Managing Discontent

Ralph Miliband observed that the Labour Party’s role was ‘the management of discontent’, keeping it ‘within safe bounds’. From an anti-communist perspective, the welfare state was created as a bulwark against more radical ideas. While Labour’s internal politics are often rancorous, Marxists and centrist social democrats tend to agree on its purpose. The Labour Party is the connective tissue between the British trade union movement and the state. Its institutional legitimacy depends on its ability to deliver industrial peace and moderate social progress.

During the cost of living strikes of 2022 and 2023, more than five million working days were lost. It was the biggest wave of industrial action since the late 1980s. Demand for wage recovery was central to Labour’s anaemic victory in last summer’s general election. At first, Keir Starmer’s government seemed to recognise this. The junior doctors’ dispute was settled in September with an average pay rise of 22 per cent over two years. Much of the rest of the public sector got between 5 and 6 per cent, in line with pay review bodies’ recommendations.

In December, however, the government announced that teachers, civil servants and NHS staff will this year be offered only 2.8 per cent, barely above inflation. A month earlier, speaking at Mansion House, the chancellor, Rachel Reeves, had pledged to lift the cap on bankers’ bonuses: financial sector regulation after the 2007-8 crash had ‘gone too far’, she said. Meanwhile, she has warned ministers that any further public sector pay increases will be funded by cuts to frontline services. The Royal College of Nursing, National Education Union and British Medical Association all indicated they would reject the 2.8 per cent offer. To press ahead, Starmer and Reeves must be willing to return to the disruption that marred Rishi Sunak’s premiership.

A conscious embrace of industrial unrest would mark a departure from the traditions of the Labour right, for whom the question has always been how, rather than whether, to control the unions. When Harold Wilson’s cabinet debated the White Paper In Place Of Strife in 1969, James Callaghan opposed the plans to impose legal restrictions on trade unions and defended the model of voluntary wage restraint. Eventually, Margaret Thatcher’s anti-union laws seemed to settle the question. The Labour leadership adapted comfortably, with Tony Blair boasting in 1998 that he would ‘leave British law the most restrictive on trade unions in the Western world’.

Labour was elected in 2024 promising the biggest expansion in workers’ rights in a generation. The Employment Rights Bill was published with little fanfare in October. It will remove qualifying periods for parental leave, sick pay and unfair dismissal rights, and introduce conditional rights to regular hours and flexible working. Employers will find it harder to fire and rehire. The Minimum Service Levels Act 2022, which sought to ban effective strike action across much of the public sector and on the railways, will be repealed, as will the 2016 Trade Union Act, which has removed industrial leverage from millions of workers by requiring a minimum 50 per cent turnout in strike ballots. This will be the first time since the 1970s that anti-union laws have been rolled back.

By quietly promising to unshackle the unions, Starmer appeared to signal a return to a more consensual approach to industrial relations, while leaving unchanged the legal regime introduced under Thatcher. The Labour leadership evidently recognises that an improvement in workers’ rights is necessary after almost half a century of deregulation. Perhaps, despite its pro-business posturing, the government is also responding to the polls that show trade unions with a consistently positive net approval rating. No major political figure can claim the same.

Labour faces electoral threats from all sides, including its left. It won its large parliamentary majority with just 33.7 per cent of the popular vote, on a turnout of only 59.7 per cent. The Greens made significant inroads and can expect their support to grow. Starmer’s initial moves to incorporate the trade union agenda into government policy are shrewd in that they aim to rein in the left’s most powerful institutions. Bennism drew its strength from a moment of industrial militancy. Corbynism emerged from the anti-austerity movement, which coalesced around the 2011-12 public sector pensions dispute. Without a strike wave, social movements will be smaller and the political left will find it harder to regroup.

Yet Starmer’s strategy of modest progress and alliance-building could be scuppered by the fiscal hawks in his government. Since 2008, British workers have suffered the worst wage deflation in modern history. Without significant progress on pay, even trade union leaders inclined to support Starmer will find it difficult to avoid industrial action. As Callaghan learned to his cost in the period that culminated in the Winter of Discontent, a model of negotiated industrial peace only works if government policy keeps pace with working-class demands.

It does not help that many of Labour’s key advisers – both internal and in the media – inhabit an endless cycle of re-enactment. As they see it, after the crushing of the left (Neil Kinnock’s expulsion of Militant; Starmer’s purge of Corbynism) comes a regime of broad economic continuity with marginal social progress, as New Labour delivered in the late 1990s and early 2000s. But unlike Blair, Starmer cannot rely on a stable global order and secular economic growth to boost wages. Unlike New Labour, Starmer faces a trade union movement not freshly defeated by Thatcher but newly resurgent in response to an ongoing cost of living crisis.

This is already one of Britain’s most unpopular governments. The public is angry with the political and economic elite, and impatient with Labour’s lack of progress on living standards. It’s a bad time for a Labour government to pick a fight with workers – as well as pensioners and benefit claimants – while failing to take on runaway corporate profits, landlords and energy companies. Yet there is a section of the Labour right that is pushing the party to abandon its role as the keeper of industrial peace. If that happens, it won’t be Labour that benefits.