Election 2015

Labour plans draw mixed reaction from business

By Michael Stones contact

- Last updated on GMT

Business leaders gave a mixed reaction to Labour's manifesto
Business leaders gave a mixed reaction to Labour's manifesto

Related tags: Employment, United kingdom, Labour party

Business leaders have given a mixed response to Labour’s manifesto published on Monday (April 13), with praise for its commitment to EU membership but criticism of its curb on zero-hours contracts.

The Confederation of British Industry (CBI) said keeping the UK economy on track over the coming years will be critical for whichever party is successful at the general election on May 7. Its director-general John Cridland added: “As healthy public finances are a prerequisite for a successful economy, the Labour Party’s focus on fiscal responsibility and deficit reduction are welcome – and business will want to see clear timescales for achieving this.”

Positive proposals in Labour’s manifesto included: remaining within a reformed EU, establishing an independent infrastructure commission, and focusing on skills. “The focus on EU membership chimes with the view of most businesses, who are clear that our economic future is best served by remaining within a reformed EU and working with allies to achieve this,”​ said Cridland.

‘A cause for concern’

But market interventions in labour and other specific sectors, together with signals on corporation tax, were “a cause for concern”. ​Businesses were worried about Labour policy to ban zero-hour contracts that could undermine the flexible labour market, which had helped “keep the wheels of the economy turning during the recession”​ by supporting job creation, said Cridland.

Forcing firms to give fixed contracts after 12 weeks to staff who have signed up to flexible zero-hours contracts will create fewer opportunities for people to move on from lower paid work, he claimed. See more on the CBI​s response at the end of this article.

Manufactuer’s group EEF noted that while Labour was at pains to demonstrate fiscal responsibility, mentioned on page one of its manifesto, the real focus of a new government must be sustaining growth by rebalancing the economy.

The group praised Labour’s long-term approach to investing in infrastructure, as a means of boosting  overall UK productivity. EEF chief executive Terry Scuoler said: “Their commitment to follow through on long-term investment in strategic roads, make a swift decision following the recommendation of the Airports Commission and to set up an independent body to assess long-term infrastructure requirements across the country will all be welcomed by industry.”

‘Flexible labour market underpins the success’

But Scuoler worried about the party’s policy on labour rules. “The UK’s flexible labour market underpins the success many of the UK’s businesses, particularly SMEs​ [small to medium-sized enterprises],” said Scuoler.

“Labour’s plans focus on the exception to this, not the rule, as zero-hours contracts and agency workers account for small numbers of the total workforce. Responsible employers recognise the need for a fair and balanced labour market, but also a fair and balanced employment tribunal system as well.”

EEF praised the manifesto’s focus on increasing the quality of apprenticeships. But it said Labour should be mindful of the array of recent initiatives in area and avoid the constant change that has previously bewildered both employers and learners.

The Anaerobic Digestion and Bioresources Association (ADBA) welcomed the manifesto’s commitments for the renewables industry. It highlighted manifesto pledges to: create an Energy Security Board to plan and deliver the UK’s energy mix; introduce a legal target to remove the carbon from our electricity supply by 2030, give additional powers to the Green Investment Bank and to create 1M additional green jobs.

‘Hugely welcome’

ADBA’s chief executive, Charlotte Morton, said: “Labour’s manifesto commitment to support green gas is hugely welcome. Alongside the commitment to a target for decarbonising our electricity supply by 2030, it represents a strong commitment to low carbon energy.  

“To maximise the potential contribution from biogas, the party will need to go further on their resources policy, by helping councils and businesses segregate food waste and ensure it is available for anaerobic digestion.” 

The GMB union said the manifesto offered workers much-needed protection. "At long last we have a major political party prepared to address and give rights to workers to shield them from exploitation in their workplaces," said ​GMB general secretary Paul Kenny.

"​Voters are faced with a stark choice – a party governing in the interest of corporate bosses with zero hours contracts and for tax breaks for the wealthy elite or a party seeking to provide rights and protection for working people."

CBI response

CBI director-general John Cridland: “Keeping the UK economy on track over the coming years will be critical for whichever party is successful at the general election.  As healthy public finances are a prerequisite for a successful economy, the Labour Party’s focus on fiscal responsibility and deficit reduction are welcome – and business will want to see clear timescales for achieving this.

