Don't tilt too far towards unions, warns Peter Mandelson

A key architect of New Labour has urged Sir Keir Starmer not to give too much power to trade unions if he wins power at the next election.

Lord Mandelson said a Labour government should avoid "rigidities" that could deter investment in crucial industries.

The peer, who now advises Sir Keir, said a Labour would need private investors to boost the economy.

But it needed to be bolder than New Labour, which came to power in 1997, in shaping industrial growth.

Tony Blair's government had been too late to embrace industrial strategy, believing it "went against the grain" of a market-driven economy.

He added there had been a change in thinking since the 1990s, with an acceptance the state could play a bigger role in helping secure jobs in new industries.

The Labour peer was a cabinet minister in the Blair and Brown governments - and played a central role in the party's shift to the centre ground of British politics under Mr Blair.

He now chairs a lobbying company and has been acting as an unofficial adviser Sir Keir Starmer.

Labour's plans for improving the economy and boosting skills have been a key focus of its conference in Liverpool, which could be the last before the next general election, expected next year.

The party is seeking inspiration from the US President Joe Biden's vast package of support for green industries to rebuild Britain's "industrial foundations".

The plans include allowing electronic voting for strikes, and allowing for sector-based negotiations between trade unions and employers through "fair pay agreements".

Lord Mandelson said the UK would not be able to match the levels of investment in the US, but it was right to try and "adapt the technique".

He said implementing an industrial strategy should be an early priority for Labour if it wins office, noting New Labour's approach would be "just a tad too much hands off".

The Blair government, he added, had only fully embraced the idea after the 2008 financial crash, "rather than as we should have done in 1997".

He warned, however, that the party would inherit a worse-performing economy than it did in the 1990s.

Whilst there could be opportunities to borrow to boost the economy, he added, the incoming government would depend "above all else" on the private sector to invest.

He warned that Labour should "take care" not to reintroduce rights for trade unions that would create "rigidities" in the jobs market.

This would include, he said, "giving all expression to "massive strike funds "so beloved of Len McCluskey and Sharon Graham" - the former and current bosses of Unite, one of Labour's biggest union backers.

He added Labour would need to avoid getting "to a point where people say 'hold on a moment, I think this government's gone too far, I think we're tilted too far in the other direction, and this is impairing Britain's investment attractiveness".