How the coalition sneaked through a law making it easier to sack workers

While all eyes were on press regulation, MPs quietly voted to halve the consultation period for redundancies from 90 days to 45.

While the Commons noisily debated press regulation, MPs elsewhere in the House quietly signed away workers' rights. On a delegated legislation committee (a backdoor means of sneaking through contentious amendments), nine Conservatives and two Liberal Democrats voted to reduce the consultation period for collective redundancies from 90 days to 45. 

At present, employers planning to make 100 or more redundancies are legally required to consult with trade unions and other employee representatives for this period to help minimise the impact and seek alternatives to job losses. Unite cites the example of Jaguar Land Rover, which proposed making over 1,000 staff redundant in 2009 but later avoided any job losses after identifying £70m of savings during the consultation.

The reduction to 45 days, based on a proposal in the infamous Beecroft report, means fewer companies will now adopt this enlightened approach. As John McDonnell, one of the seven Labour MPs who voted against the measure (only 18 MPs can sit on the committee), noted: "We know that the reduction to 45 days means that the opportunity for consultation is hopeless. It will not happen and will be meaningless. There will not be the time for the employees to work with the employers to look at alternative plans for that company." 

The Labour leadership is also opposed to the measure. Shadow minister for employment rights Ian Murray said: "Collective redundancies are, or course, one of the most dramatic forms of job loss. That is why the current legislation on collective redundancy is so vital; it allows for particular care to the process of achieving business restructuring, ensuring that employees are involved as much as possible in the decision-making and if job losses are necessary then all employees and their representatives are closely involved."

The change will now come into force on 6 April but you will search in vain for a mention of yesterday's vote in today's papers. 

Unite trade unionists at Unilever's Port Sunlight factory picket outside the main gates of their factory. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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There are risks as well as opportunities ahead for George Osborne

The Chancellor is in a tight spot, but expect his political wiles to be on full display, says Spencer Thompson.

The most significant fiscal event of this parliament will take place in late November, when the Chancellor presents the spending review setting out his plans for funding government departments over the next four years. This week, across Whitehall and up and down the country, ministers, lobbyists, advocacy groups and town halls are busily finalising their pitches ahead of Friday’s deadline for submissions to the review

It is difficult to overstate the challenge faced by the Chancellor. Under his current spending forecast and planned protections for the NHS, schools, defence and international aid spending, other areas of government will need to be cut by 16.4 per cent in real terms between 2015/16 and 2019/20. Focusing on services spending outside of protected areas, the cumulative cut will reach 26.5 per cent. Despite this, the Chancellor nonetheless has significant room for manoeuvre.

Firstly, under plans unveiled at the budget, the government intends to expand capital investment significantly in both 2018-19 and 2019-20. Over the last parliament capital spending was cut by around a quarter, but between now and 2019-20 it will grow by almost 20 per cent. How this growth in spending should be distributed across departments and between investment projects should be at the heart of the spending review.

In a paper published on Monday, we highlighted three urgent priorities for any additional capital spending: re-balancing transport investment away from London and the greater South East towards the North of England, a £2bn per year boost in public spending on housebuilding, and £1bn of extra investment per year in energy efficiency improvements for fuel-poor households.

Secondly, despite the tough fiscal environment, the Chancellor has the scope to fund a range of areas of policy in dire need of extra resources. These include social care, where rising costs at a time of falling resources are set to generate a severe funding squeeze for local government, 16-19 education, where many 6th-form and FE colleges are at risk of great financial difficulty, and funding a guaranteed paid job for young people in long-term unemployment. Our paper suggests a range of options for how to put these and other areas of policy on a sustainable funding footing.

There is a political angle to this as well. The Conservatives are keen to be seen as a party representing all working people, as shown by the "blue-collar Conservatism" agenda. In addition, the spending review offers the Conservative party the opportunity to return to ‘Compassionate Conservatism’ as a going concern.  If they are truly serious about being seen in this light, this should be reflected in a social investment agenda pursued through the spending review that promotes employment and secures a future for public services outside the NHS and schools.

This will come at a cost, however. In our paper, we show how the Chancellor could fund our package of proposed policies without increasing the pain on other areas of government, while remaining consistent with the government’s fiscal rules that require him to reach a surplus on overall government borrowing by 2019-20. We do not agree that the Government needs to reach a surplus in that year. But given this target wont be scrapped ahead of the spending review, we suggest that he should target a slightly lower surplus in 2019/20 of £7bn, with the deficit the year before being £2bn higher. In addition, we propose several revenue-raising measures in line with recent government tax policy that together would unlock an additional £5bn of resource for government departments.

Make no mistake, this will be a tough settlement for government departments and for public services. But the Chancellor does have a range of options open as he plans the upcoming spending review. Expect his reputation as a highly political Chancellor to be on full display.

Spencer Thompson is economic analyst at IPPR