“Labour’s manifesto includes a number of proposals that are positive for business, including remaining within a reformed EU, establishing an independent infrastructure commission, and focusing on skills. But market interventions in labour and other specific sectors, together with signals on corporation tax, are a cause for concern.”

On EU membership:“The focus on EU membership chimes with the view of most businesses, who are clear that our economic future is best served by remaining within a reformed EU and working with allies to achieve this.”

On infrastructure: “We support the creation of an independent infrastructure commission, which we’ve long argued will help unlock vital long-term investment.”

Flexible labour market:“Businesses do have concerns around policies that could undermine our flexible labour market, which helped keep the wheels of the economy turning during the recession by supporting job creation. For example, forcing firms to give fixed contracts after 12 weeks to staff who have signed up to flexible zero hours contracts will create fewer opportunities for people to move on from lower paid work.

"When it comes to setting the national minimum wage the independent Low Pay Commission, not politicians, should be in the lead to ensure any increases are affordable.”

Market interventions:“The independent Competition and Markets Authority ​[CMA] already has a mandate to ensure markets are working for customers, and its work should be allowed to continue unhindered, free from political interference.

“Proposals to separate the generation and supply businesses of the Big Six energy companies pre-empt the CMA’s independent investigation.”

Education and skills: “We back boosting vocational skills and beefing up careers advice. These will help people into higher skilled, higher paid jobs and ensure growth works for everyone.”

Tax avoidance measures: “Her Majesty’s Revenue and Customs ​[HMRC] must have the right powers and resources to tackle tax evasion and abusive arrangements. But an arbitrary target for tackling avoidance and poorly targeted legislation may prevent HMRC from carrying out its job effectively.”

Business taxes:“Business rates reform is long overdue, but quick fixes funded through a rise in the Corporation Tax rate would undermine progress to make the whole tax system more competitive and send the wrong signal to firms of all sectors and sizes.”

EEF response

EEF chief executive Terry Scuoler: “Labour is at pains to demonstrate fiscal responsibility and its proposals to focus on a long-term industrial strategy and keep Britain at the heart of the EU are welcome. But, the real focus of a new government must be sustaining growth by completing the job of rebalancing the economy.

“The party’s manifesto highlights some of the key foundations for doing so, such as the promise to invest in infrastructure and make a rapid decision on airport capacity.

“However, employers will be concerned by some employment proposals which threaten to have a negative impact on the UK’s flexible labour market.”

Science and innovation funding​: “A continuing commitment to protect large areas of spending will leave a future Labour government with some challenging decisions on where cuts will fall. Their manifesto pledge to provide long-term funding settlements for science and innovation with the aim of securing the UK’s place as a world leader in these areas would go some way to providing certainty and stability in these vital areas of investment.”​ 

Infrastructure​: “Labour is right to recognise that taking a long term approach to investing in infrastructure is a sure way to boost overall productivity in the UK. Their commitment to follow through on long-term investment in strategic roads, make a swift decision following the recommendation of the Airports Commission and to set up an independent body to assess long-term infrastructure requirements across the country will all be welcomed by industry.”

On Devolution​: “Putting economic growth at the heart of the debate on English devolution is something industry would like to see from all political parties. However, ending a century of centralisation in the space of a couple of years could cause fractures in the business environment, just as the economy is showing signs of recovery.

“Success will be better guaranteed and entrenched where devolution is based on the capability and capacity of local areas to deliver more strategically across borders. This should happen when they are ready, not through top down enforced change. Starting off in areas such as local transport and further business rates retention is the right approach to foster such a strategic approach.”

Labour market: “The UK’s flexible labour market underpins the success many of the UK’s businesses, particularly SMEs. Labour’s plans focus on the exception to this, not the rule, as zero-hours contracts and agency workers account for small numbers of the total workforce. Responsible employers recognise the need for a fair and balanced labour market, but also a fair and balanced employment tribunal system as well.”

Apprenticeships​: “The focus on increasing the quality of apprenticeships will send a strong signal to industry that Labour is committed to driving up status of vocational education. However, Labour must be mindful that there has been an array of recent initiatives in this space and avoid the constant change that has previously left employers and learners bewildered.

“The commitment to give employers control of apprenticeship funding paves the way for creating a truly demand-led system. Apprenticeships should not however be seen as conditions to meet for businesses winning government contracts or recruiting highly skilled employees from overseas.”

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