Labour is missing a trick on Beecroft

by Peter Watt

There is nothing like a bit of hysteria to whip up a good story.  The report from venture capitalist Adrian Beecroft into possible changes in employment law was finally published this week.  I say finally, as the draft report leaked to the Telegraph was dated October 2011.  The reaction of much of the left has been so frenzied Labour is in danger of missing a trick.

First things first; the report is not in itself going to deliver growth in the economy, it is not in fact in any shape or form a growth strategy and, as far as I can tell, no one from the government is claiming that it is.

People keep saying that we need a growth strategy, as if growth is simply in the gift of the government but no one has yet established quite what this holy growth grail looks like.  Hikes in spending aren’t possible and the options to tax raise tax to fund investment are limited.  And so, whoever was in charge, would face the same problem.

Labour of course has its “five point plan for growth and jobs” which is ok as far as it goes but it really isn’t going to singlehandedly turn the economy around, even if it was fully implemented tomorrow.  No, the uncomfortable truth is that the road to growth is likely to be paved with luck and a series of small and not very exciting stepping stones that cumulatively help encourage investment and inspire consumer confidence and thereby, help our economy to grow.

The government has however put all of its economic eggs in one basket; as David Cameron seemed to confirm this week when he again claimed that the only way to deliver growth was austerity.

In the face of this, it is right for Labour to criticise the government’s lack of ambition on growth and or even tweak its economic approach in light of evidence that it needs to do more.  Where is the creativity, the innovation or the optimism?  Some measures may work, others may fail but when faced by a flat lining economy, surely it is worth trying?

The government could continue to cut spending while taking some modest steps that may help deliver growth.  Some of these measures could be very local or regional whilst others, as Peter Mandelson and Ed Balls set out, should be delivered internationally.

So why then has Labour become near-hysterical about the Beecroft report.  Logically, looking at removing barriers preventing firms from employing people has to be a sensible thing to do.  It doesn’t seem unreasonable to allow a government to remove red tape to allow business to prosper.

For many on the left, however, the fact that Adrian Beecroft is Tory donor (and a venture capitalist to boot) seems to indicate his basic unsuitability to advise.  It feels like another one of those, “all Tories are evil and actively want to damage working people” reactions, that we on the left seem to revel in.

The Beecroft report, its publication and the government’s reaction to it, has become another one of those internal coalition battles – the frustrated ranks of the Tory right demanding the scrapping of swathes of employment legislation – clearly utter nonsense, while the frustrated ranks of the Liberal Democrat left resist all changes proposed by the Tory Beecroft – equally bonkers.

And here is the space that Labour could occupy.  Neither side in the internal coalition battle is wholly right on this; and yet as a result of their in-fighting, possibly beneficial changes to the labour market have been delayed.

The truth is, that whilst some of the 20 or so recommendations made by Beecroft are plain wrong, others are sensible and should be implemented.  And anyway, rarely are all of the recommendations of any report offering advice to government implemented.

So instead of effectively attacking the unfairness of the whole report, Labour could have decried the incompetence of the Government for delaying the implementation of many of its proposals which are in fact sensible.

They could have rightly denounced the proposal for ending unfair dismissal legislation as, not only unfair, but also likely to negatively impact consumer confidence.  But, equally they could have demanded the immediate implementation of, 5 day staff consultations, on redundancies if a company is in serious financial trouble.  Or, allowing larger firms to undertake 30 day consultations where more than 100 workers are at risk of redundancy as opposed to 90 days.  The introduction of online centralised immigration status or Criminal Records Bureau checking would be a good thing.  Some of the exemptions from regulation for businesses with less than ten employees are worthy of consideration, as is the capping of certain pay-outs in employment tribunals.  In other words it wasn’t all bad.

I suspect that we could all argue about the exact measures which should or shouldn’t be implemented and to what extent.  Of course on their own, changes to employment law won’t deliver growth.  And yes, Adrian Beecroft is a Tory and a venture capitalist.  But by engaging in knee-jerk opposition Labour is missing the opportunity to label the government as incompetent by failing to support some sensible measures which might help, even if only a little bit.

Peter Watt was general secretary of the Labour party


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29 Responses to “Labour is missing a trick on Beecroft”

  1. Mouth of the Umber says:

    Whilst a Tory donor is arguing with the SoS for Business it is best that the opposition stays out of the way. QED. Employment legislation does need reforming, from both sides ! ! !

