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- I beg to move,That this House has considered the impact of employment rights on businesses.It is a pleasure to serve under your chairmanship, Dr Murrison. Members across the House will know that I have the distinct honour of being the Member of Parliament for Spelthorne, which is not in Lincolnshire or Lancashire; it is everything south of Heathrow airport until hon. Members get to the River Thames. There are 4,500 small businesses in my constituency. They are its lifeblood. There are also huge employers: BP’s global headquarters is in Spelthorne, as is the world’s second biggest film studios, at Shepperton. I visit as many small businesses as I can, and it is always fascinating to get their insight.Indeed, I am very much looking forward to next Wednesday, when the Spelthorne Business Forum riverboat trip will see a number of small and medium-sized enterprises come together to go two hours along our beautiful stretch of the River Thames, networking and comparing stories and views. I have to be frank and say that our consideration of the Employment Rights Bill comes in the context of these businesses already smarting, struggling and, in some cases, closing as a result of this Government’s Budget—in particular, the triple whammy of the rise in employers’ national insurance, the minimum wage and business rates.I should explain that I have a fair experience of life in business. After my 25 years in the Army, I spent 10 years in venture capital and private equity, running, investing in and, we hope, improving small businesses, and growing them into mid-sized businesses and publicly listed bodies. They were mostly in the financial sector, and all had a tech underpinning. Latterly, I spent four years attempting to get Britain’s first ever defined-benefit pension consolidator, the Pension SuperFund, past the Pensions Regulator—an experience from which I still bear the scars.Yesterday, the House had the opportunity to discuss the measures in the Employment Rights Bill in some detail and to vote on a number of proposed improvements thereto, but I want to concentrate today on the cost of the Bill for businesses. In my view, the cost has been significantly underestimated, and I fear it will come as a shock when the Government see the extent to which it acts as a further sea anchor on growth and employment. Sadly, we have already seen unemployment rise by, I think, 300,000 since this Government took office.The Government’s impact assessment estimates that the measures in the Bill could cost businesses up to £5 billion annually. According to the Institute of Economic Affairs,“the £5bn figure is likely to be a considerable underestimate. It almost entirely relates to increased administrative burdens, failing to calculate the significant impacts on business costs and hiring from making it more expensive to employ people.There is no attempt, for example, to calculate how many fewer people will be hired due to limiting zero hour contracts and day-one rights to unfair dismissal protection”or“the costs of more strike action as a result of repealing the measures that made it harder to strike in the Trade Union Act 2016.”I have been in businesses where people are making very hard decisions. They want to generate growth, they know there is considerable work to be done, and they want to take the next step and make the next investment, but that is a very big decision point, as we will see as I develop this theme. I have seen with my own eyes, talking to Spelthorne businesses, that even today people are curtailing their growth and investment plans. My huge fear is that the new measures in the Employment Rights Bill, which will eventually become an Act, will further dent business confidence, meaning that these businesses will not grow and natural leavers will not be replaced.Economic studies and business surveys suggest that that will largely be passed on to consumers through higher prices, workers earning lower wages or job losses. I am sure that the Government Members never wanted that to be the outcome of this legislation. The Institute for Fiscal Studies estimates that around 80% of the extra costs are passed on in the form of lower wages than would otherwise have been paid. According to the Government’s impact assessment:“Costs will be proportionately higher for small and micro businesses due to the fixed costs of admin and compliance burdens”.There is, of course, an irreducible minimum: if a business needs a menopause management plan and it has only three employees, someone still has to write and manage that plan. The legislation does not seem to derogate, whereby certain sizes of business can just take a knee and have a bye.The Regulatory Policy Committee, which assesses the quality of Government impact assessments, says that the Government’s impact assessment for the Employment Rights Bill was “not fit for purpose” and that the Bill could lead to lower wages and fewer jobs. It assessed eight of the 23 individual impact assessments as not fit for purpose, and six were at the highest impact measure category of the original assessment.The Regulatory Policy Committee said that the Government need to provide more evidence to support an“imbalance of power between employers and workers in certain sectors of the economy”as its rationale for introducing the Bill. I am sure hon. Members will have seen that the Bill is, to a certain extent, riven with trade union speak—they will have seen trade union interests being played out in the legislation. Of course, hon. Members in certain parts of the House benefit hugely from being the recipients of donations, as does the Labour party as a whole.
- My hon. Friend is right to highlight the flaws in the impact assessment—there has been wider commentary supporting that point. Does he agree that one of the issues is the accumulation of different aspects of the Bill? For example, not only will there be more hooks for grievances to be based on, but the removal of the 50% threshold for strike action makes it easier for strikes to follow as a result of those grievances. That is at odds with what Ministers themselves have said. For example, when the British Medical Association went on strike, the Health Secretary criticised the low turnout in the ballot, yet this Bill makes it easier to take strike action on some of those more dubious grievances.
