stable local employment; • retention of national collective bargaining; • supporting in-house services and opposing any moves to outsourcing and

privatisation of services.

Regional funding: There must be a clear plan to replace European Union regional funding. This includes support for scientific research, investment from the private sector and grants from regional development funds. For example, Sunderland’s Nissan plant received £189 million (€220) from the European Investment Bank in 2011 for production of the Nissan Leaf and electric batteries.87 The wider region has also benefitted, receiving a total of £595.6 million for investment in jobs and infrastructure.88 Similarly the North West region received £755.5 million89 from the European Regional Development Fund (ERDF), channelled through the North West Regional Development Agency (NWDA). An industrial strategy must ensure that funding which provides a vital lifeline for regions ravaged by deindustrialisation is maintained or directly replaced. The Migration Impact Fund should be expanded to ensure that all regions share in the positive economic impacts of migration. Scotland:

87

Sunderland's Nissan Leaf production gets £189m boost, BBC News, November 2011, URL 88

Jonathan Walker, What has the European Union ever done for us in the North East? Sunderland Chronicle, June 2017 URL 89

2007 to 2013 ERDF programmes and resources, Department for Communities and Local Government, URL

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As the most devolved of the UK countries, Scotland presents a separate area for inquiry. Manufacturing has been historically central to Scotland’s economy and despite suffering decades of de-industrialisation, it is clear that several Caledonian success stories can be emulated across the UK. Unite notes the success of Scotland’s low carbon economy, which has created 44,800 jobs across 24 low carbon sectors. It is estimated that there are also 21,500 jobs in Scotland across 9 renewable energy sectors.90 Scotland has higher levels of employment in most of the low carbon heat sectors than the proportion of population. Further analysis shows that this success has been made possible by the presence of manufacturing facilities as well as the proportionally larger market for heating equipment hence the importance of a green manufacturing strategy based on a balanced energy policy including nuclear.91 Government investment in building this low carbon manufacturing base has helped Scottish manufacturers to win substantial new contracts. For example, the ‘Green Bus’ Fund resulted in the majority of the orders placed for hybrid buses being confirmed for production at Alexander Dennis.92 Previously the company and its workforce emerged from a 3-day working week. In April 2016 Stagecoach placed orders for 480 buses and coaches in deals worth a total of £97 million. The orders consisted of £82 million worth of new vehicles for its regional networks in England, Scotland and Wales. A further £10 million will be invested in new buses for London and about £4.5 million in coaches for its megabus.com operations. Having benefited from the ‘Green Bus Fund,’ Alexander Dennis went on to be awarded 436 vehicles out of the total 480 from Stagecoach Group, providing a fully accessible fleet of vehicles powered by the latest Euro and Hybrid technologies. Moreover Alexander Dennis also won an estimated £50 million of a £71.5 million order by FirstGroup in April 2016. The order, placed by FirstGroup’s bus division, will see the introduction of 305 state-of-the-art, low emission vehicles to their UK fleet between now and the end of March 2017. Alexander Dennis will build 204 of the vehicles, representing almost 70% of the total order. Northern Ireland: The case of Northern Ireland merits particular attention, especially in the light of ‘Brexit’. Manufacturing is deeply embedded in Northern Ireland, accounting for 30% of the economy and resulting in 214,000 direct and supported jobs. The manufacturing base ranges from traditional Agri-food to the high-tech, such as the world class Linamar-Montupet engine factor in County Antrim. However, in the past twelve months manufacturing has received a series of body blows, following job cuts and closures by major firms, such as Caterpillar, Bombardier, Michelin and JTI Gallaher. Unite estimated that over 6,000 manufacturing jobs have been lost since 2012. Nowhere is there a clearer case for the need for an interventionist industrial strategy than Northern Ireland. In this submission Unite has named a series of barriers to reshoring and

90

The size and performance of the UK low carbon, BIS Report, 2015 economy, URL 91

Ibid (page 38) 92

£12m boost confirms ADL leadership in low carbon European super-league, Alexander Dennis, 2010, URL

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new investment across the UK, which includes energy costs, access to finance and access to skills93. These barriers are clearly present in Northern Ireland. For example, energy costs are the second most expensive in Europe.94 This is caused by both inadequate capacity and a botched policy of privatisation by the Northern Irish Executive. In addition, Northern Ireland experiences unique barriers for example high transportation costs to the rest of the UK. An effective cartel on freight shipping means that ferry travel is five times more expensive across the Irish Sea than the English Channel, a clear problem for imports, exports and a UK-Irish supply chain. 95 Brexit also poses new issues for Northern Irish manufacturing. For example, the movement of workers and goods between Northern Ireland and the Republic is vital for agri-food businesses. For larger manufacturing firms Brexit, the uncertainty of the UK’s access to the Single Market and the future of the UK-Ireland and UK-Europe supply chains all threaten continued foreign direct investment. It is clear that the main barrier to government support for manufacturing is a lack of political will. In the case of Northern Ireland Unite believes the Executive parties have opposed the creation of an industrial strategy for purely political reasons. An industrial strategy for Northern Ireland must commit to using all the options in the Government’s industrial toolkit, including investment, strategic use of procurement, and investment in both skills and infrastructure. For example, the Canadian government has supported Bombardier by providing them low-interest loans/grants to safeguard employment. Similar incentives which provide firms with access to grants, tax credits, and equity-linked capital supports would be preferable to NI Executive’s plans to simply cut corporate tax.96 Use of the public sector procurement budget is similarly vital. In 2015 Wright Bus in Ballymena were overlooked for the contract for the Belfast Rapid Transit system. The £19 million contact, went instead to Van Hool in Belgium.97 While the NI Executive blamed European Union directives it is clear that the 2013 Social Value Act and EU Directives on Social Value give local and regional governments scope to broaden their procurement considerations beyond price. Now that Britain is set to leave the European Union procurement laws should be re-examined to make ensure procuring public bodies are given explicit support and direction to consider ‘social value’ when awarding contracts.

93

David Bailey and Lisa De Propris, Manufacturing reshoring and its limits: the UK automotive case, Cambridge Journal of Regions, Economy and Society, 2014, URL 94

High energy cost 'causing crisis in NI economy,' BBC News, URL 95

Northern Ireland’s Manufacturing: The Engine of Prosperity, Manufacturing Northern Ireland & Oxford Economics, 2016, URL 96

Lower UK corporation tax rate will hit Northern Ireland hard, warns top accountant, Belfast Telegraph, 2016, URL 97

Belfast Rapid Transit: Wrightbus 'bitterly disappointed' to miss out on lucrative government contract, Belfast Telegraph, November 2015, URL

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Positive procurement:

The UK’s public procurement budget is worth £268 billion, accounting for 33% of total public spending and 14% of GDP.98 This should be used to create a stable, internal market. Supporting manufacturing through targeted procurement results in clear social value, creating jobs, sustaining industry and reviving communities. Unite welcomes the reference to the Social Value Act in this consultation. Unite is calling for the expansion of the 2013 Social Value Act, to include goods as well as services. By developing this legislation instruction should be given to public bodies to secure best value contracts, which should make ‘social value’ a determining factor. Similarly, an integrated industrial strategy must see the UK’s strategic industries, such as steel and train manufacturing, be included in large infrastructure projects such as HS2, Heathrow, Hinkley Point, and CrossRail 2. The automotive industry is indicative of the missed opportunity of public sector procurement. Data collected by Unite reveals that 74% of vehicles procured by public bodies in the UK are not produced in the UK. Local authorities have the best statistics for the use of UK produced vehicles - 52% of vehicles used by local authorities have been produced in the UK, the next closest country is Germany, which supplies 10%. The ambulance services have the worst statistics for the use of UK produced vehicles. 92% of vehicles used by the ambulance services are produced abroad, with just 8% coming from UK producers. Germany supplies 40% of ambulance service vehicles, followed by France at 33%. The police service also procures a large number of vehicles from non UK producers. 85% of police vehicles are produced outside of the UK, 42% of these vehicles are produced in Germany and 13% in France. 75% of fire service vehicles are non UK produced - 28% are produced in Germany and 14% in Sweden. In discussions with local councillors Unite has found that local councils are actively encouraged by central government to seek out lowest cost, rather than highest quality, contracts for new fleets. Companies such as Hyundai are known to exploit this criteria by intentionally submitting ‘loss leader’ bids, which appear cheaper for the initial vehicles, but recoup profit through servicing the fleet over the course of the contract.

The point made by the example of automotive extends across public procurement. The race to the bottom is endemic in the voluntary sector and local services contracts including advice work, social care, leisure, housing, and mental health work. EU law, which continues to cover the UK until March 2019, does provide procurement criteria other than cost and Unite is clear that that there must be minimum standards in all contracts that should include collective agreements to set a floor for terms and conditions. This would drive competition on quality not cost and would also likely lead to greater insourcing of work.

98

ONS (2016) Public Expenditure Statistical Analyses 2016, URL

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There are lessons to be drawn from other countries. In Canada the annual budget for public sector procurement stands at $200 billion. Unlike the UK, Canada has proactively used this money to develop and support high-value manufacturing across the country — from the Bombardier passenger car facility in Thunder Bay, Ontario, to bus factories in Manitoba and Québec.99 In the UK the National Health Service spends £12 billion procuring drugs and supplies from the pharmaceuticals sector100 which has helped build a highly successful UK-based pharmaceutical industry. This is another example of how positive procurement can support UK industry and high skilled manufacturing.

Procurement and workers’ rights: Local government must use procurement to ensure all suppliers and contractors pay the real Living Wage and do not use zero hours contracts or exploitative employment practices. Such provisions must be adopted by all central government departments to ensure that all infrastructure spending is tied to decent employment rights. For example, public investment in HS2, Hinkley Point or CrossRail 2 should not only support the procurement of UK manufactured goods, such as steel, but should include protections for contracted workers. Similarly public procurement from local, regional and central government should seek to encourage and strengthen collective bargaining and working rights. Procurement must also be tied to clear public policy goals such as a supporting equality of pay and high quality apprenticeships. Looking internationally, in the United States the previous administration introduced a statutory goal that 5% of federal contract value is awarded to women-owned SMEs and Federal contracts can be set aside for women-owned small businesses.101 This target was established in 1994 and finally met in 2016. As a UK example, government contracts, both central and local, are important to the construction industry. During 2015, public sector construction projects were worth over £5 billion a quarter. Procurement can be used to ensure direct employment, apprenticeship places and training for women. If a construction company can’t offer these opportunities, they should not be awarded the contract. This can be an even greater lever in improving the quality of jobs and apprenticeships when government is investing to increase the supply of new build council homes for social rent. Direct Labour Organisations were traditionally a source of high quality apprenticeships. In addition, councils should be offered incentives to bring outsourced services back in-house for the on-going repair and maintenance of council housing. In May 2016, Unite won significant levels of compensation and a public apology for workers systematically denied employment for their trade union activities by companies including Balfour Beatty, Carillion, Laing O’Rourke and Sir Robert McAlpine. Yet from our members' experiences we believe blacklisting is a contemporary problem that continues to blight lives.

99

Scott Sinclair, Stuart Trew and Hadrian Mertins-Kirkwood, Sense of the CETA An Analysis of the Final Text of the Canada-European Union Comprehensive Economic and Trade Agreement, Canadian Centre for Policy Alternatives, 2014. 100

Drug industry agrees to £12bn NHS bill cap, The Guardian, URL 101

Women’s businesses get 5% of U.S. federal contracts – a goal first set in 1994, Financial Post, URL

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It is clear that the Government has not taken action to stamp out blacklisting, even in the most high profile of infrastructure projects. In 2013, Balfour Beatty admitted operating a blacklist when constructing facilities for the 2012 London Olympic Games.102

102

Balfour Beatty admits to Olympics blacklist checks, Building, 2013 URL

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Case Study Footnotes:103

, 104

, 105

. 106

103

Unite the Union, Wales, URL 104

Wales Council for Economic Renewal URL 105

Partnership Council for Wales, URL 106

The full Fife Council Construction Charter can be seen on the Fife Council website here (Motion 6, Page 5), URL

Case study: Code of Practice for Ethical Employment in Supply Chains in Wales Unite is part of a social partnership in Wales which results in a constructive and meaningful relationship between government, trade unions and other partners. Through this partnership Unite played a crucial role in the crafting of Code of Practice for Ethical Employment in Supply Chains. The code, which was developed by the Workforce Partnership Council with the strong involvement of Unite will revolutionise employment conditions for workers. In particular, companies bidding for public sector work in Wales will be expected to conform to fair work practices and not employ workers on zero hours contracts, via umbrella companies or on false self-employment contracts. The code includes a commitment that all suppliers should pay workers the ‘Living Wage’. The code further strengthens the Welsh government’s clear stance on blacklisting. The code of practice contains a commitment to ensure suppliers are not using blacklists and establishes procedures to avoid using companies who have failed to take the issue seriously. The code also covers modern slavery and provides advice and guidance on how staff can spot and deal with concerns of modern slavery which affects 50 million people worldwide including in the UK and Wales. It is expected that all public sector bodies in Wales, Welsh businesses and suppliers to the Welsh public sector sign up the code. In signing up to the code organisations will agree to all of its 12 commitments. The Welsh government spends around £6 billion every year on goods, services and through the supply chain. Unite in Wales has been at the forefront of campaigning for direct employment regulated by collective agreements for all workers engaged on publicly funded projects. In recent years there has been a steep rise in vulnerable workers being employed via precarious employment practices and bogus self-employment arrangements, through employment agencies.

