Employment laws must be weakened, bosses demand, as business minister repeats criticism of Tory donor's proposals
Business leaders stepped up the pressure over the government's reluctance to put weaker employment protection at the heart of its growth strategy when both the Confederation of British Industry and the Institute of Directors condemned the gap between the government's rhetoric and its enterprise bill published on Wednesday.
Business chiefs are furious at the reluctance of the cabinet to back plans put forward by the No 10 adviser and Tory donor Adrian Beecroft to tear up Britain's employment rules.
The CBI dismissed the labour market measures published in the enterprise bill as insufficient. It said: "So far, there has been too little progress in too many areas, with the government's intended changes yet to filter through."
The Institute of Directors also attacked the bill as "another missed opportunity" for the government. "In a week where Adrian Beecroft's report has dominated the news agenda, the gap between government rhetoric and actual deregulation is all too obvious," it said.
Pressed in the Commons, Cameron would not be drawn on whether he endorsed Beecroft's most radical proposal for no-fault dismissal, saying the idea was being discussed for microcompanies.
The business secretary, Vince Cable, also dismissed Beecroft proposals to end protection for public-sector employees when services are contracted out to the private sector. Cable did not rule out examining some parts of the "gold-plated" Tupe rules – Transfer of Undertakings (Protection of Employment) – which protect workers' pay and jobs when they move to a new employer. Some issues might need to be "cleared up", he said.
But Cable, who is involved in a war of words with Beecroft after the Tory donor accused him of being a socialist and anti-business, told the Guardian there was no need for a review of the Tupe rules.
In barbed comments aimed at Beecroft he said the government would not make changes based on "one man's anecdotes" but said he did not want a "spat". Cable said: "I'm not getting into a debate with this man. I'm not interested in a spat. I just want to get on with my job. Much of what is in the [Beecroft] report is uncontroversial. For instance the need to reform employment tribunals has wide support and is something the department is already acting on."
Speaking for the first time about proposals to water down the laws that protect workers' pay and conditions when they are outsourced to a private company – one element of the Beecroft plans that is actively being considered by the government – he said: "There are a few issues that need clearing up, but there is no need for a wholesale review. We will look at this area based on evidence. We are not going to change the system based on one man's anecdotes."
Earlier this week Cable derided many of the key plans put forward by Beecroft to reform employment protections and cut red tape. He described proposals to cut the maximum payout for unfair dismissal to make it cheaper for firms to jettison staff as "bonkers".
But this is the first time he has commented on the Tupe arrangements. They are particularly important to the coalition after claims from the right that public-sector employment conditions are too generous and preventing private-sector companies pitching for contracts.
Beecroft urged the government to remove "gold-plated" Tupe provisions that bar companies from firing workers or reducing wages if they take over a service contract. Beecroft said private sector employers should be able to cut the wages and pensions of all staff who move out of the public sector after one year. His report claimed restrictions prevented employers easily hiring and firing staff and were holding back thousands of firms from taking on new employees.
His report, which was commissioned by the former No 10 strategy director Steve Hilton, called for the government to confront vested interests that shielded underperforming staff.
One employment lawyer questioned whether the Beecroft proposals on Tupe would even be achievable. Anne Pritam, a partner in the employment team at the law firm Stephenson Harwood LLP, said such a move would be difficult because the Tupe clauses on outsourcing services are enshrined in European as well as UK law. "The domestic legislation that we introduced simply reflects European case law, which binds us legally anyway. We cannot remove it. So they are not going to be able to change wholesale the way in which this procedure works, although there could be some small changes, useful clarifications and guidance."
Beecroft made an estimated £100m from private equity deals before taking semi-retirement from Apax Partners, the firm he helped found.
He handed his report to Hilton last Autumn but it was shelved. It was published this week in response to freedom of information requests and immediately caused a stir with its controversial call for a bonfire of traditional employee rights.
