Comment: Business needs relief from the burden of regulation
The government wants small businesses to be the engines of recovery. They will need a break from the crushing burden of employment law leftover from the last government.
By Julian Smith MP
Before being lucky enough to be elected as the Member of Parliament for Skipton and Ripon, I was a small business owner. I founded it in my bedroom, it grew and I was proud of the success it became.
It became a success despite the challenge of employment law, something that took more of my time than any other management responsibility. That is why the issue is so important to me in Parliament, being I know how important it is for tens of thousands of small firms – the lifeblood of my constituency, the lifeblood of our country’s economy.
Since the election of the Labour government in 1997, employment laws and regulations were piled on to British business. From maternity and paternity rights to the minimum wage, the intentions were often good, the reality less so.
The intense focus on employee rights has ended up with the employer spending a huge amount of time ensuring that he or she is abiding by the law, wary of the consequences of even the most innocent error. Under the last government there was a cumulative effect of employment law which fundamentally changed the playing field and left employers feeling defensive rather than confidently hiring people and managing their staff.
Even John Hutton the former business secretary admitted that things had gone too far. In 2008 he said that “Exercising the right to work ultimately depends on getting the right balance in employment law. Having a multiplicity of employment rights won’t amount to a great deal if you can’t get a job in the first place. The best employment policy is therefore one that allows the economy to remain strong and successful and helps businesses to create more and more jobs.”
He was right in his fears. A friend is starting a new business at the moment. She told me the other day that her business advisor told her to hire people on short term contracts to avoid the pitfalls of having employees on permanent contracts. So at the key moment that we need more jobs, in fact hundreds of thousands of new jobs, the advice to a budding entrepreneur, is to avoid permanent staff if you can.
Small businesses owners worry about these things – that is why they are good at what they do – they are worriers and grafters and by putting so many obstacles around the key drivers of their business – staff – government is forcing them to spend less time on their business.
The level of competition faced by the UK is getting more and more intense and we should be worried. Over the next few years we desperately need people to take the risk, set up businesses, invest in existing ones and create jobs here in Britain.
That is why, with legislation still coming through from the last government, I think we need a pause. The coalition is doing many positive things to create the conditions for growth – scrapping Labour’s jobs tax, the National Insurance holiday for businesses outside the South East and the cutting of corporation tax.
But with employment law, at the moment where we need to let business focus on growth, the coalition is in danger of pushing forward with even more legislation. Shared parental leave, the right to request training and flexible working, to name but three.
I am urging ministers to give British business light at the end of the tunnel and strengthen the Coalition’s commitment to a thorough review of employment legislation and to engage all parts of business in that review. They will be happy to help – and we should consult companies of all shapes and sizes, from all parts of the country.
We need a holiday from new employment law in 2011 and a commitment to an Employment Law Review. They should take pride of place in the government’s Growth White Paper. It is the very least that British business can expect following years of being ignored.
Julian Smith is Conservative Member of Parliament for Skipton and Ripon.
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