CBI minions of the world unite, you have nothing to lose but your credibility!

If a week was once a long time in politics, it’s now no time at all when it comes to thinking up new legislation. For a week was all it took for renowned Star Trek fan Sajid Javid, newly promoted from culture to business secretary, to master his brief and decide that what Britain really needs right now is another small business and enterprise Bill. Not just any old small business and enterprise Bill, mind, but an “ambitious” small business and enterprise Bill. And this less than two months after the last small business and enterprise Bill – which clearly wasn’t anywhere near ambitious enough – reached the Statute Book.

According to Tuesday’s BIS press release, the Starship Enterprise Bill will:

“Help make Britain the best place in Europe to start and grow a business, and help create two million jobs over the next five years, so that more people have the security of a regular pay-packet. Unless, of course, they are employed on a zero-hours contract. Ha ha ha, beam me up Scottie.”

Yes, I made that last bit up. But the Bill really will “cut red tape for business by at least £10 billion over the next five years” and “create a Small Business Conciliation Service to help resolve disputes [especially over late payment]” – these being pledges in the Conservative Party Manifesto 2015.

Fortunately for Mr Javid, he didn’t have to spend any of his first week in 1 Victoria Street working out exactly how the Bill will cut £10bn worth of red tape for business. No, that’s not how policy-making works these days. Mr Javid left it to junior BIS minister Anna Soubry to explain:

“This will be a no nonsense Bill [unlike the last one!] to back small businesses and help create jobs, giving financial security and economic peace of mind to hard-working people across the country. We will be asking businesses for evidence in the coming weeks and months. We want them to be our partners in identifying and scrapping needless burdens at home and in Europe.”

Yes, that’s how evidence-based policy-making works these days. You – the one-week-old cabinet minister – decide to have a Bill, then you hunt around for evidence to justify said Bill. They didn’t tell us this on my MSc in Public Policy, but hey.

To be fair to Mr Javid and his colleagues, a Small Business Conciliation Service doesn’t sound such a bad idea. I just wonder whether there will be fees for small businesses to use the Service. And whether those fees will be anywhere near £1,200. That would only be right and proper, after all. Why should hard-working taxpayers have to bear all of the cost?

As for how to cut that £10bn of red tape, I imagine Ms Soubry’s inbox is already filling up with lengthy emails from Sir Michael Rake and his numerous minions at the CBI. Because, on Wednesday, while being skewered by Sarah Montague on the BBC Radio 4 Today programme (start at 2:34:55), Sir Michael blustered that we desperately need to cut Red Tape because “where [employment] rights are so extensive it leads to employers not being willing to employ people, that is not helpful to anyone”. And who could argue with that?

Later that morning, I tweeted the CBI to ask them which employment rights, exactly, are currently “leading to employers not being willing to employ people”. And also to ask them to explain what it is that causes the “inflexibility in being able to adjust your workforce to changing circumstances quickly enough” that, apparently, so concerns Sir Michael. Needless to say, I didn’t get any response, but it seems reasonable to assume that it’s not the statutory right to four weeks’ paid holiday that Sir Michael has in mind. Could it be the legal right not to be subject to unfair dismissal?

Well, I guess it could be. But, if you are an employer, and minded to employ one or more extra members of staff, you will know (unless you are a complete idiot, in which case you probably shouldn’t be an employer) that you have no less than two years to decide whether you’ve made the right decision, before those employees qualify for legal protection against unfair dismissal. That is, you can get rid of them as quickly and as unfairly as you like, as long as you do it within two years of hiring them. And, even if you decide that you made the right decision in hiring them, but circumstances somehow change for the worse after two years, you can still dismiss them (or make them redundant). You just can’t do so without following a fair procedure. And how hard can that be for titans of industry with their gene-based, wealth-creator superbrains?

Even if you’re a regular, non-superbrained oik who somehow made it to being CEO of a wealth-creating company, it wouldn’t take you (or your unpaid intern) long to discover that, these days, the risk of facing an employment tribunal claim for unfair dismissal, however badly you treat your human capital units, is … well, negligible. Since the introduction of upfront tribunal fees of £1,200 in July 2013, and the introduction of Acas early conciliation in April 2014, the number of unfair dismissal claims has fallen by two-thirds, to fewer than 13,000 per year.

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Yep, that’s fewer than 13,000 unfair dismissal claims per year, from a workforce of some 26 million. Put another way, each of the UK’s 1.2 million employers now faces an unfair dismissal claim – maybe well-founded, maybe not – about once every century, on average. But, according to the superbrained, wealth-creating Sir Michael Rake, that is still far too often for our entrepreneurial classes to cope with. So we must cut Red Tape now! Over to you, Sajid.

