Lord Mandelson’s Advice on Trade Unions and Economic Policy for Keir Starmer

Lord Peter Mandelson, a prominent architect of New Labour, has offered advice to Sir Keir Starmer, urging him not to grant excessive power to trade unions if Labour wins the next election. In Lord Mandelson’s view, a Labour government should steer clear of imposing “rigidities” that could discourage private investment in critical industries. He believes that while private investors are vital for boosting the economy, the party must adopt a more assertive approach to shaping industrial growth compared to New Labour.

Lord Mandelson’s critique of the Blair government’s reluctance to embrace an industrial strategy in the 1990s is a significant aspect of his advice. He contends that at that time, the government was hesitant to endorse industrial planning, fearing it contradicted the principles of a market-driven economy. However, he acknowledges that thinking has evolved since then, with a growing acknowledgment of the state’s role in securing employment in emerging industries.

Lord Mandelson, who served as a cabinet minister in both Tony Blair and Gordon Brown’s governments, played a pivotal role in steering the Labour Party toward the political center during Blair’s leadership. In the present day, he chairs a lobbying company and serves as an informal adviser to Sir Keir Starmer.

The Labour Party’s efforts to revamp the economy and enhance skills are taking center stage at their conference in Liverpool. This conference may be the last before the next general election, expected to take place next year. The party is drawing inspiration from the extensive support for green industries provided by US President Joe Biden to rebuild the UK’s “industrial foundations.” Furthermore, Labour has unveiled proposals to fortify employment rights, particularly for workers in the gig economy. These initiatives include enabling electronic voting for strikes and facilitating sector-based negotiations between trade unions and employers through “fair pay agreements.”

Lord Mandelson acknowledges that the UK cannot match the scale of investment seen in the United States but believes it’s worthwhile to adapt and adopt elements of Biden’s approach. He contends that implementing an industrial strategy should be one of Labour’s top priorities if they come into power, emphasizing that New Labour’s approach of “hands-off” would be insufficient. The Blair government, in his view, only fully embraced the idea post the 2008 financial crash when it should have done so in 1997.

However, he also cautions that a future Labour government would inherit a more fragile economy compared to the 1990s. While there may be opportunities for borrowing to stimulate the economy, Lord Mandelson emphasizes that private sector investment will be paramount.

In particular, he advises Labour to avoid reinstating trade union rights that might create labor market inflexibilities. Lord Mandelson expresses concern about granting extensive strike funds, a concern attributed to figures like Len McCluskey and Sharon Graham, former and current leaders of Unite, one of Labour’s significant union supporters. He warns that such a move could deter investment and impair Britain’s attractiveness to investors.

Lord Mandelson’s advice underscores the intricacies and challenges involved in crafting economic and labor policies that align with Labour’s values and aspirations while also maintaining a competitive and attractive business environment.