The Employment Rights Bill will soon receive royal assent and become law. It represents, very nearly, a promise fulfilled – a welcome change for a government that has too often disappointed.
The Labour manifesto last year promised that new legislation would mean “banning exploitative zero-hours contracts; ending fire and rehire; and introducing basic rights from day one to parental leave, sick pay and protection from unfair dismissal”. All of those elements are in the bill – and yet the trade unions and some within the Labour Party sound nervous. They should not, though it is easy to see why they are getting twitchy.
In the first place, the three people principally responsible for the bill have either left the government or relinquished responsibility for these reforms. Angela Rayner, a former Unison rep who, for many years, has campaigned for what was once called the “new deal for working people”, had – even before her resignation last week – seen both her control over the issue and her original radical proposals softened, but she was still committed to change and remained an influential voice. Jonathan Reynolds, the business secretary, has unexpectedly been made chief whip, while the employment minister, Justin Madders, has also left the department.
Then there are some late Lords amendments, tabled by the Conservatives, that seek to clarify, or weaken, the legislation. In addition, there are some areas of the new law to be decided by ministers, after further consultation with employers. This may all take time to settle.
As a result, Paul Nowak, the general secretary of the TUC, warns the government to make “the right political choices”. Sharon Graham, the leader of Unison, threatens to ask her members to disaffiliate from Labour, an extraordinary move.
What is missing here is any sense of political reality or the economic peril the nation faces, with anaemic growth an existential menace to everything the Labour government seeks to achieve.
In practice, there is everything to be said now for extreme caution in loading on extra costs for business. The government’s own estimation of the added burden, some £5bn, is modest in relation to total labour costs – representing 60 per cent of GDP, or £1.5 trillion.
However, overly burdensome regulations will hit startups, small and medium-sized businesses hard, and will probably prove to be a deterrent to hiring more staff – particularly if they think they will find it impossible to let them go if they prove unsuitable. Not every business can afford a HR team, or to hire employment lawyers.
Indeed, given the substantial hikes in employers’ national insurance contributions and the minimum wage, as well as the lingering effects of Brexit, the Trump tariffs, and high energy costs, British business rightly needs to be given some support to recover its competitiveness, generate some investment, jobs, growth and tax revenues. Workers have certainly suffered through the cost of living crisis, but these last few years haven’t been easy for hard-pressed businesses either.
Mr Nowak asks the government to demonstrate “whose side it is on”. The answer to that should be “the British people”, as Tony Blair used to say. Or, as Sir Keir Starmer puts it, “country before party”.
Companies are not some class enemy, “profit” cannot be a dirty word in an economy desperate for investment, and the UK has to hang on to one of its few international competitive advantages – its flexible labour market. There is a balance to be struck, with the national interest put first.
The new team of ministers, led by Peter Kyle, are therefore right to listen to voices from industry and commerce, and to see if the workers’ rights legislation can be improved, without diluting its primary goals. Thus, while compulsory exploitative zero-hours contracts are to be outlawed, the Lords might be right in suggesting that they should still be available for those people, maybe a small number, for whom such an arrangement suits their personal circumstances and who actually request them.
If the clearout at the Department for Business results in a better relationship between employers and the Labour government, that is no bad thing.
It is for some a shame that, so early in its life, the Starmer administration has had to move on to a “Phase 2”, but something needed to be done to get past the first year of missteps and mishaps.
At the Home Office, at the Business Department, in welfare reform and in No 10 itself, the government is rapidly rethinking what it has been doing, and deploying those it needs to get things back on track.
With the deserved promotion of Shabana Mahmood and Pat McFadden in particular, there is at least the sense that the government is listening to the electorate and intends to deliver the kind of tangible results that the voters are demanding – on migration and on welfare reforms. Wes Streeting has already shown the right kind of zeal in modernising the NHS; so, too, it must be hoped, will Bridget Phillipson in schools. The Ministry of Defence, led by John Healey, has been a quiet success.
With a much-enhanced economic team in No 10, the same should be happening at the Treasury, where Rachel Reeves remains under pressure.
On a broader front, the new deputy leader should not be elected as a sort of “shop steward”, in permanent opposition to the leader, but as a partner and someone who can communicate and explain what the government is doing, and why.
This is, in fact, the traditional role in government as it was played out by, for example, John Prescott and Harriet Harman, and, mostly, by Ms Rayner. Division at the top would not help restore stability to the Starmer administration.
To some degree, Downing Street has turned the crisis over Angela Rayner into an opportunity to rebuild momentum. With some reasonably fresh faces, a renewed determination to get things done and push reforms through, there is, to borrow a phrase, also some reason to hope that things can only get better.