Copyright Steve Bell 2015/All Rights Reserved e.mail: belltoons@ntlworld.com tel: 00 44 (0)1273 500664

Copyright Steve Bell 2015/All Rights Reserved e.mail: belltoons@ntlworld.com tel: 00 44 (0)1273 500664

[Many thanks to the great Steve Bell for granting me permission to use this image.]

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Has the Low Pay Commission jumped the shark?

It is a truth not previously acknowledged that one way to unite the TUC and CBI in outrage is to suggest that the Low Pay Commission has outlived its original purpose, and that control of the national minimum wage (NMW) rate might now be best reclaimed by the people we elect to run the country.

I know this because, late on Tuesday evening, after a day of ever more surprising media reports of machinations within the Coalition over a possible ‘inflation-busting’ hike in the NMW rate, I was impertinent enough to make such a suggestion on Twitter.

Within a few minutes, my tweet had prompted sharp responses from both Nicola Smith, Head of Economic & Social Affairs at the TUC, and Neil Carberry, Director of Employment & Skills at the CBI.  This in itself was intriguing, as neither Nicola nor Neil had previously exhibited any great inclination to respond to anything I might have said or written.  But what most tickled my interest was the degree of solidarity Nicola and Neil showed in seeking to pour a large bucket of cold water over my impertinence.

Every year since 1999, the Low Pay Commission has laid waste to a small forest in producing an inch-thick report on the NWW that is read by few if any outside a small circle of NMW policy geeks (and the handful of unfortunate civil servants charged with drafting the government’s response).  In my last job I had a whole shelf of these reports, and laid across a road they would easily have stopped a marauding tank.

But have these hefty reports, and the existence of the Commission itself, done much in recent years to improve the plight of the five million or so workers in the UK economy who now languish on low pay?  The Commission is, after all, the Low Pay Commission, not the Minimum Wage Rate Commission.

Well, with all due respect to the hard work and undoubted integrity of the individual members of the Commission, I’m not sure that low paid workers have been terribly well served by the Commission in recent years.  A succession of paltry, below-inflation NMW rate increases since 2009 have resulted in an hourly rate some 45 pence below what it would be if it had risen with the cost of living since June 2010.  The critical issue of enforcement of the NMW has been woefully neglected.  And where has the Commission been in debate about the shocking growth of in-work poverty?

How dare I even think such heresy! “Over time NMW workers have done better than both inflation AND wages”, retorted Neil Carberry.  However, as the Low Pay Commission itself noted in its 2012 report, “most of the real and relative increases in the minimum wage occurred as a result of the comparatively large up-ratings from October 2001 to October 2006. Since that time, the adult rate of the minimum wage has risen more or less in line with average earnings, but has lagged price increases”.  The largest up-ratings were in 2001, 2003 and 2004, and those relative hikes were entirely justified given the excessively cautious (i.e. low) rate at which the NMW was introduced.

Nicola Smith, meanwhile, was even more extravagant about the recent influence of the Commission: “without the LPC would we even still have a NMW?”  Well, yes, I’m sure we would Nicola, as I don’t think even Nick Clegg could have convinced his MPs, let alone his party membership, to tolerate abolition of the NMW itself – always assuming that the Liberal Democrats would have needed to take such a stand.  Any mooting of abolition by deep blue Conservative ministers would have faced strong internal opposition from MPs and think tankers such as Matthew Hancock, Guy Opperman, Robert Halfon and Ryan Shorthouse.  And, as of this week, Conservative ministers and MPs of all shades of blue are madly trying to outbid each other both in their regret for their party’s past opposition to the NMW, and in their personal enthusiasm for a substantial hike (of as much as £1.00 per hour) in the NMW rate now.

So, given where we are now, with all three main parties scrabbling to position themselves as the shoutiest champion of the NMW, what are the “very big risks to ending the Commission approach” that so alarm the TUC and CBI?  Apart from, that is, the terrible risk of the TUC and the CBI having a tad less direct influence on government policy.

Well, I’m not sure that I can see any significant risks. The Commission and its plodding, bipartisan approach were products of the excessive caution and timidity of the first New Labour government in relation to any policy that might possibly fetter corporate power.  And, in the early years of the NMW, that approach undoubtedly served a valuable function: to take the politics out of the NMW whilst it bedded in.

But to my mind the NMW is now safely cemented into the UK’s labour market policy architecture.  In the words of the Conservative pressure group, Bright Blue, “there is now a strong academic consensus that a sensible minimum wage does not cause unemployment.  Firms adapt well: reducing profits or pay differentials, or boosting productivity”.  And, armed with data, analysis and advice from civil servants, advisory bodies and political advisers, our elected politicians routinely take positions on, and make decisions about, any number of economic issues at least as consequential as what the NMW rate should be.  In short, the Low Pay Commission has – just like the Happy Days of my youth and Sherlock last weekend – jumped the shark.

It’s time to put politics back into the National Minimum Wage.