- My right hon. Friend makes a very good point. When these measures kick in, we could see the law of unintended consequences playing out, with a series of compound impacts.The RPC said that the fundamental basis for the creation of the Bill in the first place had not been made, and that there had been insufficient “considerations of alternative options” and an “inadequate assessment” of how the Bill would impact small businesses. Some of the individual impact assessments had“missing business impacts, lack of proportionate monetisation and insufficient assessment of key risks.”The areas in the impact assessment with the weakest scrutiny included day one unfair dismissal rights, reforms of trade union legislation, flexible working and third party harassment. Looking at the overall cost of the reforms, the Regulatory Policy Committee said:“The direct impact on business estimate does not account for the likelihood employers may offset the costs of regulation and mandated benefits through wage adjustments, benefit reductions or other compensatory mechanisms which would eventually be borne by the employee.”Let us see what other people think of the impact assessment. The Chartered Institute of Personnel and Development published a report in April 2025 entitled “The (Unintended) Consequences of the Employment Rights Bill”. Its survey of 2,000 employers showed that about eight in 10 believed that the measures in the Employment Rights Bill will increase their employment costs. About half of the employers surveyed believed that, overall, the ERB measures will negatively affect employment at their organisation. When we look at how employers plan to respond to the seven measures, one by one, we can see that between 5% and 20% of employers indicate that each of the measures will lead them to reduce staff through redundancies and/or recruiting fewer workers to their organisations. So much for the No. 1 mission of growth.
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- As ever, it is a pleasure to see you in the Chair, Dr Murrison, and I am pleased to follow the hon. Member for Spelthorne (Lincoln Jopp).Next year will mark 125 years since Seebohm Rowntree’s report into poverty. It was that report that sparked Seebohm and Joseph Rowntree to use their family business to institute rights for workers in my constituency: paying decent wages; introducing pensions and good terms and conditions; and providing welfare, education and leisure. Sickness levels fell, productivity boomed and workers were better off.Concurrently, in the crucible of industrialised Britain, the trade unions were making a case for similar rights, often to less amenable employers. They organised, they fought, they spoke up and they succeeded in winning their battles. They wanted those rights for all workers, so they found their political voice and founded the Labour party. At this point, I will refer to my entry in the Register of Members’ Financial Interests. I was a trade union official for 17 years and a national officer for 12 years, and I have worked across many industrial sectors.In response to the speech by the hon. Member for Spelthorne, I would say that if we have strong partnerships between trade unions and business, or between trade unions and the public sector, we have the opportunity to hit a sweet spot. We will therefore not see the industrial action that he talked about and that we saw in spades under the last Government. We will also advance the interests of businesses and workers side by side, which is a strength, and where economic power comes from having strong employment rights.
- Was the hon. Member affected by the tube strikes the other day?
- I was not, because I walk or cycle through London, which I recommend to everybody. Those strikes did not have an impact on me at all.Good industrial relations are important for business, because when employers are in touch with their workers, business can boom. Ultimately, the people with the most vested interest in the success of a business are the people whose jobs depend on it, so when they are included in the industrial environment, the opportunities come.The hon. Member for Spelthorne referred to employees’ talent. If employees are brought into the fold, so their imaginations run free and their creativity flourishes, that opportunity really strengthens business. That is why the measures that Labour introduced this week are good for workers and good for business. I congratulate the Labour Government on bringing forward what I hope will be just their first Employment Rights Bill. Instead of causing the fragmentation that we are seeing across our country, good workers’ rights are good people’s rights above all. They address equality and bring fairness, not only in the industrial setting but across wider society as well.Too many workers have been left feeling insecure, however, such as those in the gig economy, the self-employed and the bogus self-employed. We have a duty to close those loopholes. Indeed, the hon. Member said that employers will seek more loopholes, but of course, we will close them if labour is being exploited. The picture of business for far too long has been about workers getting less of the wealth from business while contributing more. We have to restore such values in the workplace.Yesterday, I was filled with real pride as we went through the voting Lobby—I think we went through 12 times. I am proud of the legislation, which will provide day one employment rights, giving people real security in employment; improve statutory sick pay; give greater flexibility to workers while ending abusive fire-and-rehire practices and exploitative zero-hours contracts; and strengthen collective redundancy rights.
- My constituents tell me how important it is to strengthen statutory sick pay, particularly for lower-paid workers who cannot afford to take time off work without it. Does the hon. Member agree that, contrary to the views of Opposition Members, that is a particularly important employment right?
- I am grateful to the hon. Member for mentioning that. When I was the shadow Secretary of State for Employment Rights, we really fought for that right, not least during covid. What a difference it would have made to workers then, and it would have kept our country safer. Of course, we need to look after people when they are sick, so I dispute what the hon. Member for Spelthorne said about a menopause plan costing business—women generally would also certainly dispute that, because having a plan would be better for business and better for women at work.We must reset the relationship with trade unions, which is why establishing a Fair Work Agency and championing engagement around equality are important. I look forward to the future for businesses with a traditional Labour agenda that benefits businesses and workers by bringing better security and better productivity, and providing the green shoots of rebuilding the economy.I recognise that businesses are in a fragile environment. Over the summer, I held business summits for the daytime and night-time economy. The attendees are looking forward to engaging with me as we set out our plans for our city together: resetting the climate, realigning workers’ rights and giving businesses a boost. The voices of businesses are really important. The Living Wage Foundation notes that 87% of employers say that paying the living wage improved the reputation of their business, and two thirds said that it improved recruitment. A letter about the Employment Rights Bill from leading economists and employment lawyers, published by the Institute of Employment Rights, says:“The emerging consensus is that labour laws do not, on the whole, have negative economic consequences, and may well have positive ones.”
