The government must overhaul its “damaging” employment rights law or risk stifling growth, the head of Britain’s largest business lobby group warned on Monday – just two days before Rachel Reeves presents her second budget.
Rain Newton-Smith, chief executive of the CBI, will use the group’s annual conference in London to point out that ministers have failed to listen to employers’ concerns over the bill, which sets out tougher dismissal rights and guaranteed working hours. She argues that eight in 10 companies believe the legislation in its current form will make it harder to hire and slow economic growth.
“Durable reform requires partnership, not a closed door,” she will say. “If eight out of 10 companies say this bill will make it harder to recruit, they are holding back growth. The government must change course and ask companies and unions to reach consensus through compromise.”
Newton-Smith will also warn Reeves against repeating what she described last year as a “stop-start economy” and further tax rises, pointing out that the Chancellor’s first Budget proposed £24 billion a year in new business costs. “It feels less like we’re on the road and more like we’re stuck in Groundhog Day,” she’ll say.
Her comments come amid growing fears among employers that next week’s Budget could include further revenue-raising measures, including a proposed £2,000 cap on salary sacrifice pension schemes – a move which the pensions industry says could prompt almost a third of companies to cut their contributions.
The CBI conference will also feature Business Minister Peter Kyle, who is expected to reassure employers that Labor is committed to cutting red tape, cutting energy costs and reversing what he describes as “industrial decline”. Kyle will announce a two-month consultation to decide which companies will be eligible for a 25% cut in energy costs from April 2027. The target group is more than 7,000 energy-intensive companies in sectors such as automotive, steel and chemicals.
“In recent years, our most promising innovators and industries have been hamstrung by some of the highest electricity prices in the G7,” says Kyle, promising further reforms to make the UK “the best place to start and scale a business.”
Conservative leader Kemi Badenoch will also address delegates and promise that any government under her leadership will “repeat every job-destroying, anti-business and anti-growth measure in this bill”.
Newton-Smith is expected to urge ministers to find a long-term solution to the UK’s crippling energy costs, pointing out that Britain suffers from some of the highest prices in the world. She will call for a plan “that recognizes the role of the North Sea in our transition” and sets out the structure of energy bills.
“You will never be able to tax your way to growth,” she will say. “How can companies hire to grow when government decisions go the other way? When Social Security goes up and changes in wage cuts make it more expensive to risk people?”
The conference will feature leaders including British Airways chief executive Sean Doyle and Sir Charlie Mayfield, who recently published the government’s Keep Britain Working review.