  2. Nick says:

    So as usual, you’ve stuck your head up your arse as to the real problem. Government debt.

    Meanwhile, here’s a little analysis for what parliament is, a bunch of thieves. Median workers, 26K have just had the state retirement age raised 2 years. Cost to them, 10.8K in lost pension payouts, plus another 9K for working longer in NI payments.

    20K down.

    MPs = Fraudsters.

  3. Nick says:

    Next is the completely bogus assumption that growth solves the government finances. Ignoring the debt for the moment, lets look at the deficit. The increase in borrowing each year (ignores the off the book fraud)

    150 bn a year.

    The government needs to cut spending or increase taxation by that amount to solve its mess.

    So at 15K per unemployed person gained by getting them back to work (so long as you don’t spend money doing so), a million back to work gets you 15 bn.

    Where is the other 135 bn going to come from?

    Do you owe it to the electorate be honest that your plan is to get them to pay 135 bn extra in taxes?

    Give those current tax payers pay 550 bn, (550+135)/550-1= 25% extra taxation.

    Are you going to say your plan is to put taxes up by that amount?

    Of course not. You’re lying about it or you are ignorant and incompetent.

  4. Peter, I haven’t had time to study the report in depth yet, but my impression after an initial skim was that although Beecroft has identified some of the challenges facing small businesses I’m not sure his solutions would actually improve things significantly. There is absolutely no doubt that employment legislation and ‘red tape’ is a barrier to to small firms employing more people, but exempting them might not be the solution as it could simply make them less attractive places to work and make it harder for them to recruit the best people. But I’m glad someone from the Labour side has stood up against the hysteria as simply pretending the problem doesn’t need fixing isn’t the right approach.

  5. If we adopted the stance you suggest we wouldn’t be able to continue rather successfully retoxifying the Tory brand. I agree over the longer term we should come up with our own reforms, but right now, this is an appalling mess for the government and we should continue rubbing their noses in it. If the government we confident of their position on this Cameron wouldn’t have had such trouble answering the questions yesterday.

    Your analysis of a lot of party member’s views of Beecroft is no doubt right, but the idea we shouldn’t go for the jugular on this is not one I agree with (and I come from the right of the party!). This is an issue that forces another wedge in the coalition, and helps retoxify the Tories.

    Even John Rentoul supported Miliband’s approach at PMQs yesterday, and that’s saying something! 🙂

  6. aragon says:

    Another Independent leading article.

    http://www.independent.co.uk/opinion/leading-articles/leading-article-we-need-to-look-beyond-the-fuss-about-beecroft-7782393.html
    Peter Watt and the Independent are both wrong about Beecroft there is very little of value.

    Let’s take the CRB checks, they should be reduced is scope or abolished, pushing the cost onto the tax payer is not the solution.

    Having a clear position benefits the Labour party.

    Finding cums in a poor report that promotes, fire at will, would confuse the message and Labour party values.

    Beecroft is not a brush the Labour party wishes to be tarred with.

  7. BenM says:

    @Nick

    Government debt is not the problem.

    Manic hysteria about government debt – like yours – is the problem.

  8. Brumanuensis says:

    Well, that was predictable.

    The Beecroft ‘report’ is nonsense. It’s notable that there’s not a single footnote, nor a bibliography at the end and Beecroft never substantiates any of his assertions. Indeed in the opening section, he comments that it is impossible to measure the full effects of regulation, but that there is a ‘general feeling’ among employers that the level of regulation is too high. Well blow me. That’s not at all surprising is it. Not to mention that a ‘general feeling’ is hardly the most scientific basis to propose re-writing up to 40 years of employment law.

    When Watt claims:

    “First things first; the report is not in itself going to deliver growth in the economy, it is not in fact in any shape or form a growth strategy and, as far as I can tell, no one from the government is claiming that it is”.

    This doesn’t add up. Beecroft has claimed that GDP wil be 5% lower if his proposals aren’t implemented and no-one seems to have distanced themselves from that claim. Of course, Beecroft once again offers no proof for it, but that’s par for the course really. Employment lawyers I’ve spoken to genuinely view the changes negatively – even those acting for employers – and that is reflected in the Law Society’s opposition to Beecroft’s ‘proposals’.

