Cable dismisses "bonkers" unfair dismissal plans

Coalition tension over the Beecroft report continues.

The coalition tensions over proposals for “no fault dismissal” are still rumbling on, with the Business Secretary Vince Cable vowing to fight the “bonkers” plans by venture capitalist and Conservative donor Adrian Beecroft.

The Beecroft proposals were first floated back in October. The businessman was commissioned by Downing Street to look at ways of increasing productivity and efficiency for small businesses. One suggestion was to scrap unfair dismissal rules, which he said were having a “terrible impact” on the “efficiency and hence competitiveness of our businesses”.

The full report is set to be published this week, but has already been leaked to the Daily Telegraph. Proposals include stopping the planned spread of flexible working, and scrapping planned equal pay audits.

Despite the fact that the report has not yet been officially made public, it has been the subject of intense Whitehall negotiations for months. Back in November, my colleague Rafael Behr reported:

Cable has agreed to "look at the evidence". Some Tories are suspicious that this is a Lib Dem ruse to kick Beecroft into the long grass. David Cameron is known to have a short attention span and the suspicion is that, once the Autumn Statement on the economy is out of the way and some other big events have come along to distract the prime minister - as is inevitable - the fire-at-will idea can be quietly shelved. This, some Tories mutter, is a classic Lib Dem tactic in the coalition.

However, seven months later, it has not panned out as the Liberal Democrats hoped, with Cameron saying he will examine the idea of no fault dismissal. “I am interested in anything that makes it easier for one person to say to another person: ‘Come and work for me’. We need to examine every proposal,” he said in Chicago this weekend.

Cable is said to be surprised that Cameron is not distancing himself, given that Beecroft is a major Tory donor and there have been rumblings over cash buying influence. The Business Secretary has said that the proposals have no evidential base.

Yet many Tory MPs support the Beecroft proposals, as a radical way of injecting growth into the economy. Floundering on the economy and keen to shore up support within his own party, it makes sense that Cameron is listening – but it is a balancing act, as pushing through such controversial measures would cement the "nasty party" image that the Prime Minister has done so much to work against. As Liberal Democrat opposition galvanises, it remains to be seen who will be victorious in the Battle of Beecroft.
 

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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Time to start fixing the broken safety net that no longer catches struggling families

We are failing to ensure we look after the children of families both in and out of work.

Families on low incomes are once again bearing the brunt of a tough economic environment. Over the past decade, rising costs of items such as food, energy and childcare, combined with stagnating wages and cuts in benefits, have repeatedly put a squeeze on family budgets.

Between 2014 and 2016, some of these pressures eased, as inflation sank to zero and pay started to grow again. But now that inflation has returned, for the first time in postwar history the increasing cost of a child is being combined with a freeze in all financial support for children. The failure to uprate either benefits, tax credits or the wage levels at which tax credits are withdrawn means that inflation is bound to erode modest family incomes both in and out of work.

The gradual fall in living standards that this produces will be worsened by other benefit cuts that come in over the next few years, for different families at different times. For a start, the phasing out of the “family element” of Child Tax Credit (and its equivalent in Universal Credit) will eventually result in all low-income families getting more than £500 a year less from the state than at present.

Since this only applies to families whose oldest child was born in April 2017 or later, it hits families with the youngest children first, with the effect spreading gradually through the population. The restriction of tax credit entitlements to a maximum of two children is also being phased in, affecting only third children born from this year on, but will clobber families much more severely, with a loss of nearly £2,800 a year per child.

Some existing larger families who escape this cut have nevertheless had their income severely reduced this year (by anything up to £6,000) by the reduction in the benefit cap.

My latest report on the cost of a child, for Child Poverty Action Group, takes stock of these trends and the effects they will have on parents’ ability to provide for their families effectively. For some families in work, improved support for childcare and a higher minimum wage partially offsets the losses incurred as a result of the above cuts. But for those relying on benefits as a “safety net” when they are not working, the level of this net is being progressively lowered over time. On present policies, the support that it provides will sink below half of what families need as a minimum sometime early in the 2020s – having in contrast provided about two thirds of their requirements at the start of the present decade.

There comes a point when a “safety net” stops being worthy of its name because it is no longer enough to provide even the bare essentials of modern life. The evidence shows that when income sinks this low, most families can only escape severe material hardship either by going into debt or by getting help from extended family members.

We are about to enter a new parliamentary season, led by a government that survived by the skin of its teeth after a disgruntled electorate failed to give it the clear majority that it sought. Raising family living standards has been at the heart of the political promise to improve people’s lives. The benefits freeze alone seems to contradict this promise by creating a downward escalator for the half of families relying on some kind of means-tested benefit or tax credit, in combination with child benefit.

For those  who are “just about managing”, and particularly for others who are not managing at all, the clearest signal that Philip Hammond could give in his Autumn Budget that he is starting  to reverse the direction of that escalator would be to restore a system of benefit upratings. This would at least allow incomes to keep up with living costs, stopping things from getting systematically worse, and giving a stable foundation on which measures to improve living standards could build.

Professor Donald Hirsch is director of the Centre for Research in Social Policy at Loughborough University