Scrap unfair dismissal, says Downing Street report

Leaked report argues that move will boost employment -- a disingenuous claim given non-existent econ

Workers should lose the right to claim unfair dismissal if they are sacked without explanation, according to a leaked government report. The argument is that this would allow businesses to replace unproductive workers with more capable candidates, thus boosting economic growth.

The controversial proposals are made in a report from venture capitalist Adrian Beecroft, commissioned by David Cameron. It claims that current laws allow workers to "coast along", leaving employers fearful of expansion because new employees are impossible to sack.

Dated 12 October 2011, the report, leaked to the Daily Telegraph, says that the first major issue for British enterprise is "the terrible impact of the current unfair dismissal rules on the efficiency and hence competitiveness of our businesses, and on the effectiveness and cost of our public services." It continues:

The rules both make it difficult to prove that someone deserves to be dismissed, and demand a process for doing so which is so lengthy and complex that it is hard to implement. This makes it too easy for employees to claim they have been unfairly treated and to gain significant compensation.

It is hardly surprising that the report is said to have the support of both Downing Street and the Chancellor, as it is merely a step further in the direction they have already taken. At the Conservative Party conference earlier this month, George Osborne announced measures to make it easier for bosses to sack workers. These included increasing the qualifying period for unfair dismissals from one year of employment to two, and requiring those who take their employer to industrial tribunals to pay an initial deposit of £250, and a further £1,000 is a hearing is granted.

His justification was the same as Beecroft's: that this will encourage companies to take workers on. But it is more than a little perverse to argue that making it easier to sack people will reduce unemployment.

Even Beecroft accepts that there are risks to his strategy. Writing that it would be "politically unacceptable" to simply scrap unfair dismissal, he proposes that employers be allowed to sack unproductive staff with notice and a basic redundancy package. However, he says that a "downside" to this is that employers could fire staff because they "did not like them". He adds:

While this is sad I believe it is a price worth paying for all the benefits that would result from the change.

It is more than "sad" for workers to face a higher risk of losing their jobs in this unstable economic climate. If the current system is open to abuse by employees, as claimed, this would merely tip the balance way towards the employer. There are other ways of reforming the system without eroding workers' rights to such an alarming degree (some are outlined in this Liberal Conspiracy blog).

Such a change might make things easier for business, but would be an alarming assault on employee rights. Moreover, it is disingenuous to claim that it would have a significant impact on growth. This analysis places too much weight upon the role of workers' rights in rising unemployment (which is spurious, to say the least), and not enough on non-existent economic growth and government cuts.

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

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Who'll win the Richmond Park by-election?

There are three known unknowns that will decide the contest. 

It’s official: Zac Goldsmith has resigned as the Conservative MP for his Richmond Park seat, and has triggered a by-election there, where he will stand as an independent candidate.

Will it be a two-way or a three-way race?

The big question is whether the contest will be a three way fight between him, the Liberal Democrat candidate Sarah Olney, and an official Conservative candidate, or if CCHQ will decide to write the thing off and not field a candidate, making it a two-horse race between Goldsmith and Olney.

There are several Tory MPs who are of the opinion that, given that latitude to disagree on Heathrow has been granted to two Cabinet ministers, Boris Johnson and Justine Greening, similar leeway should be extended to Goldsmith. It’s win-win for Downing Street not to contest it, partly because doing so would put anti-Heathrow MPs, including Johnson and Greening, in an impossible position. Theresa May isn’t averse to putting Johnson in a tricky spot, but Greening was an early supporter of her leadership bid, so her interests come fairly high up the prime ministerial radar.

But the second reason not to contest it is that Goldsmith’s chances of re-election will be put in a serious jeopardy if there is a Tory candidate in the race. Everything from the local elections in May or the Liberal mini-revival since Brexit indicates that in a three-way race, they will start as heavy favourites, and if a three-way race results in a Liberal Democrat win there will be bloodletting.

Although people are talking up Goldsmith’s personal vote, I can find little hard evidence that he has one worth writing home about. His performance in the wards of Richmond Park in the mayoral election was actually a bit worse than the overall Tory performance in London.  (Boris Johnson didn’t have a London seat so we cannot compare like-for-like, but Sadiq Khan did four points better in Tooting than he did across London and significantly outperformed his general election performance there.) He did get a big swing from Liberal to Conservative at the general election, but big swings from the Liberal candidate to the Tory were a general feature of the night, and I’m not wholly convinced, given his performance in Richmond Park in 2016, that it can be laid at Goldsmith’s door.

If he wins, it’ll be because he was the Conservative candidate, rather than through any particular affection for him personally.

But will being the Conservative candidate be enough?

Although on paper, he inherits a healthy majority. So did Robert Courts, the new MP for Witney, and he saw it fall by 19 points, with the Liberal Democrats storming from fourth to second place. Although Goldsmith could, just about, survive a fall of that magnitude, there are reasons to believe it may be worse in Richmond Park than Witney.

The first is that we already know, not just from Witney but from local council by-elections, that the Liberal Democrats can hurt the Conservatives in affluent areas that backed a Remain vote. But in Witney, they barely squeezed the Labour vote, which went down by just over two points, or the Green vote, which went down by just under two points. If in Richmond Park, they can both damage the Tory vote thanks to Brexit and squeeze Labour and the Greens, they will win.

Goldsmith's dog-whistle campaign for the London mayoralty will particularly help squeeze the Labour vote, and thanks to Witney, the Liberal Democrats have a ready-made squeeze message. (In Witney, Green and Labour votes would have been more than enough to elect Liz Leffman, the Liberal candidate.)

But their good performance in Witney and Goldsmith's mayoral result may not be enough on their own.  Ultimately, the contest will come down to the big question that will decide not just the outcome in Richmond Park but the future of the Liberal Democrats.

Have the voters forgiven the Liberal Democrats for going into coalition?

We know that Brexit can help the Liberal Democrats at the direct expense of the Conservatives. What we don’t know is if Brexit is enough to convince 6,000 Labour voters in Bath to vote tactically to get Ben Howlett out in exchange for a Lib Dem, or for 7,500 Labour voters to back a Liberal candidate in Hazel Grove to defeat William Wragg.

One of the reasons why the Liberal Democrats lost votes directly to the Tories in 2015 was fear: of uncertainty and chaos under an Ed Miliband government propped up by the SNP. That factor is less live in a by-election but has been further weakened due to the fact that Brexit – at least as far as Remain-backing Conservatives are concerned – has brought just as much uncertainty and chaos as Miliband and the SNP ever would have.

But the other reason was disgust at the Liberal Democrats for going into coalition with the Conservatives. If they can’t win over enough votes from the parties of the left, we’ll know that the party still has a way to come before we can truly speak of a Liberal revival. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.