- Does my hon. Friend agree that we have to assess the economic impact and consequences, which we have seen over a number of years, of low pay and insecure hours, and how they have contributed to high turnover and sickness absence in businesses? I believe that those problems are substantially addressed by the provisions of the Employment Rights Bill.
- My hon. Friend has spoken powerfully and brought that observation to the attention of the House. Low productivity was also a major feature of the last Administration.The letter goes on to highlight how worker protection positively impacts productivity, how investment in skills improves the competency of workers, and how collective bargaining raises wages and stabilises employment. Over time, that positive investment will spill out to the wider economy and Government, so that there can be investment in the public services that have been so broken. If workers have more in their pockets, they are more likely to spend in the local economy, and wage disparities will be addressed so that wealth is more evenly spread, boosting local business. We also still have parts of the Taylor review and its 53 recommendations to implement to help small employers and those in irregular work.
- A few months ago, The Times invited the Chancellor of the Exchequer to address its CEO summit. Just before the Chancellor was called up to the stage, the host reminded the audience that the Chancellor had promised that this would be the most pro-business Government ever. The host then invited the chief executive officers—I think there were 200 of them—to say how many of them, having seen the Labour Government at work, think that it is pro-business. Not a single hand went up. Is the hon. Member aware of that?
- In the first of five years, we have had to repair the economy. That has been our focus, but as we move forward, businesses will see the vision that Labour has for rebuilding the economy. In my constituency, I see the vibrant boom of entrepreneurs and their business concepts coming to fruition. People want to start a business and see its success. We will certainly build the wider infrastructure needed for that.There is much more that we need to do to advance the rights of workers. Sector bargaining is a must, with standards and terms to boost economic sectors across the economy, address labour shortages and provide sector security. I would like to see workers on company boards, co-producing with businesses and seeing the success of workers. A single status for workers is really important as we move forward. That is an issue that I have worked on for many years.On changing the culture in workplaces, I want to ensure that workers no longer have to fear negative behaviours at work. An issue close to my heart, and one that I have worked on for many years, if not decades, is bullying at work. In two different parliamentary Sessions, I have introduced a Bullying and Respect at Work Bill, addressing negative cultures in the workplace. Bullying costs business £18 billion, and 17 million working days are lost.We need a legal definition of bullying, a route to an employment tribunal and a positive duty to prevent, as in Australian legislation. I hope the new Minister, who I welcome to her place, will be willing to meet me and campaigners to discuss such legislation to ensure that we can introduce such a measure on one of the biggest issues blighting business today.If workers are not subjugated and their wages are not extracted, we will build a more equitable society, a strong economy and flourishing businesses. A cohesive society is certainly something that I know working people long to see under this Labour Government.
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- It is an absolute pleasure to serve under your chairship, Dr Murrison. I thank the hon. and gallant Member for Spelthorne (Lincoln Jopp) for his passion on this topic, which he illustrated incredibly well in his contribution. The issues that he raised are the ones that were in my speaking notes to highlight to the Government yesterday during the Employment Rights Bill debate.What a pleasure it is to see the Minister in her place. I wish her all the best for the future. I am sure her energy and enthusiasm will help her along the way.We are all very aware that small businesses are the backbone of the British economy, as the hon. Member for Spelthorne said. In March 2025, some 89.3% of businesses in Northern Ireland—72,465, to be precise—were micro-sized, with fewer than 10 employees. Only 2.2% of businesses had more than 50 employees. Four in 10 businesses —some 39.6%—had a turnover of less than £100,000, while a smaller 12.8% had a turnover exceeding £1 million.These are not our Tescos and Waitroses, with their human resources departments and access to civil service occupational health services. These are small shops, for whom paying £250 for an occupational health referral body is a big deal. The impact on small businesses in my constituency is absolutely ginormous and will have great effect. They include local restaurants that cannot afford to pay their staff sick pay and get other staff in to replace them. They either step in themselves and do their own work through the night, or staff all work even harder than they already are to take up the slack, because they understand the financial pressures.The Federation of Small Businesses has said that sickness absence already costs an average small employer more than £3,500 a year, or £5 billion across the economy. The Employment Rights Bill will see those costs rise dramatically from next April. We need a better focus from the Government and, with great respect, from the Minister and her Department, on helping small firms look after people and get them back into healthy work. I know the Government have said that is part of their policy, and I do not doubt it, but we need to see how that is going to work.
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