Case study: Fife Council Construction Charter A similar example of the benefit of working with trade unions collaboratively is found in Scottish local government. In February 2017 Fife Council agreed a new construction charter to promote local employment, fair wages and worker protection. The Fife Council Construction Charter - which has been drawn up with the help of Unite - is designed to stamp out bad industry practices, such as bogus self-employment schemes, on construction sites in the county. The Charter says companies should not use umbrella companies to pay workers, and underlines the vital role of collective bargaining through trade unions. All construction contractors doing work directly for the council will be asked to agree to it and others who approach the council for other matters like planning permission will be strongly encouraged to do so. The charter will ensure that local investment is directed towards companies who support the local community, pay a fair wage and treat workers with respect and dignity. It also enshrines health and safety standards, while encouraging construction firms to promote and improve opportunities in education and training.

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Defence procurement: An industrial strategy must include support for strategic industries, and nowhere is the link between central government procurement and an industry as clear as defence.

Unite represents hundreds of thousands of highly skilled people working in the defence and allied industries. Over 50,000 skilled defence jobs have been lost in the last ten years. This is because 12 pence in every pound goes to the United States defence industry – by 2020 this is expected to double.

107 Unite is calling for a clear long-term strategy for defence procurement, based on an assessment of the UK’s defence needs and sovereign capability requirements. This, in turn, should lead to long-term procurement objectives and clear signals to industry about the technologies that need to be maintained and those that will disappear. This should form a Defence Industrial Strategy so that possible diversification opportunities can be identified early. The Defence Industrial Strategy should be aligned to a broader manufacturing strategy so that investment takes place in technologies with a market advantage. Unite has also called for the Ministry of Defence to consider employment, industrial and economic factors when conducting ‘value for money’ assessments to determine defence procurement. The development of a balanced scorecard should be part of a Defence Industrial Strategy.

107

Defence Diversification Revisited, Unite the Union, May 2016, URL

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Skills: reskilling and apprenticeships: Britain’s highly skilled workforce is often cited as a reason for manufacturing to locate or re-shore operations in the UK. However, lack of high skilled labour from under investment in apprenticeships or skilled migration is identified as a barrier to long-term investment.108 The Government must plug the skills gap by increasing investment in apprenticeship schemes. The example of Germany should be emulated, where firms such as BMW and Volkswagen are incentivised to train more apprentices than they need so young, skilled workers can be released to jobs throughout the supply chain.109 As mentioned in both the Investment and Procurement sections of this submission, industrial strategy must actively pursue economic, social and environmental aims. One example of this is the provision of high quality apprenticeships. There is a need to ensure young people see a skilled 'gold standard' apprenticeship as a real alternative to an academic qualification. To achieve this professional careers advice must be re-introduced into secondary education. Unite has written extensively on what constitutes high quality apprenticeships and trade unions have been part of the Sector Skills Councils and have worked closely with them to promote good quality apprenticeships for example those provided through the Technical Apprenticeship Service (TAS). Unite holds agreements with a number of employers organisations on apprenticeships and training and works closely with the Sector Skills Councils in manufacturing industries, notably SEMTA, in engineering and the manufacturing sector and COGENT in the chemicals, polymers, pharmaceuticals, petroleum and science sector (who run the Technical Apprenticeship Service). In contrast the Government has not included trade union representation on the recently established Institute for Apprenticeships. Apprenticeships should have a nationally recognised qualification in a recognised occupation as the outcome, with the necessary underpinning technical knowledge and assessment of competence through colleges and work-based learning in combination. Through these apprenticeships we should move towards the proportionate representation of women and Black, Asian and Minority Ethnic people in these industries. In contrast the Institute for Fiscal Studies has warned against bogus apprenticeship whereby short (sometimes one-day) training schemes are badged as apprenticeships.110 Similarly Unite is aware of many employers who use apprenticeships as a source of cheap labour and do not offer a guaranteed job at the end of the programme. In 2014, Unite guided workplace representatives at a local authority who expressed concerns on the use of the term “apprenticeship” being advertised locally by the Council, which they successfully challenged. An ‘apprenticeship’ was being advertised at the apprentice national minimum wage, for a 12 month fixed term contract duration, where the ‘apprentice’ would work as an ‘Apprentice Civil Enforcement Officer’ who would issue parking tickets and the like. The only ‘future prospects’ linked to this role in the job description was a “nationally recognised qualification”

108

David Bailey and Lisa De Propris, Manufacturing reshoring and its limits: the UK automotive case, Cambridge Journal of Regions, Economy and Society, 2014, URL 109

German Lessons: Developing Industrial Policy in the UK, TUC, URL 110

Reforms to Apprenticeship Funding in England, IFS Green Budget, 2017, URL

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in “Business and Administration”. Upon further investigation this was found to be simply a Level 2 ‘Award’ under QCF terminology, which would be achieved via 20 Guided Learning Hours (GLH) over the 12 month duration. People working for local authorities in Civil Enforcement do an important job for the general public and society. However, the question was raised: was this a genuine apprenticeship? In our members’ view it was not and we agree. The terms ‘Apprentice’ and ‘Apprenticeship’ must reflect quality, skills and expertise, the above example and other scenarios have threatened the terms. To ensure equal pay for equal value we not only need to strengthen enforcement of legal rights and tackle discrimination, but to address the occupational segregation that continues to operate in our economy. Unite has previously produced ‘Thinking about an apprenticeship? Women who work in science and engineering talk about their jobs’111 and has organised events promoting apprenticeships for women in science and engineering based industries. As an illustration of the link between parts of an integrated industrial strategy the construction of the new nuclear power station at Hinkley Point will generate thousands of jobs in the south west, including 500 much needed apprenticeships for young men and for young women. The trade unions involved with this project, including Unite agreed a ground-breaking template with EDF for decent working conditions and employment practices.112 Closing the skills gaps: The skills gap for advanced manufacturing and engineering continues to grow year-on-year. SEMTA (Science, Engineering and Manufacturing Technologies Alliance) have shown that on current trends this gap will reach 800,000 by 2020. This is supported by Engineering UK, who estimates the UK will need 182,000 new skilled engineers each year in order to close the growing skills gap.

Source: Closing the Skills Gap: Semta

111

Unite the Union, Thinking about an apprenticeship? Women who work in science and engineering talk about their jobs, URL 112

Hinkley Point go-ahead decision ‘historic’, Unite the Union, September 2016, URL

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A similar skills shortage is experienced in the transport sector with a national truck driver shortage of 45,000 and with over 35,000 existing drivers due to retire in the next two years. Unite represents nearly 80,000 logistics workers in the sector and our first-hand experience is telling us that the industry is facing a long-term challenge to attract and recruit sufficient people to professional driving, and that the skills shortage in the logistics sector has reached crisis point.

Road haulage is an example of an industry which is failing to attract and keep workers because of low pay, terms and conditions. There remain no minimum pay standards (company or regional), low new starter rates, no adequate pensions provision, final salary pensions closures, and no sector portable defined contribution schemes. Unite is campaigning to establish minimum standards for the industry which can protect workers and in doing so attract and retain new drivers.

Research by the IPPR (Institute for Public Policy Research) has identified a strong link between low productivity and low wage sectors of the economy. It recommends that businesses should establish degree apprenticeships for the biggest low-wage sectors, starting with wholesale and retail – following the model recently developed for aerospace and other high-growth sectors.113 It is clear that there is an urgent need to fund and develop such training schemes to end the growing skills shortages in transport and the NHS.

113

Boosting Britain’s low-wage sectors: A strategy for productivity, innovation and growth, IPPR, May 2016, URL

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Case study: construction apprenticeships Unite has called for high quality apprenticeships in the construction sector to address the widening skills gap, which threatens to be exacerbated by Brexit.1 The Construction Industry Training Board estimates that the industry needs 31,350 new entrants a year while consultants Arcadis estimate that the industry needed 400,000 new entrants every year until 2021. Dead-end courses: Figures obtained by Unite from the Government’s Skills Funding Agency, have revealed that the number of classroom based construction courses increased by 14% in 2016; dwarfing the number of apprentices beginning their training. The only qualification recognised in construction is the National Vocational Qualification (NVQ) and this can’t be achieved without substantial site experience. An NVQ is necessary to acquire a Construction Sector Certification Scheme (CSCS) card which is required to work on construction sites. In most cases people undertaking classroom training have no avenue to achieve an NVQ. In 2015/16 a total of 192,500 people began a classroom based construction course, compared to 167,000 in 2014/15 a 14% increase. However during the same 12 months just 21,460 people began a construction apprenticeship. Therefore, 89% of people beginning a construction course are undertaking potentially ‘dead-end’ training. An industrial strategy must refocus resources spent on such dead-end courses to ensure that funding is more effectively invested in boosting the number of genuine apprenticeships, so that a far higher number of young people can acquire the skills and qualifications to enter the industry. The role of unions in securing high quality apprenticeships: In contrast, Unite has secured agreement for 500 civil engineering apprentices to be trained on the Hinkley Point C development with a further agreement for one apprentice for every 10 construction engineers on site. Unite is committed to negotiating a similar deal for HS2. Unite is also involved in the JTL ambassador scheme which has been highly effective in increasing the number of women undertaking an electrical apprenticeship. Unite has been at the forefront of championing construction apprentices. That includes ensuring that major construction projects train high numbers of apprentices. The record of small and medium sized businesses in training apprentices is far superior to that of the major contractors. If an industrial strategy is going to close the skills gap then the major players must undertake far more of the heavy lifting.

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Reskilling and upskilling: The UK must develop an up-skilling strategy to support and develop the reskilling of workers for the jobs of tomorrow and to have the opportunity for progression. In the aerospace and shipbuilding sectors, previously secure jobs can be placed at sudden risk by cuts in government spending or policy changes at the Ministry of Defence. For example, in 2010 the Strategic Defence Review114 huge cuts were announced for the armed forces it was anticipated that the loss of these jobs and the impact on defence manufacturers could mean thousands of potential redundancies. In response a ‘talent retention scheme’ was launched to ensure workers at risk of redundancy could be redeployed with engineering companies with vacancies. Such schemes, with trade union and government support, should be considered for wider development to not only match displaced workers with vacancies, but offer support, training and opportunities for re-skilling and career change. At a time when the skills gap in advanced manufacturing and engineering is only growing, a joined up response is needed to ensure no worker is thrown on the scrap heap. The predicted changes which will be wrought by increased automation threatens to increase uncertainty across the economy. At a time when the skills gap in engineering is only growing, it’s important that skilled workers are not thrown on the scrapheap, but are given genuine support for redeployment. A ‘talent retention scheme’ should be a nationally coordinated programme to help workers whose jobs are threatened by offering genuine opportunities for secure employment. This must go beyond simply being a recruitment portal to offering training for CV and application writing, support for interviews and opportunities for re-skilling.

