Employment Rights: Impact on Businesses

Debate between Steve Barclay and Lincoln Jopp

Tuesday 16th September 2025 Westminster Hall

[Lincoln Jopp (Spelthorne) (Con)]

I beg to move,

That this House has considered the impact of employment rights on businesses.

It is a pleasure to serve under your chairmanship, Dr Murrison. Members across the House will know that I have the distinct honour of being the Member of Parliament for Spelthorne, which is not in Lincolnshire or Lancashire; it is everything south of Heathrow airport until hon. Members get to the River Thames. There are 4,500 small businesses in my constituency. They are its lifeblood. There are also huge employers: BP’s global headquarters is in Spelthorne, as is the world’s second biggest film studios, at Shepperton. I visit as many small businesses as I can, and it is always fascinating to get their insight.

Indeed, I am very much looking forward to next Wednesday, when the Spelthorne Business Forum riverboat trip will see a number of small and medium-sized enterprises come together to go two hours along our beautiful stretch of the River Thames, networking and comparing stories and views. I have to be frank and say that our consideration of the Employment Rights Bill comes in the context of these businesses already smarting, struggling and, in some cases, closing as a result of this Government’s Budget—in particular, the triple whammy of the rise in employers’ national insurance, the minimum wage and business rates.

I should explain that I have a fair experience of life in business. After my 25 years in the Army, I spent 10 years in venture capital and private equity, running, investing in and, we hope, improving small businesses, and growing them into mid-sized businesses and publicly listed bodies. They were mostly in the financial sector, and all had a tech underpinning. Latterly, I spent four years attempting to get Britain’s first ever defined-benefit pension consolidator, the Pension SuperFund, past the Pensions Regulator—an experience from which I still bear the scars.

Yesterday, the House had the opportunity to discuss the measures in the Employment Rights Bill in some detail and to vote on a number of proposed improvements thereto, but I want to concentrate today on the cost of the Bill for businesses. In my view, the cost has been significantly underestimated, and I fear it will come as a shock when the Government see the extent to which it acts as a further sea anchor on growth and employment. Sadly, we have already seen unemployment rise by, I think, 300,000 since this Government took office.

The Government’s impact assessment estimates that the measures in the Bill could cost businesses up to £5 billion annually. According to the Institute of Economic Affairs,

“the £5bn figure is likely to be a considerable underestimate. It almost entirely relates to increased administrative burdens, failing to calculate the significant impacts on business costs and hiring from making it more expensive to employ people.

There is no attempt, for example, to calculate how many fewer people will be hired due to limiting zero hour contracts and day-one rights to unfair dismissal protection”

or

“the costs of more strike action as a result of repealing the measures that made it harder to strike in the Trade Union Act 2016.”

I have been in businesses where people are making very hard decisions. They want to generate growth, they know there is considerable work to be done, and they want to take the next step and make the next investment, but that is a very big decision point, as we will see as I develop this theme. I have seen with my own eyes, talking to Spelthorne businesses, that even today people are curtailing their growth and investment plans. My huge fear is that the new measures in the Employment Rights Bill, which will eventually become an Act, will further dent business confidence, meaning that these businesses will not grow and natural leavers will not be replaced.

Economic studies and business surveys suggest that that will largely be passed on to consumers through higher prices, workers earning lower wages or job losses. I am sure that the Government Members never wanted that to be the outcome of this legislation. The Institute for Fiscal Studies estimates that around 80% of the extra costs are passed on in the form of lower wages than would otherwise have been paid. According to the Government’s impact assessment:

“Costs will be proportionately higher for small and micro businesses due to the fixed costs of admin and compliance burdens”.

There is, of course, an irreducible minimum: if a business needs a menopause management plan and it has only three employees, someone still has to write and manage that plan. The legislation does not seem to derogate, whereby certain sizes of business can just take a knee and have a bye.

The Regulatory Policy Committee, which assesses the quality of Government impact assessments, says that the Government’s impact assessment for the Employment Rights Bill was “not fit for purpose” and that the Bill could lead to lower wages and fewer jobs. It assessed eight of the 23 individual impact assessments as not fit for purpose, and six were at the highest impact measure category of the original assessment.

The Regulatory Policy Committee said that the Government need to provide more evidence to support an

“imbalance of power between employers and workers in certain sectors of the economy”

as its rationale for introducing the Bill. I am sure hon. Members will have seen that the Bill is, to a certain extent, riven with trade union speak—they will have seen trade union interests being played out in the legislation. Of course, hon. Members in certain parts of the House benefit hugely from being the recipients of donations, as does the Labour party as a whole.

[Steve Barclay (North East Cambridgeshire) (Con)]

My hon. Friend is right to highlight the flaws in the impact assessment—there has been wider commentary supporting that point. Does he agree that one of the issues is the accumulation of different aspects of the Bill? For example, not only will there be more hooks for grievances to be based on, but the removal of the 50% threshold for strike action makes it easier for strikes to follow as a result of those grievances. That is at odds with what Ministers themselves have said. For example, when the British Medical Association went on strike, the Health Secretary criticised the low turnout in the ballot, yet this Bill makes it easier to take strike action on some of those more dubious grievances.