Is the government going to press ahead with plans to allow small businesses to “fire at will” or not? It was the most controversial recommendation in the Beecroft review – a Tory-commissioned report into reforms to employment law – and one that was fiercely resisted by the Liberal Democrats. They argued that a measure likely to make people feel insecure in their jobs would dampen confidence and discourage spending, slowing the economy down further. (They also recognised that it might just make the government look mean.) The Tories are generally persuaded that firms are reluctant to hire if they can’t then easily sack under-performing staff. Earlier this week Business Secretary Vince Cable announced that a number of measures to loosen employment protection might indeed be implemented.
This has been reported as a humiliating defeat for the Lib Dems.
In fact the story is more complicated. Cable and Ed Davey, his fellow Lib Dem minister in the Business department, have always been quite sympathetic to the “supply side” case for labour market liberalisation. But the Lib Dem leadership thought “no fault dismissal” was going too far. There has been some pretty ferocious briefing against Beecroft’s plan, which aides to Nick Clegg have been quietly denouncing as a shoddy piece of work, commissioned as a favour to a Tory donor (venture capitalist Adrian Beecroft) and, politically speaking, a bit nuts. Have they lost this argument in the “quad” – the foursome of top ministers that runs the coalition? On closer inspection, the Beecroft proposals are mostly being put out for wider consultation. Cable has agreed to “look at the evidence”. Some Tories are suspicious that this is a Lib Dem ruse to kick Beecroft into the long grass. David Cameron is known to have a short attention span and the suspicion is that, once the Autumn Statement on the economy is out of the way and some other big events have come along to distract the prime minister – as is inevitable – the fire-at-will idea can be quietly shelved. This, some Tories mutter, is a classic Lib Dem tactic in the coalition. They cite as evidence the way Cameron’s tough rhetoric after the summer riots was talked down by Lib Dems and eventually came to nothing. Rightwing Tories accuse the Lib Dems of using the endless demands on the PM’s time and his tendency not to concentrate on one thing for long to filibuster ideas off Downing Street’s agenda. So the Battle of Beecroft goes on.
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