114

Defence Diversification Revisited, Untie the Union: URL

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Automation: the fourth industrial revolution In recent years, the speed and nature of technological developments has led to talk of a new wave of automation, increasingly termed ‘Industry 4.0’.115 Advances in technology, especially in robotics, sensors, Artificial Intelligence (AI) and cloud computing, are helping to drive the current wave of automation. It took fifty years for the world to install the first million industrial robots – introduced in 1961. The second million will take only eight years.116

In ‘The Future of Employment: How susceptible are jobs to computerisation?’ Dr Michael Osborne and Dr Carl Benedikt Frey state that automation could lead to 35% of UK jobs being lost within the next two decades.117 In a speech to the TUC in 2015, Andrew Haldane, Chief Economist, Bank of England said that up to 15 million jobs in the UK could be at risk of automation over the same time period.118 Unite is clear that to avoid the worst case scenarios, workers and their trade unions must play a central role in the implementation of new technology and share of rewards. As others have noted, an appreciation of the crucial role of labour bargaining power is missing from today’s debate about the ‘march of the robots’.119

This rapid rate of technological change presents a very real threat of job losses to workers in all areas of the economy and in many different unrelated roles. Unite has identified more than 650,000 Unite members working in high risk sectors at risk of losing their jobs through automation. Using Frey and Osborne’s methodology 231,768 of these Unite members could lose their jobs by 2035.120

115

Manufacturing’s next act, McKinsey & Company, 2015, URL 116

Robots, McQuarrie Research, 2016 URL 117

Carl Frey, Michael Osborne, “The future of employment: How susceptible are jobs to computerisation” Oxford Martin School, URL 118

Labour’s Share’ - a speech given by Andrew Haldane, Chief Economist, Bank of England, to the Trades Union Congress, London, 12 November 2015 119

Fear of the robots is founded in the messy reality of labour, Duncan Weldon, Financial Times, 17th

April 2016, URL 120

From brawns to brain: the impact of technology on jobs in the UK, Deloitte, URL (P1 and Unite’s membership system)

Source: McQuarrie Research

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In 2013, ‘Robotics and Autonomous Systems’ (RAS) were identified by the Coalition Government as one of the ‘Eight Great Technologies’. However, in October 2016, the Science and Technology Committee inquiry into Robotics and Artificial Intelligence unsurprisingly “found that there was no Government strategy for developing the skills, and securing the critical investment, that is needed to create future growth in robotics and AI”.121 Continued Government inertia on this very important issue is squandering a unique opportunity to implement a comprehensive industrial strategy that plans for the ‘21st century workplace’. Unite insists that such an industrial strategy should ensure that technology is only implemented when it is beneficial for all, with work as the central pillar of society. While it is agreed that automation will change the nature of existing work, Unite does not accept that it must result in inferior work or unemployment. Unite is calling for:

• The extension of collective bargaining in the workplace to include the introduction of new technology;

• Trade union members at board level to be involved in all decisions relating to the introduction of new technology in the workplace;

• Regulation for how employee information can be gathered, stored and disclosed; • A ‘Future of Automation’ Commission involving trade unions, employers, research

councils and academics, tasked with finding potential solutions for the future; • Social and economic impact assessments to accompany government investment in

new technology such as autonomous or electric vehicles. • A commitment to a programme of re-skilling and up-skilling existing workforces; • The creation of new training and apprenticeship schemes reflecting changing job

roles. Unite is also aware of the ongoing debate on the question of a tax on robots. This is a question which must be thoroughly debated. Unite will explore the idea of a specific tax where employers use robotics to replace workers, in order to fund research into new technologies, new ways of working and talent retention programmes. Unite is also keen to explore the potential for a shorter working week without a reduction in pay. This would allow workers to share in the gains in productivity which could be made possible by automation. This would greatly improve work life balance and leisure time for UK workers, and be an economic boon for consumer, tourism and creative industries. Such a change in working patterns would also allow working people to meet their increasing family and care obligations which result from the demographic changes to the UK population previously mentioned in this submission. Attention should also be given to the potential of a Universal Basic Income although any social security system that incorporates a UBI system must work in tandem with stronger employment rights, public services, housing, childcare and continue to have extra payments for disabled people. Similarly, rather than continuously raising the pension age, the productivity gains of automation could allow workers to share jobs without loss of pay. This would allow for phased retirement which would allow an older worker to ‘job share’ with a new entrant as part of a high quality apprenticeship.

121

Robotics and artificial intelligence, Parliament, 5 October 2016 URL

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An industrial strategy should also examine the potential to diversify current UK manufacturing capabilities and for the UK to become a hub for the manufacture of Industry 4.0 technology. Manufacturers in the UK are already starting to operate so-called ‘smart factories’, where networked machines and computers work together to enable organisations to digitally plan and project the entire lifecycle of products and production facilities. Experts in Germany, where investment in automation is high expect widespread adoption in factories around the world in the next decade. Unite notes the increased use of robots and ‘cobots’ in sectors such as automotive and aerospace.122 In Germany cobots are already used in the Ford factory in Cologne and the Volkswagen factor in Wolfsburg for handling ergonomically unfavourable production tasks, such as overhead assembly123. In the United States automotive employers spent over $ 718 million124 on cobots in 2015 and 2016. Any industrial strategy must acknowledge the potential market for building and maintaining both robots and cobots.

122

Meet the cobots: humans and robots together on the factory floor, Financial Times, URL 123

Human-robot collaboration—co-worker made of steel, Automica Munich, URL 124

Man and machine: The new collaborative workplace of the future, CNBC URL

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Making history: what is the ‘Fourth Industrial Revolution’? Manufacturing is constantly changing and evolving. New automation is best understood as the latest of four clear stages. The first was the Industrial Revolution which began at the end of the 18th century when hand production was replaced with steam-powered machines such as the huge power looms in the English textile industry. The first decades of the twentieth century saw the creation of the first mass production lines, pioneered by Ford Motors in Detroit. This production line system developed through the decades, with increased use of electronics and early IT systems in the 1970s and 1980s. The ‘Fourth Industrial Revolution’ continues this development with the use of internet-enabled machinery, artificial intelligence and ‘cobots’ combined in ‘Smart Factories.’ Technology on our terms: the role of trade unions The graphic above shows these four stages of development, but what it doesn’t show is the social upheaval which happened between each stage and the vital role of trade unions. From campaigns to end child labour in factories and limit the working day in the 19th century, to winning gender pay equality in 1968 - unions have fought to organise workers throughout times of dramatic change. Unite believes the ‘Fourth Industrial Revolution’ must be met with new ideas. From a shorter working week without cuts in pay, to safeguards for the collection of ‘big data,’ and opportunities for new types of jobs – an industrial strategy must ensure new technology works for the benefit of us all.

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It is Unite’s view that an industrial strategy must have the ambition of making the UK a global leader in the ‘Industry 4.0’ revolution. This must include:

• An examination of the potential for current manufacturing capabilities to diversify through automation;

• Sector-by-sector study into viability of future investment in R&D; • Government investment in R&D to make the UK a leader in robotic production and

maintenance. The impact of automation is not limited to manufacturing. Unite members working in the transport sector will be seriously affected by the development of automated/driverless vehicles, particularly in logistics and bus and taxi drivers. Daimler already has autonomous technology in demonstration trucks,125 while Volvo says that they could have the technology within 2 years.126 The Financial Times calculates that a driver’s wage accounts for roughly a third of the total cost of owning and running a lorry. This, plus a growing shortage of qualified drivers in Europe, could provide the incentive for the industry to automate.127 An industrial strategy must make it a priority to investigate ways in which workers’ roles could be enhanced rather than losing their jobs. In road transport new technology has included telematics and the so-called ‘spy in the cab,’ an increase in monitoring and surveillance which has raised the issue of entitlement to privacy at work. Across industry, digital technology, including online platforms, offers employers new methods of surveillance and monitoring, allowing the breakup of work into smaller tasks, and contract workers on a piece work basis. When new technology goes unchecked and unregulated, it is inevitable that it will be used in this way. That is an industrial strategy must ensure automation does not merely exacerbate the existing ‘race to the bottom’ of wages, terms and conditions. While automation will change the nature of existing work, Unite does not accept that it must result in unemployment. Unite is calling for employers to create new training and apprenticeship schemes which reflect changing job roles, and also to commit to a programme of re-skilling and up-skilling existing workforces. Unite is calling for employers to create new training and apprenticeship schemes which reflect changing job roles, to recognise changing skill needs and to commit to a programme of re-skilling and up-skilling existing workforces.

125

Automation is just two years away, says Volvo, Route One, July 2016, URL 126

Ibid 127

Daimler keeps on trucking with self-driving lorries, Financial Times, 2016 URL

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Lessons from Germany: IG Metall

Unite works closely with our sister trade union in Germany, IG Metall, who have pioneered the response to automation. Alongside China and the United States, Germany is a global leader in automation, where it is known as Industry 4.0. The German Confederation of Employers, the BDA, was quick to recognise the potential of automation for driving down wages and eroding conditions. A BDA position paper called Opportunities of Digitalization, in essence a manifesto for precarious work, proposed the following ideas:

• No regulation of agency work • No maximum daily working time • No protections against workplace stress • No regulation of crowd working • Cooperation with trade unions must not hinder modernisation • No legal restriction on working time • Extending the use of zero hour contracts • Flexible use of employee data128

IG Metall organises workers across German manufacturing and in response the union sought to position itself at the centre of change. This included lobbying and working with government to shape regulation for industrial health and safety. The union also partnered with universities in Bochum and Darmstadt to establish ‚Qualification Labs‘ to propose the new types of jobs and apprenticehips needed for digital manufacturing. The union has also signed Germany’s first ‘Industry 4.0’ company level agreement with engineering firm Bosch-Rexroth at Homburg, Saarbrücken. The agreement gives the Works Council, comprised of elected union shop stewards oversight into the phrased introduction of new production methods. The agreement also includes safeguards for the collection, storage and use of data. While the agreement between the Works Council and Bosch-Rexroth sets a precedent, IG Metall are also aware that automation will impact workers who are no longer in the traditional workplace. This example also highlights the important role of social partnership and a recognised institutional role for worker voice and trade unions.

128

Opportunities of digitalization, Position Paper, Bundesvereinigung der Deutschen Arbeitgeberverbände (BDA), Germany

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Much like Task rabbit, Uber and Deliveroo in the UK, Germany has seen the rise of the so-called ‘Platform Economy,’ where piecemeal work is outsourced online. In Germany the website ‘Clickworker’ claims to have a network of over 800,000 freelancers offering to do work ranging from data processing to publicity.129 For manufacturing, this means white collar roles which were traditionally in-house can now be outsourced. In response IG Metall has launched its own online platform so Clickworkers can be made aware of their rights and get support from the trade union. This includes rating and comparing both pay and terms and conditions to prevent the race to the bottom. For example, as some online platforms proactively try and forbid freelancers workers from communicating with each other, the union’s site allows Clickworkers to collaborate and share details on pay. 130

Case Study footnotes131, 132

129

www.clickworker.com/about-us/clickworker-crowd/ 130

For fair work in the cloud! IG Metall, URL 131

Interview: Ashok Vaswani, Barclays personal and corporate banking chief, Daily Telegraph , URL 132

Breaking free – the future of customer engagement, Future Banking, URL

Case study: Barclays SkyBranch Recognising skills in the digital workplace

An example of new training and schemes to reflect changing job roles and the key role unions can play is provided by Unite members in Barclays bank. Following a Unite campaign to unionise call centres in Sunderland, Coventry and Liverpool, the union used collective bargaining to negotiate a review of the call centre workers’ pay grades and training. Across banking call centres, workers are now expected to ‘Omni-channel’ customer service. This can mean answering phones, while also responding to Live Chat screens and managing social media accounts. Due to the availability of digital banking, customers wishing to simply check their bank balances now use smartphone apps and other platforms. Barclays estimate that over three million of the bank’s customers now use mobile banking on their smart phones or tablets.1 In response to changing technology the bank relaunched traditional contact centres as ‘Skybranches,’ a one–stop-shop dealing with customers contacting the bank by apps. The bank sought to promise customers that their first point of contact would solve any given concern and that calls would no longer be transferred to other departments. In the process the bank aimed to reduce ‘handovers’ by 600,000 a month.1 This means the service call centre workers are now expected to provide is more akin to a financial adviser. Following negotiations Unite and Barclays arrived at a ground-breaking agreement which will benefit over 1,200 members across the SkyBranch branches. Over 900 workers moved up the pay bands, resulting in real terms pay rises of – on average – close to £2000. This is recognition of increased complexity in these roles. The bank also agreed to launch a series of new training programmes. This is an example of trade union organising preventing the ‘race to the bottom’ when faced with technological changes.