    It’s all very well for Watt to sit atop his high-horse and pontificate about occupying the middle-ground, but in this case the whole position is so flawed that there’s no point. And it is relevant to critique Beecroft’s background when the government has put a Tory donor in sole charge of drawing up recommendations to reform employment regulations. Why couldn’t they have asked people who knew what they were talking about? The CIPD? The IFS? The ILO? A commission of experts in labour law and labour economics?

    The reason they didn’t was because they knew what Beecroft would recommend, so they commissioned him to lend spurious credibility to changes they wanted to implement anyway.

  9. Brumanuensis says:

    @BenM

    Ignore ‘Nick’. He posts the same comment on every thread, like any monomaniac. Actually, monomaniac is probably too kind a description.

  10. Mike Homfray says:

    I don’t believe that the regulations prevent anyone from being employed. Its just an excuse.

    Labour should oppose Beecroft because his ideas are wrong and not where we want to head

  11. Writeangle says:

    These proposed new rules will make little difference to the majority of workers in the private sector. Few have any job security today in most smaller companies. Many today have to work on short time contracts so they can be dropped at a moment’s notice and they are. Often contracts only last a few months. Some in small companies have to take pay reductions as globalisation has meant cheaper immigrants prepared to work for much less.
    Obviously politicians inhabit a different world from this one.

  12. BenM says:

    @Brumaneunsis

    Excellent post.

    Peter – you are better than this.

  13. Brumanuensis says:

    Thank you Ben.

    I think any discussion on employment regulations ought to be conducted with reference to this chart:

    http://flipchartfairytales.files.wordpress.com/2012/05/employment-protection.jpg

    Now compare it with the World Bank’s ‘Doing Business’ rankings for 2012. Three of the countries above the UK – which ranks 7th out of 183 for ease of doing business – specifically Denmark, New Zealand and Norway, have higher levels of employment protection regulations. The OECD notes that there is no apparent correlation between EPRs and employment/unemployment as a whole, although for certain groups there does appear to be correlation in differing directions.

    This is demonstrated at both ends of the table. At the upper end, Spain obviously has severe unemployment, whilst Mexico has low unemployment (5.1%), but high underemployment (up to 25%), so it’s a mixed-bag. Indonesia has an unemployment rate of 6.3% (Feb, 2012). Luxembourg has unemployment of 6% and Turkey of 12%, but the latter had one of the strongest improvements in employment during 2011 (+2.1%, compared with 0% in the UK, -0.1% in the US and +1.4% in Germany).

    http://www.oecd.org/dataoecd/19/31/50299639.pdf

    So EPRs are not universally to blame. Some employment regimes are excessive and/or poorly-designed, but there is no reason for higher employment protections to automatically correlate with higher unemployment and weaker growth in employment.

  14. Les Abbey says:

    Once upon a time a party was formed to help protect workers rights against government laws designed to reduce those rights.

    Yesterday one of that party’s ex-apparatchiks said that we should support measures that make it easier to fire workers.

    Why should we be suspicious of what these people really want the party to become?

  15. Clint Spencer says:

    Oh dear, the Labourlist crew are over in droves with the tribal rubbish. Mike, Halitosis et al. The point of this blog is to take an objective view. Your better off with you blinkered crap elsewhere.

    Mike, I see the hypocrisy is still alive within you.

  16. Brumanuensis says:

    ‘Oh dear, the Labourlist crew are over in droves with the [sic] tribal rubbish’.

    Says the man who then doesn’t bother to back his position up with anything as vulgar as an argument. Or appear to grasp the difference between ‘your’ and ‘you’re’.

    Go on Earl Spencer, show us your facts. We’re all waiting.

  17. Clint Spencer says:

    My dear Halitosis. Peter has done an eloquent job. I run a business and have a day job employing people. I doubt you have ever been anywhere near the sharp end.

    Why would I bother with your self aggrandising drivel? You lefties are all the same living in lah lah land, I wish you’d all get lost form your own party and we could get rid of this broad church crap.

  18. Brumanuensis says:

    Obvious troll is obvious. Anyway, run along back to your ‘business’ then.

  19. Chris Matheson says:

    Beecroft is a stalking horse, designed to highlight a couple of extreme issues (child labour for example) which the government can dismiss and so claim to be “moderate” before takingon most of the rest of the proposals.

