Employment Rights Bill

Lord Moynihan of Chelsea Excerpts

2nd reading
Thursday 27th March 2025 Lords Chamber

[Lord Moynihan of Chelsea (Con)]

My Lords, I declare my interests as a businessman and investor. I welcome the excellent maiden speeches of my hereditarily noble friend Lord Young of Acton; by the poised and articulate Baroness, my noble friend Lady Cash, and by the two other noble Baroness. I also apologise that, with the Minister’s kind agreement, I may have to leave before the winding up.

Good economic policy brings prosperity, security and jobs. The Government say economic growth is their number one priority. Does this Bill promote growth, which needs a low-regulation, low-tax, small government, free market environment? No, it does not. When this Government came to power, they succumbed to the time-honoured temptation to focus on demand, not least by giving selected supporters above-inflation pay raises. Demand is an attractive policy, because it pursues the covetable votes of the UK’s over-50 million adult consumers. Supply—which a Government seeking growth should have more properly focused on—attracts just the 5 million votes or so from employers and sole proprietors.

However, demand stimulation quickly runs up against the problem of funding new spend with available tax receipts. Tax hikes are made with the hope that tax will go up above its current 36% of GDP—but it obstinately has not. Government expenditures and regulation are going up, but so too are departures from this country, including entrepreneurs, high earners and achievers, and young strivers—all those current and future wealth creators who would have stayed and grown the economy, had a supply-side approach been taken.

Even though the Chancellor U-turned yesterday, the OBR cut its 2% GDP growth projection to 1%. That is still too optimistic, yet even 1% GDP growth means about zero growth per capita. There was an unmentioned elephant yesterday: this very Bill. Here is what the OBR said about it:

“In this forecast, we have not incorporated any impact of the Government’s Plan to Make Work Pay”.


It then goes on to say that the Bill’s impact on GDP should be negative, which drops its growth projection to below 1%.

After last year’s Budget, the economy slowed to a halt, just as we had warned it would. Now every piece of this vast new Bill seems designed directly to further ruin the economy: banning zero-hours contracts; letting the union fox into the SME henhouse; giving the right to request flexible working; and introducing no waiting periods for statutory sick pay, parental and bereavement leave and unfair dismissal. Each claims virtue but, in reality, damages economic growth and jobs.

What will be the economic consequences of Labour’s decisions? They will include: higher unemployment, especially among the youth; lower general prosperity; and many individual recessions as GDP per capita declines—an alarming prospect for the country’s future fiscal stability. Yes, it may feel good to have a heart, but it is more important to have a head.