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Corporate governance: It must be a fundamental aim of the UK’s industrial strategy to help workers gain genuine control over their working lives – both on the shop floor and the boardroom. This can be achieved by improving working rights, raising trade union freedoms, and supporting collective and sectoral bargaining. This is developed further in the next section of this paper. Changes are needed in the way businesses are governed and markets are regulated. As Unite has previously said: “if the rules - or lack of rules – of the game are leading to undesirable or damaging behaviours than the rules need to change”.133 A meaningful approach to reforming corporate governance must be guided by ensuring the interests of workers are not subsumed by other ‘stakeholders’ such as shareholders or investors. Ending short-termism: The dangerous short-termism which is endemic across UK business can only by tackled by recognising that it is a systemic problem built into law. Bosses such as Philip Green are not simply ‘bad apples.’ They are high profile outliers who expose the rotten state of UK business culture and the feebleness of the laws and regulations meant to protect workers and the wider economy. For example, all too often company announcements concerning “efficiency gains” and job losses are fed to, and welcomed by, the markets in a cynical bid to push up short-term share prices. This is done without any real consideration for long term consequences organisational sustainability, and in many cases, without any proper consultation with employees and their representatives.134 There is no doubt short-termism is encouraged by the UK having some of the weakest protections for workers in Europe Strong trade unions and meaningful collective bargaining arrangements are essential to ending short-termism and promoting a longer-term perspective that benefits organisations, employees and, ultimately, the wider economy. Unite believes some of the areas that could help change corporate short-termism are as follows:

• Worker representation on company boards and remuneration committees. Unite believes trade union representation should account for at least half of board membership;

• Stronger promotion of collective bargaining; • Legislation for sectoral collective bargaining; • Extend the scope and range of collective bargaining, both in terms of issues and

workers covered; • Pension fund performance to be looked at on a long to medium timescale, rather

than short-term basis; • More transparency in relation to costs, charges and remuneration structures of fund

managers, and full disclosure of fund managers’ voting records; • Abolition of quarterly reporting; • Greater attention to be paid by asset managers and analysts to employment

relationships when assessing company performance;

133

Unite submission to Labour Party Cox Review on short-termism in the UK economy, 2012. 134

Unite submission to the Business, Innovation and Skills (BIS) Committee: Inquiry into Corporate Governance, October 2016

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• Better definition of trustees’ fiduciary duty in respect of long-term investment and environmental, social and governance (ESG) issues;

• Reform of the takeover regime so that mergers and takeovers are subject to a long-term company interest test;

• Amendment to directors’ duties under the Companies Act to make directors’ primary duty to promote the long-term success of the company;

• Voting and engagement rights to be subject to a minimum period of share ownership. Executive pay: The union movement has long been concerned about the scale of executive remuneration in the UK. We are particularly concerned about the gap between executive remuneration and average employee pay, both within companies and throughout the economy as a whole. We believe that the current gap between executive and average employee pay is much too high. Unite believes that remuneration reports should include the distribution of pay throughout the company by grade and should provide for each company director the ratio between his or her total remuneration and median and lowest employee pay. Unite believes that a 10:1 maximum pay ratio to the lowest should be introduced. Unite calls for democratic oversight of executive pay. Companies must be compelled towards transparency and this should include publishing pay ratios in annual reports. Equal pay audits: Equal pay audits are invaluable for exposing unequal pay between men and women in the workplace, identifying the reasons for the discrepancies and using the information to negotiate for equal pay. Unite has been calling for mandatory equal pay audits in the public, private and voluntary sectors as a way of tackling and avoiding unequal pay. In our experience organisations that carry out regular Audits have a much more transparent and fairer pay system. Unite is clear that conducting such audits must be legally mandated, with a framework for enforcement. Unite proposes the Equality and Human Rights Commission should be strengthened and tasked with the regulation and investigation of pay audits to ensure compliance. Worker representation in the boardroom: In Unite’s response to the Government’s Green paper on Corporate Governance we made the point that despite the Prime Minister’s repeated pledges, it was remarkable that no concrete proposal was advanced for workers to participate on company boards. It is the position of Unite that worker representation should be a vital part of company boards. However, this can only be successful if coupled with reform to the legal responsibilities of directors (as enshrined in Companies Act 2006), and whistle-blower legislation. Unite notes the proposals of the TUC135 that worker representatives should comprise a minimum of one third of the board, with a minimum of two worker representatives per board. Unite is committed to the objective of half of unitary company boards being comprised of workers’ representatives. These ‘workers directors’ must be elected by members of an independent trade union.

135

All Aboard: Making worker representation on company boards a reality, TUC, 2016, URL

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Where remuneration, supervisory and other oversight committees exist, worker representation should be extended to include these bodies. However, worker representation must not be restricted to these secondary boards. Unite notes that in 19 out of 28 EU Member States plus Norway (i.e., 19 out of 29 European countries) there is some provision for workers’ representation on company boards.136 It must be added that while examples from Sweden and Germany support the argument for worker representation on boards, they must not be taken out of context. Swedish and German corporate law differs from the UK meaning these models are not directly transferable without changes to UK law. This is why worker representation on boards must be intrinsically linked to wider legal reforms of corporate governance. Sweden presents a strong case study as, like the UK, companies are governed by single tier boards. The 1973 Board Representation Act enshrined worker representation into Swedish law; however it cannot be de-coupled from wider Swedish trade union legislation. 92% of the Swedish workforce is covered by collective bargaining, a stark contrast to 23% of UK workers.137 It is clear that in Sweden collective bargaining goes hand in hand with board representation, the latter proving ineffective without the former. It is Unite’s view that board representation is an axillary to collective bargaining, and the union would not support a form of board governance which acted to undermine or impede the growth of employer-specific or sectoral bargaining coverage. Elections to the board: Unite notes that in countries where worker directors are mandated by law, the company is compelled to hold an election. While the election of worker directors should involve all employees, including those overseas, candidates should only be nominated by recognised, independent trade unions. This should be enshrined in the recognition agreement between the company and the trade union. To provide protections, worker directors should only be elected to serve for a set term of three years. Furthermore, the workforce should have the legal right to ‘trigger’ a recall election. Legal protections: While worker directors should have the full voting rights of other board members and should share the majority of legal responsibilities, it is clear that several legal safeguards are needed. The role of worker directors can only be successful if it is coupled with an amendment to the legal responsibilities of directors as outlined in the Companies Act 2006, specifically the obligation “to promote the success of the company for the benefit of its members [ie, shareholders] as a whole.” This clause not only enshrines short-termism into law, it would compel worker directors to put immediate profit before the long term interest of the workforce they would be elected to represent.

136

All Aboard: Making worker representation on company boards a reality, TUC, 2016, URL 137

Securing a decent deal for workers: employee representatives on boards, Class think piece, 2014

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Either worker directors will need a specific legal carve out from this part of the legislation or – more preferably - the clause should be scrapped entirely. Boardroom confidentially is also an issue. Worker directors would be expected to observe confidentiality; however, doing so must not compromise their position as elected representatives of the workforce. Similarly strong ‘whistle blower’ protections must also enshrine the right of worker directors to report suspected illegal boardroom behaviour. Worker directors must not be allowed to become culpable for board decisions they have not been able to challenge. Boardroom diversity: Unite is firmly committed to equality for all. When it comes to workplace democracy, it is clear that the board of any company must accurately reflect the demographics of the workforce. While this can be achieved through direct democracy, Unite has proposed a series of proposals to achieve board diversity138:

1. All board posts should be advertised publicly and recruitment processes should be transparent. There should be proportional representation of women, black and Asian, disabled and LGBT to a corporation’s workers.

2. Employers should keep monitoring information on who applies for promotion, who is

short-listed and who is promoted in the organisation. This assists the board with analysing the proportion of women, black and Asian, disabled and LGBT workers who have applied for, who have been short-listed and who have been appointed to a higher position in the organisation.

3. All those involved in board appointee selection processes should be fully trained in

equality of opportunity and diversity; access to training is fair and equally open to all employees; feedback processes to unsuccessful applicants are thorough, fair and helpful; appraisal methods are transparent, non-subjective and equal.

4. If evidence of under-representation at board level has been found then positive

action should be taken. These could include: targeted training to level the playing field for those applying and active encouragement to women, black and Asian, disabled and LGBT employees to apply for promotion.

The monitoring information on career development should be evaluated at board level at least once a year. If this shows disparities in relation to women, black and Asian, disabled and LGBT workers employees being successful in promotion in future, then the Action Plan should be revisited and relevant measures needed to address the problem should be implemented. Mergers, acquisitions and takeovers: Unite is the trade union for members in many multinational firms across the economy. Any takeover of or between these companies must be transparent and in the best interests of the workforce. It is vital that companies demonstrate that they have a long term agenda to develop their new acquisition, rather than short-term asset stripping. For example, Unite supported intervention to prevent the planned Pfizer takeover of UK-based pharmaceutical company AstraZeneca 139 on the grounds that it would not have been in the workforce’s interest. It was clear that UK-based research would have been wound

138

Unite response to the Scottish Government Consultation Women On Board: Quality through Diversity, Introduction of Gender Quotas on Public Boards, July 2014, URL 139

AstraZeneca unions tell board to resist Pfizer takeover, Unite the Union, May 2014, URL

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down as Pfizer’s main incentive for the venture was to lower their tax bill.140 Similarly, Unite opposed the hostile takeover of Cadbury by Kraft as it was clear that the conglomerate’s plan of growth through acquisition would shoulder the UK manufacturer with crippling levels of debt, in turn endangering jobs. Unite strongly criticised both Kraft and the UK government for not providing any safeguards for the future of the UK workforce. Despite reassurances from Kraft, Cadbury's Somerdale plant was closed just one year after the takeover, with machinery and production offshored to Warsaw, Poland.141 The fall in value of sterling following the EU referendum is an opportunity for foreign companies seeking to buy UK-based companies. The Kraft/Heinz bid for Unilever and the PSA bid for the Opel/Vauxhall divisions of General Motors also expose the need to consider takeovers of foreign companies with UK operations. An industrial strategy must ensure future takeovers are transparent and that safeguards are provided to defend jobs. While the UK does have a public interest test to examine potential takeovers, the example of Kraft/Cadbury demonstrates that it must be strengthened to take into account the long-term interests of the company, wider economy, employees, suppliers and local communities.142 Unite also proposes:

• Workers and their representatives should be informed and consulted on the business and financing plan of any takeover prior to the acquisition. The information is required to enable employee representatives to assess the impact of the bid on employees. The Company letter to shareholders about the bid must accurately reflect the outcome of these discussions and the views of employees.

• Any takeover which significantly increases the level of debt increases the risk of the

company and is, de facto, deterioration in terms and conditions. Through their trade unions, workers should have the right, equivalent to that of pension fund trustees, to seek fair compensation and protection should substantially greater levels of leverage be part of a takeover.

• Reform of the Takeover Code which includes the removal of barriers to companies sharing non-public information with employee representatives, including bid documents; and negotiate safeguards and guarantees with employee representatives for employees’ jobs and terms and conditions.

• The facility for the Takeover Panel to intervene during the course of a bid if employee

representatives make a complaint about breach of any of the above in order to compel the parties to comply.

• A Mergers and Takeovers Commission, with trade union representation, to oversee the reforms stated above.

In Northern Ireland Unite has also proposed a ‘Viking Clause’; so named as it would seek to

140

Pfizer takeover: what is a tax inversion deal and why are they so controversial? The Guardian, November 2015, URL 141

Unite Response to Takeover Panel Consultation, URL 142

Mergers and Takeovers: The Public Interest Test, House of Commons Library, September 2016, URL

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prevent the plunder of local economies through takeovers and asset striping. This would ensure transparency, protect workers and mitigate the economic impact of corporate takeovers. This must include the right for a recognised trade union to scrutinise a takeover bid, extended consultation periods, provide protections for workers’ terms and conditions, and guarantees of continuous employment to prevent asset stripping.

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Working rights and worker voice A sustainable, high growth economy that creates decent work for all and provides the resources to fund comprehensive public services and a universal social security system would greatly raise UK living standards. As this submission sets out, a successful industrial strategy needs a well-trained, respected workforce with good pay, terms and conditions, trade union representation and collective bargaining. In contrast, privatisation and austerity have damaged the economy, services and the workforce, with a race to the bottom as contractors compete on price by pushing down service quality, pay, and terms and conditions. The yawning wealth and income inequality in our society correlates with the decline in the coverage of collective bargaining. Amongst the OECD countries the UK has the joint 6th most unequal incomes143 and the share of national income that goes in wages has also shrunk to 54 per cent from a mid-1970s peak of 65 per cent144. A number of analysts, including the IMF145, have identified that the decline in the bargaining power of labour has at least been a contributory factor. While the top fifth have 40% of the country's income and 60% of the country's wealth, the bottom fifth has only 8% of the income and only 1% of the wealth.146 Creating decent work with a solid floor of employment and trade union rights is a necessary part of moving towards a more equitable society and in tackling poverty. Two-thirds of children in poverty live in working households – in a de-regulated labour market work is not a route out of poverty147. A solid floor to employment and trade union rights that is properly enforced can also draw some of the poison from the debate around immigration in this country – exploitative employers are the reason for poor employment practices and low pay, not migrant workers. Ending the race to the bottom Proper regulation of the labour market, in partnership with the trade unions, must be a cornerstone of an industrial strategy. A properly regulated labour market must end bogus self-employment, social dumping, the use of zero hour contracts and close the loopholes of fake subcontracting, all of which result in wage cutting. TUC analysis shows that up to 3.2 million UK workers are in insecure work.148 This includes 1.7 million workers in low-paid self-employment, the fastest growing sector. What is clear is that becoming ‘self-employed’ might be a choice for some, but it is also a way for employers to avoid their legal obligations – in terms of both pay and conditions. The TUC research reveals that an increasing proportion of those working on temporary contracts are doing so on an involuntary basis. 30% of all of those working in temporary work are doing so because they cannot find a permanent job. This is up from 25% a decade ago.

