'Neoliberals have long persuaded people to believe that the law offers justice and fairness, but they rarely talk about how laws are shaped by wealth and power'
Prem Sikka is an Emeritus Professor of Accounting at the University of Essex and the University of Sheffield, a Labour member of the House of Lords, and Contributing Editor at Left Foot Forward.
A vast majority of British citizens believe in the ‘rule of law’ and for good reasons as it forms the basis of social order and protection of human, employment and property rights. The state is the ultimate enforcer of law, but it is increasingly producing a social order that privileges the interests of big business and the rich.
The UK government has scrapped the post-2008 banking crash cap on bankers’ bonuses to enable them to earn more. The cap was introduced to check predatory practices which boosted bankers’ performance related pay but caused banks to crash. The state provided £1,162bn of financial support to bailout banks. Last week, Chancellor Jeremy Hunt announced a 30-point plan to deregulate the financial sector and repeal many of the safeguards introduced after the 2007-08 crash, including the need for a higher capital base. It is estimated that the lower capital requirements, known as the Solvency II regime, for insurers would release around £100bn of capital and pave the way for higher shareholder returns, and performance-related executive pay.
In sharp contrast, the law is being used to impoverish workers and abolish hard-won social rights. In March 2022, P&O Ferries sacked 800 workers without the statutory consultations and replaced them with cheaper agency staff. Its chief executive told a parliamentary committee that the company knowingly broke the law. The Prime Minister said that the company had “broken the law” and promised to “take them to court”. However, no action was taken on the grounds that there was “no realistic prospect of a conviction”. The legal advice forming the basis of this conclusion has not been published.
Instead of strengthening workers’ rights, the government enacted the Conduct of Employment Agencies and Employment Businesses (Amendment) Regulations 2022, which enables all employers to replace striking workers with agency staff, a process that will cheapen labour and increase corporate profits. Trade unions are contesting the legislation on the grounds that it violates Article 11 of the European Convention of Human Rights.
The government is determined to further weaken workers’ rights and has introduced the Transport Strikes (Minimum Service Levels) Bill, which would require striking transport workers to provide a minimum level of services, around 20% of normal service. This would effectively lead to conscription and weaken workers’ bargaining position.
However, this isn’t the end of anti-worker laws. The Retained EU Law (Revocation and Reform) Bill aims to repeal around 3.800 laws, including a large number of employment rights introduced during the UK’s membership of the European Union. The repeal, unless replaced by equivalent laws, would reduce or eliminate holiday pay, maternity pay, working time limits, rest breaks and equal pay. It would increase the prevalence of zero-hour contracts and empower employers to fire and rehire staff on lower pay and end collective bargaining.
In a number of arenas, the state has made concessions to pacify the masses but the implicit promise has not been fulfilled. After decades of struggles women secured the Equal Pay Act 1970 to ensure that men and women get equal pay for doing ‘equal work’. However, some fifty years later, the majority of UK occupations still have a pay gap that favours men.
The Pensions Act 1995 increased women’s state pension age from 60 to 65 and aligned it with men’s, and subsequently it was hiked to 66. However, the change has not been accompanied by equalisation of the amount of pension and women continue to receive a lower pension. In July 2022, the Minister for Work and Pensions told parliament that the median weekly pre-2016 state pension is £150.88 for women and £172.79 for men; and the median weekly post-2016 state pension for women is £175.90 and £179.41 for men. There is no commitment to equalising the two in the foreseeable future.
Tax laws have long been bent to serve the interests of the rich. Earned income above the tax free personal annual allowance of £12,570 is taxed at rates between 20% and 45%, but unearned income in the form of capital gains and dividends is taxed at much lower rate. Capital gains are taxed at rates between 10% and 28%. Its recipients do not pay any national insurance even though they use the National Health Service (NHS) and social care. This preferential treatment is worth around £25bn a year to the privileged few.
Neoliberals have long persuaded people to believe that the law offers justice and fairness, but they rarely talk about how laws are shaped by wealth and power, or the capture of the state. Wealthy elites and corporations fund political parties, individual legislators and think-tanks to enable them to advance their interests, often at the expense of labour and less powerful sections of society. It is hard to think of any public petitions or demonstrations demanding fewer rights and greater insecurity for workers and women, but it happens because elected governments are disconnected from the masses. Hard-won rights are being swept away with little opposition in parliament or mainstream media. Like medieval times, the ‘rule of law’ continues to camouflage forms of oppression and is condemning millions to a life of insecurity.