Published:

What impeccable timing. As the Public Accounts
Committee reveals that less than 5% of the £1.4 billion given by the Coalition
to its Regional Growth Fund has actually reached employers, Vince Cable takes
to the stage to offer "intervention and partnership" for struggling
industries. In defiance of the lessons of history, and in the face of this most
recent evidence of government's inability to create jobs and prosperity, the
Business Secretary continues to indulge in statist rhetoric. In his speech
yesterday, Mr Cable characterised non-intervention as "complacent".
But the real complacency lies in the belief that industry can survive the
ever-increasing burden of both tax and regulation on energy and employment,
pushing up costs and expanding unproductive back office activity.

The forms of "intervention" sorely needed
by industry and business of all kinds are cuts in both energy and payroll taxes,
and swift reductions in environmental and employment regulations. Mr Cable's
rhetoric aside, there are a few glimmers this week of reality breaking through.
Replacing the current health and safety regime with a more common-sense
approach will be especially popular with small businesses. BIS is also, we are
told, about to unveil a package of employment law reform.


The Business Secretary has already made clear that this
package will not include Adrian Beecroft's proposal for "firing at
will."
No matter.  The concept of "compensated
no-fault dismissal" was the least credible recommendation in the Beecroft
review. Sure, it captured
the headlines, but for
all the wrong reasons.
To imply that businesses
up and down the
country are held
back by their inability
to sack employees
on the spot, without
offering reasons, not only presents
a false picture of most employers, it
also feeds the leftist
preconception that employers
and employees have conflicting
interests. In fact the
current unfair dismissal
warning system, which
now kicks in after
two years of employment,
ensures that employers
give underperforming
staff the chance to
improve; it also
helps to create a
workplace culture in
which employers communicate
with their staff and
in which employees,
in turn, can be
confident that they
will be treated fairly.
This balancing of interests
is perfectly reasonable;
to reduce it to
the expectation of
a payoff would
not serve the interests
of either party.

But the Beecroft report also contains a string of less
sensational recommendations which, if implemented, could restore some sanity to
employment law. Eminently practical, if less headline- grabbing, they include
placing a cap on awards for discrimination-based dismissals, to bring these
awards into line with other forms of dismissal compensation. At present
discrimination awards are unlimited, providing a real incentive for employees
to mount such claims and forcing employers to agree larger pay-offs, regardless
of the actual losses suffered. Another sensible suggestion is to rescind the
ludicrous provision of Harriet Harman's 2010 Equality Act, whereby employees
can bring cases against their employers based on alleged third-party
harassment. Beecroft also floats the idea of stripping the “gold-plating” from
EU-derived TUPE regulations, to make it easier to rescue troubled businesses.
Along his ideas for exempting small businesses (fewer than 10 staff) from some
of the more onerous employee rights and regulations, and simplifying tribunal
procedure, this set of reforms would help businesses of all kinds – but
particularly small start-ups. Not only would it be cheaper than government
hand-outs, it would also be much more likely to create real, sustainable, jobs.

Will this week's employment law package from BIS, sketched
out in yesterday's
Sun
, bring these mundane but important reforms to life? The
real test for the no-nonsense Michael Fallon and Matt Hancock at BIS will be
their success in convincing their Lib Dem boss that this kind of deregulatory
action is both practical and do-able – and in moving quickly to put it through
Parliament. If they succeed, we can afford to ignore Mr Cable's grandstanding,
1970s-style rhetoric.

Comments are closed.