143

Income inequality, OECD, URL 144

How to boost the Wage Share, TUC Touchstone (2013), URL 145

Inequality, Leverage and Crises, IMF Working Paper WP/10/268, URL 146

The Scale of Economic Inequality in the UK, The Equality Trust, URL 147

Nearly two-thirds of children in poverty live in working families, IFS, URL 148

Living on the edge: The rise of job insecurity in modern Britain, TUC, 2016, URL

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When this is broken down further, it is revealed self-employed workers are most likely to be working in information, finance, and professional services (21%) construction (20%), and ‘transport, arts and other services’ (16%). Estimates of bogus self-employment vary. Citizens Advice suggests that around 500,000 people could be classified as falsely self-employed.149 This form of ‘self-employment’ means that workers are deprived of their basic employment rights and protections, such as sick pay and maternity pay. It also means they do not have a vital safety net for periods when they cannot work. There is a need to distinguish between genuine self-employment and false or bogus self-employment. While there are many who make a positive choice to be self-employed, we also know that people have been forced into ‘self-employment’. Bogus self-employment is used to deny workers their statutory employment rights. In the construction industry, where the practice is particularly widespread, it places people outside of the industry-wide collective agreements. The divide in the way in which government treats employees and the self-employed is making it artificially cheaper for firms to move to a model of firm-contractor, and away from the employer-employee model of working. A simplification of the law so that employment rights cover all workers and not only employees would end this problem. It is already the case that if a person is subject to direction and control in relation to their work then that person is regarded as an employee of the person or organisation who is doing the directing and control, regardless of what contractual arrangements may be in place. However the monitoring and enforcement is non-existent leaving the worker themselves to challenge their own employment status, and in doing so, very often lose work. Unite is clear that no worker should be stripped of their rights simply because they do not work in a traditional workplace. The Government must commit to lifting the universal level of employment rights by extending existing rights to all those in work, not only those who qualify for ‘employee’ status. This includes family-friendly rights, protection from unfair dismissal and the right to redundancy pay. As Unite has stated to the BEIS Committee Inquiry on the Future World of Work and Rights of Workers, “The legal default should be for all workers to have employed status with the onus on the employer to prove a person is genuinely self-employed. All workers should be entitled to trade union and employment rights granted to employees.”150 Any new definition of a self-employed worker should not be limited to tax and National Insurance liabilities. There must be joined-up government and it must be accompanied by a new definition in employment law. Within the construction industry the Construction Industry Scheme should be abolished making genuinely self-employed workers responsible for their own tax affairs. HMRC should be provided with sufficient resources to ensure company compliance with tax and National Insurance obligations.

149

Bogus self-employment costing millions to workers and government, Citizen’s Advice, 2016 URL 150

Unite submission to the House of Commons Business, Energy and Industrial Strategy Committee Inquiry on the Future World of Work and Rights of Workers, URL

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Unite is also aware of reports of agencies attempting to force workers into so-called ‘umbrella companies’, particularly in the construction sector, to off-load National Insurance Contribution and other benefits to the detriment of the worker and has called for them to be outlawed along wwith other forms of bogus self-employment.151 Zero hours contracts: Zero hours contracts are formally contracts without a minimum number of guaranteed hours each week. They represent the latest attack on workers’ rights and dignity. Employers are using zero hours contracts to cut wages, avoid holiday pay, pensions, and other benefits enjoyed by employees and agency staff. As mentioned in the introduction the number of workers on zero hours contracts reported in official government statistics hit a high of 910,000 in the last quarter of 2016, a rise of more than 100,000, or 13%, compared with the same period in 2015152, although anecdotal evidence would suggest that this is an underrepresentation of the actual number in use. Figures report that 55% of those on zero hours contracts are female and that these contracts are most prolific in the accommodation and food (25%), health and social work (22%), and ‘transport, arts and other services’ (14%).153 TUC research shows that the typical UK employee earns 50% more an hour than the typical worker on a zero-hours contract.154 The median hourly rate for a zero-hours worker is £7.25, while for all employees it is £11.05. Furthermore, the growth in zero-hours working over the last decade is costing the Government almost £2 billion a year.155 The Government must commit to a ban on zero hours contracts, emulating the precedent set by New Zealand in 2016.156 In April 2016 the New Zealand Parliament unanimously passed legislation ending the use of zero hour contracts. The legislation is a relatively simple amendment and works in the following ways. Firstly, an employee must be given guaranteed hours. These must be specified and written in the contract. Secondly, if an employer wants workers to be available in addition to the guaranteed hours then these must be specified in number, with the reason as to why they cannot be part of the regular guaranteed hours. An employer has to give ‘reasonable compensation’ for availability on the part of the employee – whether required to work or not. This is effectively an ‘on-call’ payment. An employer also has to state the notice period for cancelling shifts – if a shift is cancelled by the employer after this notice period the employee should receive ‘reasonable compensation’. The implementation of the legislation has meant that large, multi-nationals such as Burger King, KFC, Pizza Hut and Starbucks, who also operate in Britain, have moved to fixed shifts and hours. There is no reason why the same cannot work here. Large chains such as these operate over regular opening hours, will know their regular footfall, busy periods and low periods – they have sufficient data to plan in advance to know how many staff to roster on shift. There is nothing to prevent individuals therefore being given advance notice and guaranteed hours. The continued operation of these chains in New Zealand with no adverse effects demonstrates this.

151

Unite demands government outlaws umbrella companies, URL 152

Record 910,000 UK workers on zero-hours contracts, The Guardian, URL 153

House of Commons Library Briefing Paper Number 06553, 3 October 2016 – Zero-hours contracts 154

Zero-hours contracts have become an easy way to employ staff on the cheap, says TUC, URL 155

Zero-hours contracts allow bosses to treat workers like “disposable labour”, says TUC, URL 156

The real heroes of the end to zero hours, Unite New Zealand, 2016, URL

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Union rights: the role of collective bargaining Collective bargaining helps address the imbalance in power that exists between employer and employee including the ability to negotiate on pay, benefits, terms and conditions and health and safety in the workplace.157 Without recognition and the right to bargain collectively workers are immediately disadvantaged with only the right to have a shop steward/rep or official represent them in a grievance or disciplinary hearing. The argument about redressing the bargaining power of labour was recognised over a hundred years ago by Winston Churchill when he introduced the Agricultural Wages Board, which was the last surviving Wages Council before it was abolished by the previous Coalition Government. He said:

“…where you have…no parity of bargaining, the good employer is undercut by the bad and the bad by the worst…where these conditions prevail you have not a condition of progress, but a condition of progressive degeneration.”158

Workers in workplaces that recognise trade unions have better terms and conditions than in comparable non-unionised ones. Research shows that workers in unionised workplaces earn on average £4,000-a-year more than workers in comparable non-unionised workplaces with greater job satisfaction and job security.159 Recognition also means a safer workplace. There are 50% fewer accidents in unionised workplaces than comparable non-unionised ones160. With a recognition agreement Unite members can elect their own health and safety reps, trained by Unite tutors to monitor health and safety in the workplace. Unite has been at the forefront of protecting our members from exploitative employment practices. For example, Unite has negotiated agency agreements that enshrine regular consultation between the elected shop steward’s union and the company on the use of agency workers. This ensures that agency workers are only sourced through agreed agencies which are covered by union recognition, and that the use of agency workers will not be to the detriment of the permanent workforce. The agreements also agree limits on the use of agency work, in the cases of Vauxhall and Rolls-Royce, for example, that is 5% of the total workforce. The union has also campaigned tirelessly to organise workers in industries such as retail and construction, where exploitative employment practices are rife. Following a Unite campaign, thousands of workers at Sports Direct’s Shirebrook warehouse in Derbyshire received back pay totalling an estimated £1 million for non-payment of the minimum wage. This covers workers directly employed by Sports Direct and those employed through employment agency The Best Connection.161 This has been followed by a 15p pay rise for all minimum wage workers’ the appointment of a full time nurse and welfare officer, and the removal of the ‘six strikes’ policy, after which workers could be dismissed. An independent review of working practices and corporate governance is now set to take place including a review of Sports Direct's model of predominantly using agency workers. 157

It’s time for a collective bargaining renaissance, URL 158

Winston Chuchill, Hansard Series 5, Vol 4, col 388. 28 April 1909, URL 159

One resolution, twenty good reasons to join a union, Work Smart, URL 160

Do the Maths, employers: strong unions are good for business, The Guardian, URL 161

Unite secures minimum wage victory for Sports Direct workers, August 2016, URL

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The Sports Direct business model has been exported not only across retail, but to other sectors such as transport and manufacturing. In the road transport, commercial, logistics and retail distribution sector, Unite has received reports that agency workers in warehouses are invariably subject to higher performance standards than core workers. Core workers may be expected to work at 85% of the measured standard whilst agency will have a 100% target. There are also agency drivers who are said to be self-employed but work solely for one company with their work and vehicle provided by that company. This is also not a problem limited to the private sector. Unite has also received reports that NHS trusts in England are trying to cut agency costs and NHS improvement have a drive to do this since last December. Trusts are doing their best to recruit mainly nurses from the bank or agencies to become permanent staff. One consequence is that two Trusts (so far) in London & Eastern have offered band 5 & 6 nurses an increased basic salary for not joining the NHS pension scheme and joining an inferior pension scheme instead on a temporary basis. Apparently, the pension regulator has allowed this practice to occur.

Sectoral collective bargaining: Unite believes that low pay is a drag on productivity. The break-up of sector wide collective bargaining has meant a decline in economic planning, the consumption power of workers and the ability to ensure ‘work pays’. Employers have increasingly been forced to compete on cost rather than productivity and quality as they bid to undercut each other on wages. Sector wide collective bargaining, along with proper employment protection, can help address undercutting and exploitation in labour markets and the unfair treatment of migrant workers and agency workers. The task required is to develop institutions that will facilitate the process by which wages and conditions can be negotiated and then set for the industry as a whole. This must involve employers’ organisations and unions as the key social partners, with government and civil servants facilitating and possibly assisting to identify independent experts to aid the process. Sector forums could also consider other matters of strategic importance such as training and skills. This submission has already made reference to the establishment Wages Councils to prevent undercutting, and their subsequent abolition. An industrial strategy must consider how national sector bargaining be rebuilt for the 21st century.162 In addition, ACAS should have its duty to promote collective bargaining restored and fair wages resolutions should be re-introduced in public procurement establishing a wage floor on the basis of the relevant collective agreements. As mentioned elsewhere in this submission, trade unions must be involved in any ‘sector deals’ as proposed in the Green Paper. Legislative support: The 2016 Trade Union Act and the 2014 Lobbying Act undermine workers’ fundamental right to independently organise and this legislation must be repealed. This must be the first step towards substantially raising the level of trade union freedoms in the UK. This must include a wider dismantling of the pernicious anti-union legislation

162

It’s time for a collective bargaining renaissance, URL

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introduced from 1979 onwards including the ending of restrictions to secondary picketing and supportive strike action.163 Unite reiterates our call for the Government to update legislation around balloting to allow secured workplace ballots and e- ballots, alongside postal ballots. The restriction of trade unions to postal paper ballots inhibits turnout and participation. The need for such trade union freedoms will be quickly exposed once the UK leaves the European Union. Many of the working rights won by trade unions throughout our history were enshrined in European law, which granted an extra level of protection. This meant that that employers looking to attack working conditions were restrained by EU law. If the protection of EU law is to be removed trade unions must be able to organise workers to defend themselves. Raising trade union rights in the UK must also include giving trade union Equality Reps statutory rights to facility time in the workplace. The notorious ‘Swedish Derogation’ of the Agency Workers’ Directive must also be repealed. This derogation leads to the manipulation of minimum hours of pay between agency assignments in order to exempt them from equal pay. Such contracts have been used to guarantee as little as 1-4 hours a week at minimum wage164. Unite evidence shows around 30% of agency workers are now on this contract which is particularly rife in logistics and manufacturing and road transport and retail distribution sectors. Unite has seen an increasing number of employers, including in the major supermarkets distribution supply chains, seeking to avoid the application of equal rights for agency workers by applying 'the Swedish Derogation'.

