It is not that long ago that the new Prime Minister Sir Keir Starmer announced that his would be the government of ‘growth, growth, growth’. What has he done in that time to try to realise that ambition? It is hard to think of a single measure that will genuinely do anything to improve the fortunes of wealth-creating businesses – other than promised planning reforms which seem destined to fail as they are based on the faulty premise that it is only Nimbys who hold up house-building and other development, and not reams of environmental regulations which Labour has shown no interest in reforming.
We have a government which poses as a friend of business but which in reality is more tilted towards the demands of organised labour than any government for at least half a century
On the other hand it is very easy to point to measures which will place extra burdens on business. We have had the right to switch off and the right to demand a four-day week. We have had the promised repeal of all trade union reforms enacted since 2010. And now we have a Fair Work Agency which will be charged with enforcing Labour’s workplace reforms, and empowered to levy huge fines on businesses which transgress.
The government is spinning this as a rationalisation exercise, in that the new body will replace several smaller quangos like the Gangmasters and Labour Abuse Authority, yet Angela Rayner has made it quite clear that the intention is to create a regulator with the power to issue much stiffer fines.
We have a government which poses as a friend of business but which in reality is more tilted towards the demands of organised labour than any government for at least half a century. Starmer’s conceit is that what is good for workers will also be good for business and the economy. His creed is the opposite of ‘trickle-down’ economics. In Starmer’s world if you make a worker happy then the benefits will trickle up to the bosses.
Except, let’s face it, they probably won’t. With the Fair Work Agency we will have yet more jobs for regulators, on good salaries with guaranteed, taxpayer-backed pensions. This will be paid for by extracting fines from the pockets of businesses which are judged to be delinquent. Inevitably, these will turn out to be disproportionately represented by small businesses – the ones which can’t afford to employ full-time compliance departments to keep on top of the latest intricacies of employment law, as interpreted by employment tribunals.
We are heading towards a French-style economy, where there are plenty of large companies with cosy relationships with local and national government. Where there is room, too, for micro-businesses which don’t have to employ staff outside the family, but where much of the middle layer –small, fast-growing companies – is missing. That is what happens when you over-regulate labour, making it extremely difficult to hire and fire staff.
Who would want to create jobs when by doing so you automatically become a figure of suspicion? The temptation will be for one or two person businesses to remain microbusinesses to remain just that, and shun the opportunity to grow.
On a political point, there were many predictions at the outset of the new government that deputy Prime Minister Angela Rayner would be rapidly eclipsed. Although Starmer was bound to include her in his cabinet it was suggested that he might demote her to a lowly brief. Yet when you analyse the new administration’s output it is hard to see any sign of Rayner being frozen out. On the contrary, it is Rayner, the trade unionist, who appears to represent the beating heart of the government. We are a very long way from the New Labour years.
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