Rayner's workers' rights crush confidence to record low

Telegraph

12-05-2025

Angela Rayner's plan to overhaul workers' rights has crushed business confidence to a record low, as bosses prepare to slash jobs and curb hiring.
Optimism among employers has fallen to levels not seen outside of the pandemic, according to a new survey, with just 25pc of bosses claiming they expect to increase headcount over the next three months.
This is the lowest level since late 2020, when Britain was still in the depths of Covid.
A quarter of employers are also planning to make redundancies in the next quarter, the survey by the Chartered Institute of Personnel and Development found, as fears mount over the impact of looming red tape.
Under the Deputy Prime Minister's Employment Rights Bill, bosses will be banned from handing out zero-hour contracts and flexible working will be made the 'default' for all.
Workers will also be handed full rights from day one, including maternity and paternity leave, sick pay and protection from dismissal.
The Bill is set to pile further pressure on businesses already battling Rachel Reeves's £25bn National Insurance tax raid, Donald Trump's trade war and the increase in the minimum wage.
James Cockett, economist at CIPD, highlighted the threat Ms Rayner's reforms now pose to bosses given the new economic environment.
'The Employment Rights Bill is landing in a fundamentally different landscape to the one expected when it formed part of the Labour manifesto in summer of last year,' he said.
'It was always going to be a huge change for employers, but they're operating in an even more complex world now.'
Andrew Griffith, the shadow Business Secretary, accused the Government of 'killing Britain's businesses' by pressing ahead with its Employment Rights Bill after increasing taxes.
He said: 'Alongside making families £3,500 worse off, Labour's jobs tax is crushing confidence, killing jobs and pushing employers to the brink. Under Labour, the economy has flatlined and with businesses under mounting pressure, things can only get worse.
'This report only confirms what we hear daily from the shop floor to the boardroom – confidence has collapsed. Labour can't understand why because their cabinet has zero business experience.'
It came as the Recruitment and Employment Confederation (REC) found another fall in the number of workers landing new permanent jobs last month, signalling a further lack of confidence in the economy.
Neil Carberry, chief executive of the recruitment industry group, urged the Government to revisit its workers' rights reforms to ease pressure on businesses.
He said: 'The biggest single drag factor on activity right now is uncertainty. Some of that can't be helped, but payroll tax costs and regulation design is in the Government's gift.
'Businesses have welcomed positive discussions with ministers on the Employment Rights Bill, but now it is time for real changes to address employers' fears and boost hiring.
'A sensible timetable and practical changes that reduce the red tape for firms in complying with the Bill will go a long way to calming nerves about taking a chance on someone.'
Separately, the latest pay for newly-hired temporary staff increased at the fastest pace in 11 months, according to REC, fuelled by the latest rise in the minimum wage.
This adds to the Bank of England's dilemma as officials fear rising pay will push up inflation, even amid a slowdown in the wider economy.
It means the Monetary Policy Committee is expected to cut interest rates only cautiously after last week's reduction from 4.5pc to 4.25pc.
A government spokesman said: 'Through our transformative Plan for Change, the 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.'