Central, devolved and local government must use procurement powers to ensure tenders for goods or services are not awarded to firms which have zero hours contracts or use bogus self-employment. The right to access for trade unions: Unite notes that in New Zealand trade unions’ ‘right to access’ workers and speak to them means access must be facilitated by the employer. How this right is operated is within the purview of the trade union. So, a trade union can use the right to access to physically visit a workplace, with access and the ability to speak to all workers either individually or collectively, facilitated by the managers on site. In some instances trade unions have used the right to phone or electronically communicate with workers, again, facilitated by the employer through the provision of information. The law gives trade unions the right of access to speak to staff at their place of work for the purpose of recruitment. This includes talking to them while they work. This right must be without loss of pay. The key thing is the ‘right to access and speak/communicate’ being held by the trade union, with the employer having to facilitate the plans of the trade union. The right to access has precedence over trespass and other common law rights that are used to decline access to private property, in this case the employers’ premises. The law requires a union to give notice when accessing a site, and access cannot be “unreasonably” withheld.

163

Institute of Employment Rights – A Manifesto for Labour Law: towards a comprehensive revision of workers’ rights (2016) 164

Employment practices at Sports Direct , House of Commons Report, 2016 URL

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The Gangmasters and Labour Abuse Authority (GLAA): The food and agriculture sector is heavily dependent on cheap labour with high numbers of migrant workers, low pay, low skills, low productivity. Extreme exploitation such as human trafficking is rife across the sector. This includes global companies with very high levels of profitability. The Gangmasters and Labour Abuse Authority is to have its scope extended from food and farming to all sectors; however there is no corresponding increase in resources to support this. This will lead to prioritising some sectors to the detriment of others. The GLAA must be given sufficient resources to meet its extended remit. Bus deregulation: A clear example of where better regulation, in partnership with trade unions, is desperately needed is in bus services. In contrast to other countries in Europe, where any outsourcing of bus services has been in the context of sector-wide collective bargaining agreements, deregulation in Britain has resulted in a ‘race to the bottom’, with companies striving for commercial advantage through obtaining the lowest staff pay and worst working conditions. The effect on bus companies’ employees has been devastating, with bus drivers’ pay falling far behind that of other comparable occupations. After initial problems the franchise model for bus services in London and the establishment of Transport for London (TfL) avoided some of the worst effects of the franchising arrangements elsewhere in the country when Ken Livingstone’s tenure as London Mayor saw increased public funding, strategic planning and co-operative working with Unite, the bus workers’ union. However, there are still serious concerns about the bus tendering model in London which ultimately sees the cheapest operator win contracts, creating a race to the bottom for workers’ terms and conditions and service delivery. The Mayor of London Sadiq Khan has introduced a minimum pay rate for London’s 25,000 bus drivers, with a £23,000 minimum salary. The package also sees the introduction of a ‘Licence for London’ from April 2017 allowing drivers to move between companies taking with them their qualifications and seniority. It also sees the roll out of a Unite-led equality programme ensuring the diversity of the capital is reflected in all management grades of London’s bus companies. The current Bus Services Bill is a clear example of legislation acting in contradiction to the aims of a genuine, integrated Industrial Strategy – which must include both transportation services and local government. Unite is concerned that the Bill does not appear to offer protection for new employees who are not covered by the TUPE and pension protections built into the Bus Services Bill in the way current employees will be. This could lead to a risk that operators bidding for the contract will drive down costs through reducing terms and conditions for future employees, with resultant risks to future service delivery. There are precedents for this type of commitment within codes of practice, exemplified by the Agenda for Change process in the NHS. This agreement, which covers a major change programme for the whole of the Health Service, includes a commitment to maintain pay and terms and conditions over the lifetime of a contract in order to avoid a two-tier workforce developing. Unite is calling for trade unions to be made statutory consultees when franchises are being formed and for the removal of clause 21 from the Bill, which would ban local authorities in England from setting up new bus companies.165

165

Unite submission to the Bus Services Bill: Consultation on Draft Regulations and Guidance.

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Case study footnote:

166

166

Petroleum Driver Passport UK Downstream Oil Distribution Forum (DODF), Unite the Union, URL

Case Study: the Petroleum Driver’s Passport Ending the race to the bottom in road haulage

Unite members have played a pivotal role in ending the race to the bottom in the road haulage industry. The introduction of the Petroleum Driver’s Passport (PDP) from 1

st February 2014 was achieved through a social

partnership of trade unions, employers and the Government – an example any successful industrial strategy must emulate. The Petroleum Driver’s Passport (PDP) was introduced to ensure the very highest standards for road tanker drivers in the UK downstream oil distribution sector. This passport was achieved as part of the settlement agreed at ACAS between Unite and the major distributors in 2012 which averted an industry wide strike. The dispute was about stabilising the distribution of fuel - a commodity that is essential to the smooth running of the country. Created by the Downstream Oil Industry Distribution Forum (DODF) – a partnership of employers, industry bodies and trade unions, the scheme sets a benchmark in competency against which all road tanker drivers involved in the loading, transporting and offloading of petroleum fuel products in the UK are measured. Delivering the fuel that keeps our houses warm, our cars on the road and aircraft flying is dangerous work. Fuel is a highly volatile commodity. Following the Buncefield oil storage explosion in 2005, investigators made a number of safety recommendations for contractors involved in the loading and offloading of fuel products. Unite members believed that a robust safety passport scheme would ensure that drivers delivering to UK forecourts are trained to the same high standards the Buncefield team recommended eight years after the disaster.

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Applying Unite’s Six Pillars of Industrial Strategy: Food, Drink and Agriculture

Unite has over 100,000 members in the food, drink and agriculture (FDA) sector, with thousands more in upstream and downstream industries. The FDA sector offers a prime example of how the six pillars of industrial strategy proposed by Unite can be applied across a sector of strategic importance. The future of the FDA sector has been thrown into sharp light by the UK’s impending withdrawal from the European Union. A successful industrial strategy must mitigate the economic impact of ‘Brexit’ and end the FDA sector’s structural reliance on low pay and labour abuses. Investment in a strategic industry Food and drink is the UK’s largest manufacturing sector, and the agri-food sector contributes more than £100 billion a year to national Gross Value Added.167 Employing at least 3.8 million workers, the sector acts as an economic hub, supporting jobs in transport and logistics; in manufacturing such as printing and packaging; in retail; and in the public sector. Every community in the UK has a direct FDA presence, be it through farming, food processing, manufacturing or retail. It is clear that FDA fits the criteria Unite has outlined for the sector to be considered of strategic national importance. Therefore along with industries such as steel, defence; energy and social care, an industrial strategy must be prepared to play a proactive role in supporting and developing this strategic asset. Procurement: The Government is already a major purchaser in the FDA sector. Public sector procurement contracts are worth £2.4 billion each year, which accounts for 5.5% of total UK food service sector sales. These contracts result in the three million daily meals produced for hospital patients, school and nursery children, prison inmates, the armed services, care home patients and workers across government departments.168 Following the example of the construction sector presented in this submission, the public sector must work with Unite to ensure procurement is used to proactively promote and defend the highest standards in the FDA sector. This must include ensuring ethical supply lines throughout food production, exposing and eradicating modern slavery while promoting union-approved levels of pay and conditions for FDA workers. Working rights and worker voice: There is an urgent need for a more amplified worker voice in FDA, particularly when contrasted with industrial sectors where collective bargaining is widespread and trade unions are involved at all levels of the industrial process. It is no coincidence that the Gangmaster Licensing Authority (now the GLAA) arose because of abuses in FDA. A strong worker voice in FDA not only protects the jobs, pay, conditions and rights of workers themselves but also helps ensure food safety and standards for all; they will be the first to notice problems with raw materials or livestock that if left unheeded will have an impact on consumers. Industrial strategy must give the GLAA the resources it needs to combat exploitation and modern slavery, but this must be just the start. Unite is calling for sectoral collective

167

Food and Drink Federation, URL 168

New plan for food procurement encourages UK government to buy local, The Guardian, URL

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bargaining for the sector – as is common in countries ranging from France, to Germany, Scandinavia and across central and eastern Europe.169 Sectoral collective bargaining should underpin a sector wide institutional framework which must include reintroduction of the Agricultural Wages Board. The AWB was abolished in England in 2013 after sixty years. The board set minimum pay and conditions for over 140,000 farm workers and provided a benchmark for thousands more, including estate workers and equestrian staff. A Unite survey of agricultural workers found that less than a year after the AWB in England was abolished 44% of respondents had not received a pay rise — a rise every worker would have received had the board existed. For those who did receive a pay increase, the average rise of 2% was lower than the wider economy median. Similarly many respondents reported that entitlements such as sick pay had been withdrawn. Some workers reported having to work more hours before their overtime rate kicked in, and many breaches of TUPE were exposed.170 Unite is clear that the abolition of the AWB in England contributed to this highly profitable sector becoming structurally reliant on low waged labour and unregulated working conditions. Corporate governance: FDA is worth at least £21.5 billion to the UK economy and includes some of the largest companies on the planet. Of the top 20 ‘most-chosen’ consumer brands, half are food and drink companies171, most of which have a presence in the UK and employ Unite members. While 80% of food and drink firms are SMEs, the sector relies on consolidation to grow, compared with other sectors that grow through investment in technology and skills, so the pace of mergers and acquisitions in FDA is relentless. This means that issues of takeovers, along with the potential for monopolisation of the sector, raise the issue of national food security. Too frequently, Unite members are not consulted about major changes to the ownership of the companies they work for, most recently in the failed predatory takeover bid by Kraft Heinz of Unilever – both companies employing thousands of Unite members – illustrating the weakness of current corporate governance structures. Ownership is also, increasingly, by non-UK companies. UK ownership of the top 150 UK brands fell by a fifth in a decade. The appetite of overseas investors for UK food and drink companies is rising; 2016 saw the highest level of activity in three years, and the number of deals involving overseas investors increased to a third of all transactions in 2016, compared with one in five in 2014. Worker voice where ownership is remote becomes more challenging and the role of global trade union networks is essential for unions such as Unite to maintain worker voice. Automation: Though investment in technology and skills is lower than in other sectors, automation still has a major impact on FDA jobs. In one example, a confectionery factory that employed 14,000 workers 15 years ago now runs with fewer than 600.

169

Industrial Relations in Agriculture, EurWork, 2017, URL 170

Unite Submission, Scottish Agricultural Wages Board – Scottish Government Consultation July 2015, URL 171

A Global Ranking of the Most Chosen Consumer Brands, Kantar World Panel, URL

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Unite negotiates with employers in the industry to mitigate the impact of automation on our members, to retain as many jobs as possible, and to argue for better skills and training for a workforce facing greater technological demands. The skills required in a more highly-automated industry need a commitment to major investment from both employers and the Government for FDA sectors to be at the forefront of technological advances, but also to keep FDA jobs in the UK. Skills: This need for investment in skills and training is greater for a sector that is now facing Brexit. The FDA sector is potentially most affected by Brexit for a number of reasons; in the words of one leading academic, food will be the deal-breaker in the Brexit negotiations. This is not least because of the UK’s weak food security, in terms of our self-sufficiency in food. The UK’s food imports are worth £39 billion a year, and a third of our food is supplied by the EU. The devaluation of sterling since the referendum has quickly fed through to the industry to the cost of raw materials imports such as coffee and cocoa. The rising cost of imports has in turn contributed to increases in the cost of living, affecting every household in the UK, and poorer households disproportionately. The impact on imports has exposed the UK’s dependency on imported food. The UK food industry is also exposed to the impact of Brexit because it is built on a low labour cost model, and has relied on migrant workers from around the world, many of whom are Unite members, and in recent years from the EU, particularly the more recent accession countries from Eastern Europe. In the wake of the referendum vote workers from these countries have left the UK, in response in part to increasing racism but also to the fall in the value of their UK pay because of sterling’s fall. So FDA employers, and in particular sub-sectors such as agriculture and horticulture, face an acute labour shortage. An additional exposure for agriculture is the question mark hanging over the £3 billion annual subsidies from the EU, which have been ring-fenced by the Government until 2020 but with no promises of their continuation after that point. Leaving the EU under a ‘hard Brexit’ and operating under WTO rules and its associated tariffs has the potential to eradicate entire parts of the FDA sector, such as livestock trade. It is vital that the Government ensures continued investment in the FDA sector to retain or replicate these vital subsidies. Free-trade agreements after Brexit may also dramatically alter the UK food landscape; a deal with the US, for example, may mean having to accept products produced under a US regulatory framework that UK consumers do not want – chlorine-bleached poultry, hormone-treated beef, and products containing GM – and the watering down of standards that will undermine food safety, amongst other impacts. Finally, EU legislation has underpinned workers’ rights, environmental protection, food safety, animal welfare and consumer rights, so if the Government decides to scrap these, the food sector will become more dangerous for workers, consumers, the environment and the very natural resources on which the sustainability of the food sector depends. Six pillars to mitigate Brexit: Unite in FDA is therefore arguing that to mitigate the impact of Brexit the Government must retain or replicate the existing regulatory framework. The Government’s industrial strategy must recognise FDA as a strategically vital sector for the economy, support investment, and positive procurement. Investment is also needed in skills and training, not only to meet the technological challenges of a dynamic sector, but also to retain a food industry in the UK.

