The chair of the Confederation of British Industry, Rupert Soames, has accused the government of treating employers as a “cash cow” in last month’s budget, and urged ministers to water down plans for workers’ rights.
“It’s been tough on business. In the budget, business has been the cash cow and it’s been milked. Don’t go and whack it,” Soames said at the CBI’s annual conference in Westminster.
He suggested businesses might be prepared to forgive Reeves’s £25bn increase in employer national insurance contributions (NICs), if other policies were tweaked.
“I think they need to see this in the round. And if we can come to a position where business can say: ‘Well OK, the budget was a bit shit but we can live with the rest,’ then there’s probably a landing ground we can get to, where the government can retain the confidence of business.”
Labour published its employment bill last month, with scores of policies aimed at boosting workers’ rights.
Soames criticised aspects of the plans, including enhanced obligations on firms to consult on proposed redundancies, and the obligation for employers to offer full workplace rights after a short probation period, instead of the current two years.
He suggested that, taken with the NICs rise, these changes would work against the government’s plans to increase employment.
He said: “There appears to be a dissonance between on the one hand the Department for Work and Pensions saying: ‘We’d like you to get 1 million people back into work.’ We’ve got Treasury saying: ‘By the way a lot of these people you’re going to be paying NI on.’ And you’ve got the Department of Trade saying: ‘We’re going to make employing people a whole lot more risky and basically you’re going to have to double the size of your HR department.’”
He added: “Businesspeople aren’t dumb and they will get that dissonance,” claiming Labour only has a short time to demonstrate that it is business-friendly. “The jelly on that judgment will set over the next six months to a year. And once it’s set, it will be hard to change.”
Soames was speaking at the conference, where the lobby group’s chief executive, Rain Newton-Smith, has already criticised the NICs rise, saying, “tax rises like this must never again be simply done to business. That’s the road to unintended consequences”.
Reeves is expected to tell business leaders at the conference that they have offered “no alternatives” to her plans.
The CBI has been battling to rebuild its reputation, after Guardian revelations about sexual misconduct that rocked the lobbying organisation.
Soames claimed the CBI was “back in the ring” after a troubled period. “Genuinely within the organisation, it’s got its tail up. A lot of the holes in governance and elsewhere that existed in the past, I think a lot of those have been resolved. But one of the things you learn is never to be complacent.”
