Recently Conservative minister Matthew Hancock declared that UK companies had a ‘duty’ to give preferential treatment to British workers applying for jobs in competition with foreign applicants. Here are a few reasons why it was an astonishingly ill judged thing to say.
1. It’s ridiculously (and frankly ominously) vague. How much preferential treatment? Is there any difference in CVs that would merit employing a foreigner in preference to a Brit? Should someone living 400 miles away but within the UK be treated less preferentially than someone living in the same town? Is their duty to an applicant inversely proportional, therefore, to how far the job candidate lives from their factory? How British is British? Is being a citizen ok, or should an applicant be born in the UK? Are we going to name and shame companies who don’t fulfil their ‘duties’? Do you have to be white to qualify? Do you have to own a house? If the Scots vote for independence, would companies cease to have a duty to them?
2. It’s cheap talk. It is a way for the Conservatives to curry favour with the voters they worried they were losing to UKIP, without annoying their other mainstay – the corporate sector, who can rest assured that there is nothing the Tories can or will do to enforce it. Because companies would be breaking the law! Cheap talk devalues the next thing the Tories float orally, however sensible.
3. It could start to differentiate companies’ profitability with regard to how they interpret Matthew Hancock’s intervention. If there is any scope to bend the law in the privacy of firms’ HR departments (let’s hope not), some companies with the resources and sophistication to read this properly will realise that the Tories cannot force anyone to comply with this edict, and ignore it. Others might interpret it as a threat, and start to do something about it. Still others might think that an intervention like this signals some future policy change (not realising that such a change would be in contravention with the European Single Market), or reveals something about a struggle within the party over this policy, and decide to change their procedures now. A dispersion in returns will open up that reflects how sophisticated they are in reading the runes of senior Tory speeches. This will have real economic costs. In an efficient marketplace, the only dispersion in returns should be related to how good the firm is at producing what people want.4. Speeches about such corporate duties may generate genuine economic policy uncertainty (perhaps the Tories will find some way to punish those who don’t employ the right numbers of locals, perhaps not) that will be costly for firms. Is this a code for hinting that there is a constituency in the Tory party for instituting some kind of tax on foreign employment by UK firms, and withdrawing from the single market? Or that such a tax might be part of a renegotiation of our relationship with Europe?
5. The notion that firms have duties to the populaces that comprise the marketplace in which they operate is fine. But the proper way for those duties to be fulfilled is through taxation, which the government can then use to ensure that if locals are disadvantaged in an unfair way (exposed to de-skilling unemployment or poor education through bad luck, for example) resources can be directed at them. Declaring that firms have some unspecified duty in this regard seems like desperation, a recognition that the government cannot find a way to do its duty, or cannot afford it given current tax and spending plans. Even if it were legal, and even if we agreed with the premise (that local people should be given preference), leaving up to the conscience of shareholders would provide a lottery for workers; those lucky enough to live close to dutiful firms would benefit, others would not.
6. What other duites are going to be announced to try to fix the problems with capitalism? Are we going to expect climate change to be addressed by solemnly imploring drivers that they have a duty to walk? Are we going to be expected to buy British products? And British products made by firms that in turn buy raw materials and intermediates from other British firms? Are we supposed to buy British shares? Of firms that in turn don’t have foreign holdings? Should we drop regulations currently placed on firms and replace those with duties too? Perhaps health and safety legislation should be scrapped in replaced with equally solemn words from Mr Hancock that firms really should not let people fall off ladders. What about replacing the laws of contract while we are at it, chaps? Surely we can just settle our disputes over a beer? We don’t need all this terribly complicated law stuff, do we? Should universities discriminate in favour of British students?
7. Are we to take it that the Conservatives recognise equal duties on firms abroad to discriminate against UK citizens who go abroad looking for work?
8. What other laws is Mr Hancock going to encourage firms to break? Is the subliminal message that it’s just the annoying ones emanating from Brussels? Or is this a green light to wider disregard for anything that goes against good old Conservative notions of common sense?
Perhaps there is not much to read into this at all. Perhaps it’s just the silly season for the political process, where No 10 relaxes control over junior ministers, safe in the knowledge that nothing anyone says or does really matters until people come back from holidays and the real work starts again in the Autumn. Let’s hope so.