If the Conservatives win the general election, one of their key objectives is to make the UK the easiest and best place in the world to set up and grow a business. Policies to support this include cutting or abolishing some taxes on business, simplifying employment law and creating an extra 100,000 apprenticeships a year.
But there is scepticism about how realistic some of the party’s objectives are and concern that measures to cut the budget deficit could prove disruptive to the economy. In addition, some argue that proposed measures to close the gender pay gap are ill-conceived.
At the launch of a Green Paper, Regulation in the Post-Bureaucratic Age, shadow business secretary Ken Clarke argued that both businesses and public services are blighted by red tape. “Managers should not have to deal with excessive regulations, countless government quangos and too many inspectors of one kind or another, when they ought to be getting on with making their businesses survive and grow, their public services improve and creating new secure jobs.”
Cutting red tape
The green paper outlined a scheme where no new red tape would be introduced without a compensating cut in costs and burden elsewhere. In addition, regulators and quangos would cease to exist after a set period unless they could prove their usefulness.
For David Coats, associate director for policy at The Work Foundation, such ideas are redolent of the 1980s. “If you look at the international evidence, you would conclude that the UK has quite weak regulation of the labour market. I really do wonder if the Tory red tape argument does stand up, certainly if compared to France and the Nordic countries.”
Coats is also dubious about the Conservative stance on Europe, which includes regaining national control of certain parts of social and employment legislation to reduce damage to the British economy. One example of this would be to seek guarantees about the application of the Working Time Directive (WTD) in public sector bodies such as the National Health Service.
Coats warns that considerable government resources would be needed to regain control and with little prospect of success. He explains: “You would need to change the treaty and get 27 member states to agree to it. It could be a fool’s errand.”
| What lawyers think of Conservative employment policies | Jane Hobson, partner, Weightmans, is scathing about Tory plans to simplify employment law. “We are not going to go back in time and reduce the amount of protection for individuals. There are ways that things could be made better but to say ‘let’s simplify it’ is a ridiculous statement to make.”She also suggests there is a “slight contradiction” between simplifying the law and increasing the rights of parents to flexible working. She says small businesses in particular will see this as added regulation and potentially a massive extra cost when coupled with the EU plans to extend fully paid maternity leave to 20 weeks.
Jonathan Exten-Wright, partner, DLA Piper, argues that because much recent employment law is incorporated into treaties, it would require considerable re-negotiation with EU partners to change it. “Short of withdrawing from Europe, there is little a Conservative government could do to bring about major change,” he says. Tom Potbury, senior associate in employment law at Pinsent Masons, agrees: “We are just not free to dispose of it whether we like it or not.” But Catherine Wilson, employment partner at Thomas Eggar, is sympathetic to the Tory aim of reducing litigation about health and safety issues. Tory leader David Cameron says the Conservatives will reduce the burden and impact of health and safety legislation and propose practical changes in the law to bring an end to the culture of excessive litigation. “They (the Conservatives) say there is no such thing as a risk-free environment,” comments Wilson. “I think that would be a positive benefit to employers.” |
View on Europe
There is also a sense that the Tories have an antipathy to Europe that could backfire on employers. David Yeandle, head of employment policy at the manufacturers’ lobby group EEF, says active engagement with Europe will be important for whoever wins power because of the reviews of the WTD and the pregnant workers directive. “The worry I have is that we’re going to be facing a couple of very important employment issues at European level over the next six to nine months,” says Yeandle.
Equality is one issue where Conservative employment policy is far removed from its stance in the 1980s. Policies include an extension of the right to request flexible working to all parents with children under the age of 18 and introducing a new system of flexible parental leave so parents can decide how to divide paid maternity leave between them.
Yeandle is particularly concerned about a measure designed to prevent pay discrimination against women. It would mean that, if successfully challenged at an employment tribunal, organisations with at least 250 employees will have to commission a pay audit – which could be extremely expensive for large employers.
Yeandle says: “I think it will encourage companies to settle out of court. We’re not saying there isn’t an issue that needs resolving about gender equality but simply providing figures about average pay for men and women does not solve anything.”
Nick Holley, executive director of the HR Centre of Excellence at Henley Business School, warns that defining equal pay could also be extremely complex. He says: “If you have 250 people and, for argument’s sake, each does a unique job, how do you identify what should be equalised? Yes, close the pay gap between men and women but you must consider the implications of it.”
