Labour civil war erupts as Angela Rayner to be cornered over ‘deeply-damaging’ plan
Deputy Prime Minister Angela Rayner is facing mounting pressure from both colleagues and business leaders to scale back her proposed changes to workers’ rights, as critics warn of “grave unintended consequences” for the economy. Rayner’s Employment Rights Bill, which aims to strengthen protections for workers, is set to be debated in the House of Lords next week, but business groups are urging peers to scrutinize and amend the legislation to avoid damaging economic growth.
The B5, a coalition of major business organizations including the British Chambers of Commerce, CBI, Federation of Small Businesses (FSB), Institute of Directors (IoD), and Make UK, has drafted a joint letter to the Lords expressing concerns about the Bill. The letter warns that granting workers additional “day-one” rights could have “deeply damaging implications” for the government’s priorities, including economic growth and reducing youth unemployment.
The draft letter states: “Our collective position is that, as currently drafted, the Bill will have deeply damaging implications for the Government’s priority growth mission but also their admirable focus on tackling rising economic inactivity and the growing number of young people currently classified as Neet.” It adds that the proposed changes could force businesses to make “difficult choices between jobs, investment, and growth,” particularly in light of recent increases in employer National Insurance contributions (NICs).
The business groups argue that the Bill goes “far beyond” the policies outlined in Labour’s manifesto, potentially creating a “recipe for damaging, not raising, living standards.” They are calling on the Lords to amend the legislation to strike a balance between protecting workers’ rights and supporting business growth.
A Government spokesperson defended the Bill, stating: “Through our transformative Plan for Change, this Government has delivered the biggest upgrade to workers’ rights in a generation, and our measures already have strong support amongst business and the public. We’ve consulted extensively with business on our proposals, and we will engage on the implementation of legislation to ensure it works for employers and workers alike.”
Rayner has described the Bill as “landmark” legislation that is “pro-growth, pro-business, and pro-worker.” Key measures include a right to guaranteed hours, restrictions on zero-hour contracts, and new protections against “fire and rehire” practices, where employees are dismissed and rehired on less favorable terms.
The Bill passed its third reading in the House of Commons with overwhelming support, securing 333 votes to 100. However, as it moves to the Lords, Rayner faces a coordinated effort to dilute its provisions. Business leaders argue that while they support improving workers’ rights, the current proposals could stifle economic growth and place undue burdens on employers.
The debate over the Employment Rights Bill highlights the ongoing tension between Labour’s commitment to enhancing workers’ protections and the concerns of business leaders about the potential economic impact. As the Bill progresses, the government will need to navigate these competing interests to deliver legislation that balances the needs of workers and businesses.
