BEIS White Paper on Audit Reform: Will Kwarteng's reforms really unchain entrepreneurs?
When I was a boy I used to love reading Sherlock Holmes. This year’s Queen’s Speech reminded me very much of the celebrated passage in Silver Blaze, where Holmes unearthed an important factor in a case. “Is there any point to which you would wish to draw my attention?” he was asked. “To the curious incident of the dog in the night-time” he replied. “The dog did nothing in the night-time.” came the response. “That was the curious incident”, famously retorted Sherlock Holmes.
Now what’s this got to do with the Queen’s Speech? Many have considered that in as much as it affects employment law, it was something of a damp squib. True, it contained an Enterprise and Regulatory Reform Bill which is expected to include various reforms to the Employment Tribunal system, but these have been trumpeted well before now, during the course of the Resolving Workplace Dispute consultation last year and thereafter. We have also known for some time that claimants are going to be required to lodge their claim with ACAS before proceeding with their Tribunal proceedings, so as to give ACAS the opportunity to conciliate. There will be focus on compromise agreements, which are now to become “settlement agreements” and it seems likely that the Government will be introducing penalties for employers who fail to comply with employment laws, with fines going to the Treasury, rather than to the other side. We expect the new Children and Families Bill to include provisions dealing with flexible working which will allow mothers and fathers more equally to share caring responsibilities. But frankly, as a total package, this all looks like pretty much “old news”.
However, only in the last day or so, I have detected a potential rationale for this apparent lack of legislative nerve. For many months now, commentators such as myself, have been saying to the Government they may have got it all wrong over Red Tape. Their premise is that if only they could release employers (particularly small or medium sized ones) from the shackles of employment legislation, they would go out and recruit, such as to provide the economy with the growth that it so plainly craves.
I have always felt this was dangerous. The more you bang the “Red Tape” drum, the more employers will start to believe the message, and unless the Government can show Red Tape has been successfully identified and eradicated, they may well take a decision not to recruit. The problem is that very few operations these days can expand without hiring more labour. Most businesses need people. If they have an operational need to recruit, they will do so. They are not going to be put off that course simply because they may be taken to the Employment Tribunal some time down the line (which, in any event, statistically remains unlikely). Indeed, a report for the Organisation for Economic Co-operation and Development (OECD) a few years ago pointed out that with the exception of the US and Canada, the UK is actually one of the most lightly regulated of the developed nations.
It occurred to me that the Government was at last beginning to get the message, when in its Employment Law Review released a few weeks ago, it specifically makes much reference to the fact that it is seeking to tackle “perceptions” about employment law, and “dispel myths” about what employers can or cannot do.
However more recently, and just at the time of the Queen’s Speech, things seem to have reached another level. At the weekend Philip Hammond, the Defence Secretary, and reportedly an “ally” of George Osborne, has come out and actively criticised what he describes as “whinging” company executives who are refusing to take risks and increase employment.
Indeed, at the beginning of this week, the Financial Times was reporting that David Cameron was to urge Britain’s bosses to exploit the country’s “very favourable business environment” and William Hague, the Foreign Secretary, is said to be telling companies to stop complaining about the alleged lack of a growth strategy and instead go on to “work hard”.
Moreover, a “spokesman” for Mr Cameron, whilst confirming the Government was going to do more to help, specifically drew attention to the fact that in this Country we have the advantage of the English language, falling corporation tax rates and he added, “relatively low regulation”.
So it seems plain that the Government has now decided to change tack. It has become frustrated with business leaders for continuing to blame ministers for the Country’s poor economic climate.
But it may be that in this specific respect, the Government is reaping exactly what it sowed. In that sense, the Queen’s Speech may mark an important turning point for the Government. No longer are they going to be telling businesses that they are right to be concerned about all the employment laws that are getting in the way of them being able to recruit. Rather, they are looking to say that the business environment is broadly fair in terms of the workplace, and that it is high time they showed some confidence and faith to invest in the future.
That then was the curious incident of the Queen’s Speech that did not do anything about employment law in the night time…
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