One of the clearest policy divisions with Labour is over how to tackle the budget deficit. The Conservatives want to start reducing it this year rather than wait for the recovery to become more firmly established. In the public sector, they are committed to imposing a one-year pay freeze for all but the lowest paid, plus a cap of £50,000-a-year on the highest-paid staff.
Pay freeze reactions
Coats says the pay freeze proposal could cause strikes and disruption unless trade union backing is forthcoming. He warns: “Sixty per cent plus of the public sector workforce are union members. The government can’t ride roughshod over the unions. Savings are going to be achieved by engaging the innovative capacities of front-line staff. If you don’t have them on side, it will be bad for them, bad for public sector employers and bad for citizens.”
However Dean Shoesmith, president (designate) of the PPMA, which represents HR professionals in the public sector, believes it is possible to freeze pay without causing disruption. If inflation makes people noticeably worse off, he says this could be addressed by tinkering with benefits such as annual leave. “But the longer the pay freeze goes on, the harder motivation becomes.”
Ben Willmott, senior public policy advisor for the Chartered Institute of Personnel and Development (CIPD), argues that an overall freeze of the pay bill would be a better approach because it would allow more flexibility. “You can still prioritise resources to areas where you have skill shortages or there is a particular case for extra reward,” he explains.
Willmott welcomes a Tory commitment to giving public sector workers the right to form co-operatives to run the services they deliver. Eligible employees would include Jobcentre Plus staff, community nurses and primary school teachers. He says: “It is a way of hopefully supporting employee engagement, while having a sense of shared ownership of the venture and shared pride in service delivery.”
Duncan Brown, director of HR business development at the Institute for Employment Studies, describes the idea as one of the most interesting to emerge on employment issues during the pre-election period. “Employee ownership does have a very good research record in terms of its effects on employee motivation and employer performance.”
However Coats suspects there will be insufficient will to see the idea through. “It’s probably going to be too difficult, especially with all the other things they are planning to do in the public sector.”
Welfare reform
These include the reform of the welfare system, which shadow work and pensions secretary Theresa May describes as “complex and confusing” for benefit claimants and too rigid to meet their individual needs.
The Tory solution is to harness the expertise of the private and voluntary sectors with payments based on how effective they are in keeping people in work, as well as getting them a job in the first place. “By choosing to engage the private and voluntary sectors in the delivery of welfare-to-work services we are opening it up to market forces,” she said in a speech launching the programme.
“By making outcomes central to our system we encourage competition, innovation and creativity within the providers.”
May has won a commitment from shadow chancellor George Osborne to pay for job creation programmes out of savings from the benefit bill. But with so much emphasis being placed by their party on reducing the budget deficit, it will be interesting to see if this actually happens. As with several other areas of employment reform, how far the Conservatives are prepared to go in order to implement this is open to question.
Next week: the plans of the Liberal Democrats and others post-election
What lawyers think of Conservative employment policies
Jane Hobson, partner, Weightmans, is scathing about Tory plans to simplify employment law. “We are not going to go back in time and reduce the amount of protection for individuals. There are ways that things could be made better but to say ‘let’s simplify it’ is a ridiculous statement to make.”
She also suggests there is a “slight contradiction” between simplifying the law and increasing the rights of parents to flexible working. She says small businesses in particular will see this as added regulation and potentially a massive extra cost when coupled with the EU plans to extend fully paid maternity leave to 20 weeks.
Jonathan Exten-Wright, partner, DLA Piper, argues that because much recent employment law is incorporated into treaties, it would require considerable re-negotiation with EU partners to change it. “Short of withdrawing from Europe, there is little a Conservative government could do to bring about major change,” he says.
Tom Potbury, senior associate in employment law at Pinsent Masons, agrees: “We are just not free to dispose of it whether we like it or not.”
But Catherine Wilson, employment partner at Thomas Eggar, is sympathetic to the Tory aim of reducing litigation about health and safety issues. Tory leader David Cameron says the Conservatives will reduce the burden and impact of health and safety legislation and propose practical changes in the law to bring an end to the culture of excessive litigation.
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“They (the Conservatives) say there is no such thing as a risk-free environment,” comments Wilson. “I think that would be a positive benefit to employers.”