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The failure of industry self-regulation, epitomised by the impact on pay following the abolition of the Agricultural Wages Board in England, threatens to be compounded by Brexit. In response an industrial strategy must bring together all sides of industry, including trade unions, to oversee a far-sighted and future-proofed food strategy based on a well-funded and technologically agile FDA sector. Such a strategy must be underpinned by sector-wide support for a skilled workforce. As the trade union representing workers across the whole of the food chain, Unite must be involved at all levels of the development of a UK food strategy. The issues facing the FDA sector are discussed in more detail in Unite’s From Plough to Plate.172

172

From Plough to Plate, Unite the Union, 2015, URL

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Brexit and trade agreements: Unite recognises the referendum result on June 23rd and accepts that the nature of the relationship between the UK and the European Union will now change. The question however is on whose terms that change will happen. Unite refutes the suggestion that the result gives the Government any mandate for so-called ‘Hard Brexit’ which would be an act of ideologically motivated economic vandalism for which working people would be expected to pay. Instead, Unite sees its task as ensuring that trade union values are at the heart of post-Brexit Britain. This means secure work, decent pay and a strong voice for working people. We will campaign for the Government and employers to take the necessary steps to mitigate the impact of Brexit. In the short term, the problem is uncertainty. The result of this uncertainty is also manifest in workplaces across sectors. Unite is monitoring any attempts by employers to exploit this uncertainty or use Brexit as political cover to undermine conditions or cut jobs. For example, the energy giant SSE and public services supplier Veolia have both attempted to end negotiations on holiday pay entitlement. In the case of SSE, this followed over a year of negotiations. Following the EU referendum the employer immediately moved to rescind the agreement, a clear example of Brexit being used as a smokescreen. In the longer term, the greatest threat to industry is the question mark which now hangs over Britain’s trading status with Europe and the danger this uncertainty poses to investment. Following the referendum 53% of manufacturers reported holding or cancelling investment plans if they couldn’t fund it themselves.173 The EU is the largest source of inward investment in UK. In 2013, EU countries accounted for £453 billion worth of inward FDI (foreign direct investment); that’s 46% of the total. This investment is incredibly sensitive to uncertainty. History shows the biggest hit to investment in the UK’s modern history came in 1992, when Britain exited the Exchange Rate Mechanism, while the biggest boost resulted from the UK joining the Single Market. This is because investment is reliant on market confidence. The Purchasing Managers Index (PMI), which tracks purchasing decisions, demonstrates the impact of ‘Brexit’ on confidence. Following the referendum result the PMI experienced its biggest drop since 2009. In the case of the automotive sector, many investment decisions have already been made for the production of new car models in 2017 and 2018, including the Nissan Juke and the Toyota Auris. However, the investment decisions for cars which will be manufactured after 2019 are yet to be made. This includes the Honda Civic, which will begin production in 2023, and the Range Rover Sport which will enter production in 2020. Those investment decisions will be made in what looks to be at least a two-year window of uncertainty. Car makers will simply ask: Will the UK have access to the Single Market? Is investing in UK production worth the risk?

173

Risk to investment and growth as manufacturers remain 'reluctant' to borrow from banks, EEF, August 2016, URL

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This is why Unite has argued for tariff-free access to the Single Market to be a central aim of the Brexit negotiations. Single market access: It is clear that following forty years of integration tariff-free access to the Single Market is of vital importance to the employment of many thousands of our members. This is especially true of the manufacturing, agriculture and financial sectors, which have benefitted from the lack of cross-border tariffs. Many of our members’ largest employers, from HSBC to Airbus, BMW, Astra-Zeneca or Unilever, see their presence in the UK as ‘European Hubs.’ Similarly, pending investment decisions for major manufacturers such as Vauxhall, Nissan, Siemens and Honda, are reliant on the UK retaining tariff-free access to the Single Market and the 500 million consumers therein. For both manufacturing and transport, the Single Market’s ‘frictionless supply chain’ is a crucial part of modern industry. The automotive industry is indicative of the wider manufacturing base, with the percentage of UK parts in British-built cars standing at 41%. Firms such as Bentley and BMW, for example, will transfer a single component across national borders multiple times in its journey from creation to inspection and assembly. This relationship within the UK-Europe components supply chain is two-way. Two-thirds of the £4 billion of motor components that are exported from the UK goes to the EU, while the vast majority of materials that go into British-built cars are imported.

174

Taking the aerospace and automotive industries as examples, while final products are assembled in the UK, the component parts will travel across the Channel multiple times through this process. Fuel injectors, a vital component for lorries, are manufactured in the UK by US firm Delphi. This component uses steel from Europe, which is brought into the UK to be machined, before going to Germany for special heat treatment. The injector is then assembled at Delphi’s UK plant in Stonehouse, Gloucestershire, before being sold on to truck manufactures in Sweden, France and Germany. Ford Europe manufactures engines for models including the Fiesta in Wales. This component is then sent to Cologne, Germany, for assembly before being sold back into the UK. In 2016 the Fiesta was the UK’s bestselling car model. The Airbus factory in Broughton North Wales manufactures aircraft wings. The component parts are sourced from across the Single Market and once completed the wings are shipped, flown and driven to sites in Spain and Germany, and then onto France for final assembly. Importantly, these supply chains are ‘frictionless’ allowing the development of so-called ‘Just in Time’ supply chains which operate in a window measured in hours. For example, Jaguar Land Rover and Nissan, the UK’s two largest carmakers, hold only two hours’ of stock of some items at their sites in order to minimise inventories and save on costs. This has an inevitable impact on transport workers for whom the logistical impact of exiting the Single Market and the EU Customs Union would be equally damaging. For international road haulage, the Single Market is fully integrated for all EU operators. With an International Operators Licence there are no border checks, permits required or quota

174

UK car industry fears effects of Brexit tariffs on supply chain, Financial Times, October 2016, URL

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limitations. Any operator with an international licence from any EU State can undertake international road transport between any two EU States without limitations. EU rules underpin much of the regulatory regime for the operation of the commercial road haulage sector. This includes rules relating to market access, operator licensing, transport manager qualifications, driver licensing and qualifications, drivers hours and tachograph standards, vehicle standards and roadworthiness. There is a mixture of EU Regulation and EU Directives that have been woven into UK legal frameworks. There is significant cooperation between EU enforcement agencies that is underpinned by EU regulations and Directives.175 It should also be noted that on the UK side of the Channel many of the gateway ports, such as Felixstowe, Tilbury and Dover simply do not have the road or rail infrastructure required for the prolonged border checks and inspections which would result from the UK leaving the Customs Union. State aid: government support and public ownership Unite is clear that any serious industrial strategy must be interventionist and marshal all options at a government’s disposal. This must not rule out public ownership, or other forms of direct government support for industries and infrastructure. When the UK leaves the European Union existing Single Market rules preventing state aid will no longer apply. Unite is clear that this is an opportunity any government must use to the full, particularly in defence of vital foundation industries such as steel. Under European rules there are four tests to control state aid. If:

1) The assistance is granted by the state or through state resources; 2) It favours certain undertakings or the production of certain goods; 3) It distorts or threatens to distort competition; 4) It affects trade between Member States.

If the case for state aid meets these four tests it would be considered illegal and would be referred to the European Commission.176 It is clear that where the political will has existed, European governments have sought ways to temporarily manoeuvre around this barrier. For example, in Italy the state cited EU environmental concerns in order to directly support the Ilva steel mill in Taranto. In Belgium the Government provided €211 million in direct aid to the Duferco steel mills in Wallonia. Similarly the German government expanded the short-time working scheme (Kurzarbeit) in 2008.177 Significantly, this measure provides support for workers, not to employers, and as part of the welfare system is exempt from EU State Aid rules. In the UK the bank bailout of 2010, which cost the taxpayer £850 billion, stands out as the precedent-setting example of government intervention in the UK’s modern era. The irony of having to bailout a financial industry which had been promoted for decades to replace a manufacturing sector deemed too reliant on state support is not lost on Unite members. Government must work in partnership with the trade unions and industry to set criteria for

175

House of Lords EU Internal Market Sub-Committee Request for Evidence from the Road Haulage Association on trade in nonfinancial services, Road Haulage Association, URL 176

State Aid Manuel, Department of Business, Innovation and Skills, UK Government, 2015, URL 177

Opel cuts hours as UK demand hit by Brexit, Market Watch, 2016, URL

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direct support. As mentioned earlier, Unite has proposed four tests: Strategic Impact, National Economic Security, Community Security, and Regional Impact. All new and creative methods of directly supporting industry and the workers who rely on them must be explored. Nevertheless, nationalisation, state assistance and subsidisation must be retained within the Government’s industrial toolkit. Transport: challenging deregulation and privatisation Unite opposes laws which compel the privatisation of public transport, particularly EU directives which seek to increase competition in tendering. For example, the "Fourth Railway Package" is intended to remove barriers to privately-owned train operators providing services across Europe by 2020, with competitive tendering for contracts to "become the norm" by 2023.178 In contrast, Unite supports bringing the railways into public ownership. Similarly Unite sees the port services regulation, commonly known as 'Ports Package III' as legally enforced competition which drives privatisation and precipitates a ‘race to the bottom’. The directive is clear in its intention of: “opening up national freight and passenger markets to cross-border competition.” Rather than privatisation, UK ports require increased infrastructure investment. This is especially true if the UK is outside of either the Single Market or the Customs Union, increasing demand beyond the capacity of docks, road and rail links. Unite notes that successive UK governments have sought to privatise and deregulate transport industries far faster than any requirements under EU law. Workers’ rights: Unite calls for the ‘grandfathering’ of workers’ rights underpinned by EU law into UK law at the point of Brexit. This is a call which has been echoed by trade federations including the EEF and the Chemical Industries Association. Unite is deeply concerned that the Government’s ‘Great Repeal Bill’ will not provide adequate protection of EU rights, once transferred into UK law. Such rights must be protected by more than a parliamentary majority to legislate against them. Unite recommends that the same parliamentary approach is adopted as the Coalition Government when proposing the Fixed Term Parliament Act 2011, meaning that a two-thirds majority of Parliament would be required to abolish any workers’ rights legislation. Unite sees existing EU law as the minimum standard of protections, many of which must be significantly improved. For example, Unite calls for an end to the so-called ‘Swedish Derogation’ which presents employers and agencies with a loophole to exploit agency workers. The UK can address this loophole and EU-level decisions made in the Viking, Laval, Rüffert legal cases.

