Employment Law (Businesses)

Julian Sturdy Excerpts

Wednesday 3rd November 2010 Commons Chamber

[Julian Smith]

My hon. Friend is absolutely right. A close friend of mine is starting a new business and she told me the other day that her business adviser suggested she should hire people on short-term contracts to avoid the pitfalls of having permanent staff. At the key moment when we need hundreds of thousands of new jobs, the advice to a budding entrepreneur is to avoid permanent staff if they can.

According to the World Bank’s “Doing Business” report, employing workers in the UK has become harder every year since 2007. The report shows that UK labour market flexibility has slipped down the international league table from 17th in 2007 to 35th in 2010. The UK is now behind many European countries, including Switzerland and Denmark, as well as Australia, Canada, the United States and others, on labour market flexibility.

Even those figures do not take into account the effect on small businesses of the sheer worry about these burdens or of the realities of a world in which Britain will be under increasing pressure to compete for internationally mobile business jobs. Small business owners worry about this stuff. That is why they are good at what they do—because they are worriers. By putting so many worries and concerns around the key assets of their business—staff and people—Governments have forced them to spend less time on their businesses. Tom Bannister, who runs the Coniston hotel near Skipton, does not have an HR department, so each employment change that comes from this House takes him away from running his hotel and outdoor centre. We need hard-pressed owner-managers such as Tom to be lying in bed at night worrying about things like the spa development he is currently considering rather than whether they have dealt adequately with the “protected characteristics” of their employees as determined by the Equalities Act 2010.

[Julian Sturdy (York Outer) (Con)]

Like my hon. Friend, I have a number of businesses in my constituency who have contacted me with similar concerns. They want to grow their businesses and create jobs, which is surely what we want in these difficult times, but if we continue to tie businesses down with red tape and bureaucracy, we will prevent that. It is important to get away from that approach.

[Julian Smith]

I thank my hon. Friend for those comments. It is not just small companies that are affected: the cumulative effect of the measures is also significant for bigger businesses. Before I came to the House I was a head-hunter who worked with some of the biggest companies in the world. I saw how easy it was to put a senior employee in an international location rather than in the UK. I have a long list of examples whereby, when it came to choosing between London, New York or Asia, London came last. The cost of managing and getting rid of staff often tipped the balance in favour of another location. That just happens without fanfare or fuss, and that is why, like our tax and immigration policies, our employment policy must be ruthlessly competitive. The competition that the UK faces is becoming intense. Over the next few years we desperately need people to take the risk, set up businesses, invest in existing ones and create jobs here in Britain.

Labour increased its depressing legacy of employment law in its dying days, with measures on agency workers, the Equalities Act 2010 and additional paternity leave. Each measure will have a major effect on British business. For example, the new dual discrimination laws, with limitless liability, mean that employers will have to focus even more on protecting themselves, and, with discrimination law changing so often and widening to include more and more employees, is it any wonder that entrepreneurs fear taking on their first member of staff?