Employment Law

Lord Young of Norwood Green Excerpts

Monday 21st May 2012 Lords Chamber

[Lord Young of Norwood Green]

My Lords, I have listened carefully to the Minister on Mr Beecroft’s proposals as we saw them last October. Is making millions of workers’ lives more insecure a price worth paying? That is a phrase that I cannot help remembering from a previous Conservative Administration. Beecroft himself said:

“The downside of the proposal is that some people would be dismissed simply because their employer did not like them. While this is sad I believe it is a price worth paying for all the benefits that would result from the change”.

That is Mr Beecroft for you—he clearly believes that it is a price worth paying. He is a major Conservative Party donor as well.

Why have the Government, given the situation that we are in, not put forward proposals to introduce a British investment bank to help get finance to business, but are prioritising making people less secure in work? Why have the Government not put forward a temporary national insurance contribution cut for small businesses to take on extra workers but are prioritising making people less secure in work? Why are they failing to do enough to accelerate infrastructure investment—which, after all, business organisations such as the CBI have called for, and could be threatened by Solvency II—but instead are prioritising making people less secure in work?

When there are 2.63 million unemployed, created by the double-dip recession made in Downing Street, does the Minister feel that making it easier to fire staff at will and causing even more insecurity will give hope to people who are desperately seeking a job? Does he think that firing at will will boost consumer confidence at a time when the economy has entered a recession caused by the policy of this Government? Does he agree with Dr John Philpott, the chief economic adviser at the Chartered Institute of Personnel and Development, who said:

“The vast weight of evidence on the effects of employment protection legislation suggests that … less job protection … results in increased firing during downturns. The overall effect is thus simply to make employment less stable over the economic cycle, with little significant impact one way or the other on structural rates of employment or unemployment”.

Does the Minister agree with Beecroft that small businesses have very limited administration skills and very few academic qualifications? Are not those problems that need to be addressed, rather than accepting the anecdotal evidence as a solution for creating more employment?

According to the OECD, the UK has the third least regulated labour market in the developed economies. That is one thing in the Statement with which I agree. Only in the USA and Canada is employment regulation less strict. As the Chartered Institute of Personnel and Development has said, some of the most severe restrictions on the employer’s right to dismiss staff can be found in countries such as the Netherlands, Norway and Austria, which all have unemployment rates lower than the UK’s. Even the Secretary of State has said:

“We don’t want to dent job security and consumer confidence”;

and:

“Our labour market is already one of the most flexible in the world”.

Why, therefore, are the Government ignoring this evidence? Why do they believe that making people less secure at work will be a positive contribution to creating jobs?

In the Chartered Institute of Personnel and Development’s Labour Market Outlook of summer 2011, far more employers cited access to finance—28%—and candidates lacking the right skills—50%—as obstacles to business growth than cited employment regulation. Those are areas where the Government could give positive assistance, rather than being diverted by the dubious recommendations of the Beecroft report. Is this another example of the Government’s failure to back business and to take the tough choices, such as setting up a British investment bank, and, instead, of their playing to the band of Back-Bench Conservative MPs who promote these job insecurity policies?

In February, David Blanchflower, a former Bank of England Monetary Policy Committee member, said:

“There is zero credible empirical evidence supporting … [the] contention that Britain’s economic problems would be fixed by slashing workers’ rights”.

So, what evidence do the Government have? Would not having a different employment regime for businesses with 10 or fewer employees, and those slightly larger, be a disincentive for growing small businesses to take on extra staff?

The Minister for Employment Relations, Consumer and Postal Affairs is quoted as saying in October last year:

“I think it would be madness to throw away all employment protection in the way that’s proposed, and it could be very damaging to consumer confidence”.

Has he now changed his mind? Interestingly, according to Hansard, the Secretary of State failed to vote on his department’s own legislation on changing the unfair dismissal qualification from one year to two. Today he is reported in the Sun as saying:

“Some people think that if labour rights were stripped down, employers would start hiring and the economy would soar again. This is complete nonsense. British workers are an asset, not just a cost. I am opposed to the ideological zealots who want firms to fire at will”.

Why has he allowed his department to help write and support the Beecroft review if these are the views in which he sincerely believes?

We face many challenges and businesses are giving the Government strong signals about the important things that will help them create more jobs—such as resolving the issue of finance and ensuring that we accelerate infrastructure investment. Those are the positive things that we need to do to inject growth into the economy. I look forward to the Minister’s response to my questions.