The government must overhaul its “damaging” Employment Rights Bill or risk choking off growth, the head of Britain’s biggest business lobby group will warn on Monday — just two days before Rachel Reeves delivers her second Budget.
Rain Newton-Smith, chief executive of the CBI, will use the group’s annual conference in London to caution that ministers have failed to listen to employer concerns about the bill, which includes tougher unfair dismissal rights and guaranteed working hours. She will argue that eight in ten firms believe the legislation, in its current form, will make hiring harder, acting as a brake on economic growth.
“Lasting reform takes partnership, not a closed door,” she will say. “When eight in ten firms say this bill will make it harder to hire, they are brakes on growth. The government must change course and ask business and unions to forge consensus through compromise.”
Newton-Smith will also warn Reeves against repeating what she described as last year’s “stop-start economy” and further tax increases, noting that the Chancellor’s first Budget imposed £24 billion a year in new business costs. “It feels less like we’re on the move, and more like we’re stuck in Groundhog Day,” she will say.
Her comments come amid mounting anxiety among employers that next week’s Budget could include further revenue-raising measures, including a proposed £2,000 cap on salary sacrifice pension schemes — a move the pensions industry says could push nearly a third of businesses to cut contributions.
The CBI conference will also hear from business secretary Peter Kyle, who is expected to reassure employers that Labour is committed to cutting red tape, lowering energy bills and reversing what he calls “industrial decline”. Kyle will announce a two-month consultation to decide which firms qualify for a 25% cut in energy costs from April 2027, targeting more than 7,000 energy-intensive companies in sectors such as automotive, steel and chemicals.
“In recent years, our most promising innovators and industries have been hamstrung by some of the highest electricity prices in the G7,” Kyle will say, promising further reforms to make the UK “the best place to start and scale a business”.
Conservative leader Kemi Badenoch will also address delegates, pledging that any government under her leadership would “repeal every job-destroying, anti-business, anti-growth measure in this bill”.
Newton-Smith is expected to urge ministers to deliver a long-term solution to the UK’s crippling energy costs, noting that Britain suffers some of the highest prices in the world. She will call for a plan “that recognises the role of the North Sea in our transition” and fixes the structure of energy bills.
“You will never be able to tax your way to growth,” she will say. “How can business hire for growth when government decisions push the other way? When National Insurance rises and changes to salary sacrifice make it more expensive to take a chance on people?”
The conference will be attended by leaders including British Airways chief executive Sean Doyle and Sir Charlie Mayfield, who recently published the government’s “Keep Britain Working” review.
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Reeves warned ‘damaging’ workers’ rights bill risks stalling growth