Angela Rayner’s humiliation is a rare gift to Britain

Rayner's political currency is rapidly depleting
Rayner's political currency is rapidly depleting - Eddie Mulholland

Perhaps it was only a matter of time before Labour’s “New Deal for Working People” went the way of its £28bn “Green Prosperity Plan”. Launched in 2021 to much fanfare – from the unions at least – it promised a revolution in workers’ rights not seen in “decades”.

Now parts of the deal look set to be dropped. It’s hard not to read this as confirmation that Keir Starmer has been itching to pare back the plan for some time, but faced a seemingly insurmountable obstacle in its author and champion Angela Rayner.

“Not with Keir and I at the helm,” the deputy leader said defiantly last October, in response to rumours her deal would be watered down. At the time, Rayner pledged to “personally” table the legislation within 100 days of taking office.

Zero-hour contracts would be banned, along with fire-and-rehire, while workers would be handed “basic rights” from day one. Union power would be entrenched by, among other things, making recognition easier, relaxing rules on calling strikes, and allowing right of entry to the workplace – despite the dangers this would clearly present in a period of rising militancy.

But with Rayner’s political currency depleting as the row over her tax affairs escalates, it appears Starmer is seizing the moment. Labour is expected to reveal that it has ditched plans for a legal “right to switch off” from work emails and calls out of hours. It will make clear that companies may still be permitted to fairly sack workers under its “day one” workers’ rights regime, while staff will be able to opt into zero hours contracts if they choose.

It appears as though Starmer has been itching to pare back the workers' rights plan for some time
It appears as though Starmer has been itching to pare back the workers' rights plan for some time - Anthony Devlin/Getty Images

Though the party will struggle to spin this as anything other than a humiliating defeat for Rayner, it’s good news for businesses already buckling under the burden of employment restrictions.

British workers don’t need the “biggest upgrade of rights” in a generation. Our minimum wage is now the eighth highest in the OECD once adjustments are made for exchange rates and prices, despite concerns that it is pushing strained businesses to the brink and dampening job prospects for younger workers. The Government closely regulates hiring and firing procedures, entry into pensions schemes, holiday allowance, sick pay, maternity pay, the number of hours that can be worked, and the statutory minimum length of rest breaks.

This year, the Tories introduced a right to request flexible working from day one of a new job, despite research showing that it takes, on average, 28 weeks for a new staff member to get up to speed and become fully productive in a new job. How could employers possibly know whether a flexible arrangement is suitable on day one? The Equality Act has substantially expanded the concept of “protected characteristics”, meaning a tribunal or court could rule that discrimination is behind a huge number of firing decisions.

If anyone needs more rights, it’s employers. The array of costs and obligations on businesses is one of the reasons HR has expanded at breakneck speed since 2010. More rules means more people are required to interpret them, handing ever more power to bureaucrats in a self-sustaining cycle that helps explain why around 250,000 British workers now have personnel, industrial relations, training or human resources in their job title. How many could honestly say they are contributing to their company’s bottom line or the nation’s productivity?

As for Rayner’s insistence that businesses will “thrive” under Labour’s new regime: if this is the case, why is compulsion needed? The answer must surely be that, for many employers, it will impose significant costs – even when they are ultimately passed on to consumers in higher prices or to workers in lower pay or reduced job opportunities.

It’s worth noting, too, that the problems are not just with the laws but with their interpretation. A Supreme Court ruling in the Asda equal pay case has reinforced the quasi-Marxist idea that men and women should receive the same wage for doing different jobs, despite the obvious point that many people would prefer to work behind a till than in distribution.

In 2021, meanwhile, it ruled that Uber must classify drivers as workers rather than self-employed, despite four-fifths of drivers in surveys agreeing with the statement: “Being able to choose my own hours is more important than having holiday pay and a guaranteed minimum wage.”

This begs the question of who precisely Labour’s plans are supposed to help. While the IWGB union on Wednesday warned of “extreme power imbalances between employers and employees in the UK”, surveys have consistently shown that gig staff value control over so-called “rights”. Those on zero hours are often second earners; around a third are aged between 16 and 24, and a sizeable minority are in full-time education.

The idea that today’s workers are modern-day serfs is difficult to reconcile with our 900,000 vacancies: employment is for now a seller’s market. Flexible working may benefit certain groups, but there is a risk employers will seek to avoid taking on workers who are most likely to take advantage – mothers, older staff, those with health problems.

Advocates for greater regulation look to Belgium as the poster-nation for employee well-being. Its government recently introduced a raft of new labour market regulations – yet it has an employment rate around 5 percentage points lower than ours. France, which has a notoriously socialist attitude towards worker “rights”, has consistently struggled with a low employment rate and poor competitiveness.

Despite the Tories’ best efforts to shoot our golden goose, Britain still has a flexible labour market with a wide range of types of employment. Prior to the pandemic, nearly 1.5 million people had term-time only jobs. Over 100,000 had job shares. We already have a way of managing trade-offs between the needs of businesses and the preferences of their workers: the market economy.

It’s not enough for Labour to water down its plans – it needs to scrap them altogether. If Starmer’s track record is any indication, perhaps they soon will.