    Labour shouldn’t go anywhere near this report. Our employment laws are already too weak. We are already the soft underbelly of Europe when it comes to jobs: it is cheaper, quicker and easier to sack British workers than anywhere else in Europe and so ours are always the first to go. We should be giving working people more rights, not fewer.

    The richest countries are those with the highest wages. Beecroft gives employers the tools to weaken workers, cut their pay, keep a larger proportion for themselves at the expense of the rest of the country and so reduce the national wealth. Strong employment rights make economic sense.

    Finally I agree with part of what Les said: Labour was formed to protect the rights of working people as opposed to those with whom the power and wealth resided. That historical mission is just as relevant today. Fight for the many not the few.

  20. Clint Spencer says:

    How to sum up a Lefty.
    * I know whats best despite having no experience
    * Be as hypocritical as you can because you were dealt unfair cards and its your right to grab what you can even if your inept. The key here is confidence and who shouts loudest.
    * Ignore any real facts in favour of spurious anecdotal drivel
    * When you dont have an answer shout Troll or better still call them a Tory
    * Denounce anything factual that suggests you’re wrong as the right wing Meedhiah or a smear.
    * Think of a name such as Brumanuensis, halitosis or Ludwig Wittgenstein or some such crap to make you feel intellectually superior when in reality you’ve failed at everything you’ve turned your hand too.
    * Dont ever let a fellow lefty getting a pasting for talking crap have to deal with it by himself, dive in and tell that foe that he’s a Tory Troll and mud under my shoe.

    Busted flush.

  21. Brumanuensis says:

    Gosh Earl Spencer. It’s like you’re my biographer or something. I confess: I have failed at everything I’ve turned my hand to. Particularly origami, which was rather embarrassing.

  22. Clint Spencer says:

    Halitosis,

    Glad we’re in agreement, why don’t you go to Labourlist and join your like minded brethren? I’m sure you’ll find great solace in chatting to intellectual colossus’s there, perhaps Derek or Mike or Alan Giles.

    Have a nice lefty day (lefty day defined as: a lot of hot air, but nothing meaningful)

  23. Clint Spencer says:

    Halitosis,

    With your superior intellect, please fisk this video on growth.

  24. Brumanuensis says:

    If it’s the CPS one, I’ve seen it already and here’s a rebuttal to the report as a whole: http://www.ippr.org/articles/56/9203/unravelling-the-centre-for-policy-studies-voodoo-economics-bigging-up-small-government

    Of course, that assumes it is. However you seem incapable of actually posting a video link properly. Ironic for someone who appears to spend most of their time – when not attending to their ‘business’, of course – insulting others for their apparent lack of intelligence.

  25. Clint Spencer says:

    I read that rebuttal as weak, the one basic issue that you lefties don’t get is aspiration. Nobody starts a business if they feel their going to lose their gains to wonks like you wasting it. If they feel they can get a better return net of tax they might just do it and employ someone. You know that’s capitalism, the stuff that I do well and the stuff you hate.

    “However you seem incapable of actually posting a video link properly”

    No you cock, I elected to use the embedded code, as an intelligent person would. Making it easier for halfwits to watch the video. Sadly the site doesn’t support embedded code. You would have thought there was a big sign saying no embedded code. Team you must try harder.

    Halitosis you must try full stop.

  26. Clint Spencer says:

    Oh and Brumanuensis is that a not so clever combination of Brummie and Amanuensis. That would actually make sense as Birmingham is an enigma, universally hated, lacking in serious industry and business and Amanuensis is a Latin word adopted in various languages, including English, for certain persons performing a function by hand.

    How so very apt, I have literally bust my sides laughing.

  27. Brumanuensis says:

    Clint, me old mucker. If you’re going to try and insult me, you’ll have to try harder than:

    ‘That would actually make sense as Birmingham is an enigma, universally hated, lacking in serious industry and business’.

    I haven’t quite ‘literally bust my sides laughing’, but I had a good chuckle. So thank you, whoever you really are.

  28. Colin Hall says:

    I agree with the Beercroft Report … Margins are too tight to take the risk of employing an under-performer, so we opt not to employ and therefore we don’t grow.

  29. Clint Spencer says:

    Colin,

    Their is the wider issue of what to do with those taking the mick 3-5% of my workforce do diddly squat and there is nothing I can do about it.

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