Vince Cable opposes abolition of unfair dismissal laws

Plans promoted by David Cameron's chief strategist, Steve Hilton, to abolish unfair dismissal laws have been rejected by the business secretary, Vince Cable, as "unnecessary, based on no evidence and unlikely to improve labour market flexibility".

Cable's aides said the proposals would do nothing to promote growth as 25 million consumers would face job insecurity and find it more difficult to get a mortgage, hitting government efforts to boost growth.

One of Nick Clegg's most senior parliamentary aides, Norman Lamb, went further than Cable, describing the proposals as madness.

Passages of the report, prepared for Downing Street by the Conservative donor and venture capitalist Adrian Beecroft, were leaked on Wednesday.

He proposed removing all rights to claim unfair dismissal, replacing it with a right to seek a redundancy payment. He said current employment protection laws addressed yesterday's problems and that even if it meant employers could sack staff simply because they did not like them, it was a price worth paying.

Cable's aides said the report would not be published, and it was neither an official report or officially commissioned. But the ideas are likely to be pursued by some in Downing Street, and presage a separate wider attempt to claw back employment laws from the European Union, including issues such as working time directives. UK unfair dismissal law is drawn up independently of the EU.

Ministers have already announced that they will exclude millions of people from unfair dismissal laws by giving protection only to those who have worked for the same employer for more than two years.

Cable and his Lib Dem employment minister, Ed Davey, are responsible for employment law, and aides say they are facing a long-term battle to prevent the growth agenda narrowing into a single-minded focus on restrictive employment laws. Further proposals on health and safety and sick pay are due shortly.

The leaked Beecroft report claims that workers "coast along" owing to the difficulty employers face because of the laws on unfair dismissal, and that a change would boost the economy.

Asked about the proposals at a speech on growth at the Policy Exchange thinktank, Cable underlined his determination to control the growth agenda by saying it was not an official report or an officially commissioned report.

Discussing the proposal for no fault dismissal, he said "No evidence has been advanced that I have seen that it will improve labour market flexibility in general, or have any beneficial effect, but if anyone can produce any, we will look at it."He pointed out that unemployment did not shoot up during the recession owing to flexibility in the labour rmarket. He said: "There was a great deal of flexibility shown by our employees as well as the employers. I go round a lot of our industrial plants. The unions have their formal positions, but it is very clear they are committed to their companies and are very flexible about working practices so the world has changed an awful lot in the last 30 years in a positive way."

He said the report had some good ideas such as restraining costs imposed on small businesses by the need to help government immigration controls.

Article taken from The Guardian 16 Oct 2011