In the Viking and Laval cases, the European Court of Justice (ECJ) ruled that the right of transport workers to take industrial action constitutes a restriction of the freedom of movement by impacting cross-border services. Unite notes that this case, which involved a Baltic ferry operator, is was used by Southern Rail in legal action against strike action by railway workers.179

178

EU Remain vote 'won't stop Labour rail plans', BBC News, URL 179

Southern to argue strikes go against EU free-movement rights, Financial Times, 2 December 2016, URL

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In the Laval case, the ECJ ruled that industrial action is in breach of the freedom to provide services if it is aimed at imposing terms and conditions on foreign undertakings which go beyond the minimum established by national law. Similarly, in the Rüffert case, the ECJ ruling restricts the scope of social clauses in public procurement contracts to labour standards established by law or universally applicable collective agreements. In both the Laval and the Rüffert cases, the ECJ refers to Directive 96/71 on the posting of workers, according to Article 3, ‘only terms and conditions established by law, or by universally accepted collective agreements, apply to posted workers’. Outside the EU there is the opportunity to address these detrimental decisions and to enhance the UK’s employment rights framework to promote collective bargaining and stronger employment laws. Migration: freedom of movement Unite notes that it is a fundamental position of the European Union that the movement of goods, capital and services cannot be separated from the movement of people. This will be a key issue in the upcoming negotiations, and may determine the future trading model the UK government adopts. Unite notes that the freedom of movement, as it exists within the European Union, is a red line issue for membership of either the Single Market or the EEA. It is not, as Turkey represents, a red line for tariff-free ‘access’ to the Single Market. Unite reiterates opposition to the type of migration controls advocated by many within the Conservative Party.180 While migrant workers are a vital component of the workforce for sectors such as the health service, it is not contradictory to say that the exploitation of freedom of movement by employers is an issue of central importance to Unite members; particularly in areas such as hotel services and agriculture. It is clear that many employers use freedom of movement to advance a flexible labour market model, ensuring a plentiful supply of cheap labour for jobs which cannot be offshored to cheaper labour markets elsewhere. Unite believes it is time to shift away from talk of ‘freedom of movement’ versus ‘border controls,’ but instead focus on ‘safeguards’. This must include safeguards for communities, workers, and industries needing labour. At the core of this must be the reassertion of collective bargaining and trade union protections. For example, such safeguards must include equal pay provision between workers irrespective of employment status or country of origin. Unite proposes that any employer wishing to recruit labour from abroad should only be able to do so if they are either covered by a proper trade union agreement, or by sectoral collective bargaining. This would arrest the downward pressure on wages and conditions caused by the ‘race-to-the-bottom’ culture. Unite notes countless precedents for sectoral collective bargaining agreements, which are common in countries such as Germany and Sweden. Unite notes that in Switzerland, a

180

Theresa May refuses to back down on Brexit immigration control, The Independent, 6 November 2016, URL

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country also convulsed by the result of a referendum, labour law provides for sectoral collective bargaining for sectors most impacted by ‘wage cutting.’ This includes agriculture, the hotel and hospitality sectors.181 Unite also reiterates support for EU citizens already living and working in the UK, who must have the right to remain.182 Unite will not accept the Government using the fate of migrant workers, or British workers in Europe, as a bargaining chip. Further analysis of the alternative options to EU membership from Unite can be found here.183

Trade agreements: The Government’s Green Paper suggests that new trade deals are central to the Government’s industrial strategy plans.184 It is also clear that the Conservative Government sees a Free Trade Deal with the United States as a priority, this is evidenced not only by Theresa May’s visit to Washington DC, but by the new trade missions established in the US by the Department for International Trade. Unite is clear that any trade deal with Donald Trump will be driven by that administration’s protectionist ‘America First’ philosophy with negotiations reduced to a zero-sum contest. The Trump administration has withdrawn the United States from the Trans-Pacific Partnership (TPP), and has announced plans to review the North American Free Trade Agreement (NAFTA).185 Transatlantic Trade and Investment Partnership (TTIP) The Transatlantic Trade and Investment Partnership (TTIP) has been negotiated between the U.S. and EU since 2013. TTIP seeks to create a free trade zone between all EU member states and the United States, in the process lowering industrial, environmental and labour standards down to U.S. levels. The deal would give U.S. multinationals near unrestricted access to the European market, creating an existential threat to public services. The most controversial aspect of TTIP is the creation of an international tribunal known as Investor-state dispute settlement (ISDS), which allows U.S. multinationals to sue European governments. For example, if standards regulations favoured British, over American manufacturing a U.S. manufacturer could threaten to sue for compensation, effectively forcing the Government to lower standards to U.S. levels. Unless specific services are exempted, ISDS would prevent national governments from ever bringing privatised public services back into public ownership. This is why Unite supported the campaign to exempt the NHS from the trade deal, and why we join trade unions across the U.S. and Europe in opposing this deal. North American Free Trade Agreement (NAFTA) It has been suggested that the Trump administration may use the renegotiation of NAFTA to invite the UK to join the free trade area. U.S. Senator Tom Cotton (Republican, Arkansas),

181

Collective Bargaining Framework: Switzerland, URL 182

Len McCluskey, Britain at the Crossroads, Class Conference, November 2016, URL 183

Brexit on our Terms: Unite Strategy to Defend Manufacturing Jobs Investment and Employment Rights, Unite the Union, October 2016, URL 184

‘Building future trading relationships’, Building our Industrial Strategy, UK Government Green Paper, January 2017, URL 185

Trump wants to speed up NAFTA talks, Business Insider, February 2017 URL

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an influential figure in U.S. foreign policy has already suggested: “In the wake of the Brexit vote, we should at least consider inviting Great Britain to join NAFTA.”186 This twenty-three old free trade deal between the U.S., Canada and Mexico set the precedent for deals such as TTIP by creating a free trade area across North America with devastating consequences for manufacturing and trade union rights. The agreement allowed U.S. firms to offshore manufacturing to Mexico, exploiting cheap labour while selling products back to the United States. While offshoring resulted in over 845,000 job losses in U.S. manufacturing alone, the threat of offshoring was used to undercut the bargaining power of American workers, leading to attacks on trade unions and workers’ rights.187 NAFTA also reveals the danger of the secret tribunal known as ISDS. Since 1995 Canada has become the most sued developed country in the world, facing 35 of the 77 NAFTA investor-claims, to the tune of over $200 million.188 In contrast the U.S. government has won 11 of its cases and never lost a NAFTA investor-state case or paid any compensation. This shows the extreme danger of entering into a free trade deal which contains ISDS and a disproportionate power balance in favour of the United States. Comprehensive Economic and Trade Agreement (CETA) Through the global union, Workers Uniting, Unite works closely with the United Steelworkers (USW). The experience of Canadian trade unionists opposing the CETA trade deal is illustrative of the problems UK workers would face from a similar free trade agreement with the European Union or the North American countries covered by NAFTA. “In Canada we have 30 years of experience with so called trade agreements like the CETA – and we have lost hundreds of thousands of manufacturing jobs. Agreements like CETA provide all the rights and power to investors and corporations at the expense of governments and public services. This means that investment and jobs go to the lowest cost jurisdiction, and domestic governments are powerless to develop a meaningful domestic manufacturing strategy.” Ken Neumann, United Steelworkers, National Director for Canada189 The experience of USW shows that deals like CETA are used to pit the interests of one economic sector against the other. By signing CETA the Canadian government gave European manufacturers a competitive advantage over domestic producers, effectively locking Canada into the current trade pattern. In return the CETA makes the country more reliant on exports of extractive industries such as mining, oil and gas. This is no coincidence. Through extensive lobbying the mining industry had a strong relationship with the Conservative government which initiated and formally presented CETA, having previously created trade deals with Peru and Mongolia expressly to advance mining interests190. Through CETA, the Canadian government sought to trade the interests of the extraction industry over manufacturing, a bargain which will cost Canada 150,000 jobs. This sets a worrying precedent for the UK, where the Government may seek to strike a similar 'devil’s bargain' by trading the interests of its close ally, the City of London against manufacturing.

186

Tom Cotton (R), Aspen Ideas Festival, July 2016 187

NAFTA’s 20-Year Legacy and the Fate of the Trans-Pacific Partnership, Public Citizen’s Global Trade Watch, 2014 188

Cases Filed Against the Government of Canada, NAFTA – Chapter 11 – Investment, June 2016 189

Ken Neumann, CETA, Brexit on Our Terms, Unite the Union, September 2016 190

Canada-Mongolia Foreign Investment Promotion and Protection Agreement (FIPA) Negotiations, Global Affairs Canada

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For example, ceding to City demands for 'passporting rights'191 for London's financial products into the European Market in exchange for tariffs or other restrictions on manufacturing. While in contrast to NAFTA and TTIP, CETA commits both the EU and Canada to upholding worker’s rights, there are no sanctions if these rights are violated, effectively making this provision worthless.192 Trade defence mechanisms: The European Union has a series of trade defence mechanisms in place which regulate imports and exports, and prevent unfair trading practises. It is vital that the UK seeks to retain those that remain useful. The most important of which is anti-dumping regulation. This seeks to prevent goods being sold for a lower price than the point of production in order to artificially undercut manufacturers in the importing market. The most high profile example is the devastating impact of dumped Chinese steel on the UK steel industry; however, dumping is also a major area of concern for the tyre, paper, ceramic and glass industries. It is for this reason that Unite join the TUC, ETUC and American and Canadian trade unions in opposing ‘Market Status’ for China. The UK must reject the any assertion that granting such status is the price to pay for a new trade deal with China post-Brexit. Strong anti-dumping protections are vital for UK manufacturers, ranging from steel production to tyres, ceramics, chemicals and consumer goods. Such protection defends jobs and manufacturing standards. Investor-state dispute settlement (ISDS) tribunal In the Government’s White Paper it was confirmed that the negotiations would seek to end jurisdiction of the Court of Justice of the European Union (CJEU).193 This is significant for any new trade deal as this shows there will be a need for a new form of dispute resolution. The UK government must not enter into a bilateral trade deal which contains ISDS or similarly secretive tribunals which give power to corporations over democratic governments. The example of NAFTA shows the danger that these tribunals pose. After signing the deal Canada became the most sued developed nation on earth. The constant threat of legal challenges seriously undermines a government’s right to govern, resulting in a chilling effect. NAFTA forced the Canadian government to adopt such a cautious approach to legislation that all new laws and any changes to existing laws are now vetted by trade experts to ensure they are not challengeable under ISDS rules. Both TTIP and CETA are opposed by trade unions for containing ISDS tribunals and it is vital that any new trade deal does not follow suit. Any legitimate grievances between investors and national governments must be held in open court, with the right to due process and appeal. Trade deals must not become a vehicle for corporations to hold power over democratic governments.

191

Banks on edge over UK passporting options, Reuters, 29 June 2016 192

CETA Briefing, TUC, October 2015 193

The United Kingdom’s exit from and new partnership with the European Union White Paper, URL

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Workers’ rights: In contrast to NAFTA, CETA commits both the EU and Canada to upholding workers’ rights, there are no sanctions if these rights are violated, effectively making this provision worthless.194 To avoid any levelling down of workers’ rights, any new bilateral trade deals must, as a minimum, adhere to the International Labour Organisation (ILO) conventions. Unlike CETA, any new trade deals must contain sanctions if workers’ rights are violated. Unite demands the retention of hard won EU-wide employment rights and a level playing field with the EU.

194

CETA Briefing, TUC, October 2015

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Conclusion: summary of policy suggestions

Investment • A new Foundation Industries Commission, involving trade unions and industry, to

oversee direct support for foundation industries. • The creation of a National Investment Bank, providing national and regional support • A short-time working scheme, modelled on the German kurzarbeit, to support

manufacturing workers • A house building programme including council housing • A balanced energy policy to support a ‘just transition’ to low carbon energy

production • A contingency fund to provide support for communities impacted by offshoring • Expansion of the Migration Impact Fund • Explore protections to prevent offshoring • A National Decommissioning Strategy involving trade unions and the governments of

Westminster and Holyrood.

Positive procurement

• An expanded Social Value Act to instruct all public bodies to consider social, economic role of procurement.

• Goals and regulation for public bodies to use procurement to advance social and equalities agendas. This should include a complete ban on companies using blacklisting or zero hour contracts.

• A Defence Industrial Strategy which includes a balanced scorecard to consider UK employment, industrial and economic factors when awarding MOD contracts.

Skills: reskilling and apprenticeships

• Dedicated investment in high quality apprenticeships • Professionals careers advice to be reintroduced to all secondary schools and FE

institutions • Trade union involvement on national skills bodies such as the Institute for

Apprenticeships • Regulation to prevent ‘bogus’ apprenticeship schemes • A co-ordinated national ‘talent retention scheme’ across and between sectors.

Automation: the fourth industrial revolution

• A Future of Automation Commission, involving trade unions, employers, research councils and academics

• Extension of trade union bargaining rights, including sectoral bargaining, to include the introduction of new technology

• Investigate the potential for a shorter working week and more flexible working hours.

Corporate governance

• Directly elected worker representation on unitary boards

• Reform of Company Act 2006 to end short-termism • Publishing of pay ratios and equal pay audits • Pay audits to be monitored by the Equality and Human Rights Commission to ensure

compliance. • The introduction of a 10:1 pay ratio • Abolition of quarterly reporting

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• Disclosure of company supply chains • A Mergers and Takeovers Commission • Reform to the Takeover Code • Creation of a General Anti-Avoidance Principle to strengthen UK tax law.

Working rights and worker voice

• Abolition of zero hour contracts and ‘bogus self-employment’ • Abolition of the ‘Swedish Derogation’ • Lifting the universal level of employment rights to protect all those in work • Support for sectoral collective bargaining • Restore ACAS duty to promote collective bargaining • Repeal of the Trade Union Act 2016 and all previous ‘anti-union’ legislation from

1979 onwards, including restrictions to secondary picketing • Legislating the ‘Right to Access’ for trade unions • Increased resources to the Gangmasters and Labour Abuse Authority. • The creation of sector partnership groups involving trade unions

Brexit and trade agreements

• Tariff-free access to the European Single Market • The grandfathering of all EU based employment rights, environmental standards and

protections into UK law. • Preventing the unravelling of UK employment law via statutory instrument by

requiring a two-thirds majority in Parliament to repeal employment legislation.

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