Unions warned Sir Keir Starmer not to offer “more austerity” as the Prime Minister came under pressure over public sector pay and the squeeze on welfare costs.
Sir Keir became the first prime minister to address the TUC Congress since Gordon Brown and his speech – in which he promised to “rewrite the rules of our economy” and boost workers’ rights – was met with a standing ovation.
But he was directly challenged over the decision not to scrap the two-child benefit cap and faced disquiet over hints at future pay restraint.
In his speech in Brighton, interrupted by a heckle of “tax the rich”, he told trade unionists there were more “tough decisions” to come and “pay will inevitably be shaped by that”.
He has faced union demands to commit to full pay restoration, with a series of bumper wage rises to make up for years of below-inflation deals.
But Sir Keir told the TUC: “This Government will not risk its mandate for economic stability, under any circumstances.”
His appearance came as he was under fire from Labour MPs, unions and campaigners over the decision to means-test the winter fuel payment, with a Commons vote just hours after his TUC speech.
Fran Heathcote, general secretary of the Public and Commercial Services Union, said: “We’ve had enough of being told about ‘tough decisions’. The real tough decisions are forced upon our members every day trying to make ends meet.
“Thousands of the Government’s own workers earn just above the minimum wage and are having to rely on food banks. There will not be a stronger economy without boosting the incomes of working people.
“You cannot solve the problems caused by austerity with more austerity.”
Gary Smith, GMB general secretary, said: “The Government has a huge job on to clean up the mess after 14 years of chaos and misrule from the Conservatives.
“One toxic Tory legacy was the undervaluing of public sector workers. Paying them properly is both the right thing to do and will help get our economy moving.
“We have seen some positive action from the new Government, with above-inflation pay awards already in place. But GMB’s public sector members are clear: this must be a start and not a finish.”
Unite’s Sharon Graham said the UK was better under Labour but warned Sir Keir to do more than “tinkering around the edges”.
“Labour must rule out austerity mark two and ensure we address the crisis in our crumbling public services and the lack of investment in British industry,” she said.
Sir Keir was directly questioned about the “punitive” two-child benefit cap by Allan Crosbie, president of the Educational Institute of Scotland, who said: “The UK is one of the richest countries in the world, but poverty is wrecking the lives of more than a quarter of our children.”
The Prime Minister told him: “We’ve had to take difficult decisions given the economic circumstances we’re in.”
He acknowledged that child poverty was too high but added: “This isn’t an issue that could be solved just by one adjustment in welfare, frankly. It’s about housing, it’s about education, it’s about wages, it’s about conditions in which people live.”
Daniel Kebede, general secretary of the National Education Union, said: “After decades of division, austerity and underinvestment in public services, working people needed to hear that the direction of travel has changed under a Labour Government.
“The Prime Minister failed to do that today.
“Instead of setting out a positive vision to rebuild the economy and our society, he served up more of the same.
“Tough choices to be made, things getting worse before they get better and the burden to be borne by working people and their families.”
Sir Keir sought to balance his warnings about the dire state of the public finances with the promise of a new package of workers’ rights.
He said there was a “mood of change” in the business world as he set out his plans for a government that was both “pro-business” and “pro-worker”.
The Institute of Directors (IoD) has warned that business leaders will be less likely to hire new workers as a result of the Government’s planned employment rights legislation.
But Sir Keir said: “Business leaders are not knocking on my door saying they want to rip up employee rights.
“They don’t tell me the problems they face will be solved by coming for trade unions.
“They want fair taxes, high skills and the long-term stability to invest.
“And that chimes precisely with what trade unions up and down the country tell me they also want.
“Working people want good companies to make profits, attract investment and create good jobs.”
Measures in the Government’s plans include banning “exploitative” zero-hours contracts, ending policies of fire and re-hire, and making parental leave, sick pay and protection from unfair dismissal available from day one in a job for all workers.
Flexible working will be the default from the first day in a job, while it will be unlawful to sack a woman who has had a baby for six months after she returns to work.
The Employment Rights Bill will also remove restrictions on trade unions, including the Conservative government’s law aimed at ensuring a minimum level of service during strikes.
Sir Keir described the Conservative measures as “cheap and vindictive attacks on this movement”.
An IoD survey of 715 business chiefs found 57% said they would be less likely to recruit staff as a result of the Government’s plans.
Alexandra Hall-Chen, principal policy adviser for employment at the IoD, said: “Business leaders are concerned about the impacts of the proposed new reforms on the cost of employing staff.”
