Beecroft's proposals won't help business, finance will
By Simon Nias Friday, 25 May 2012
The bonfire of employment law proposed in the Beecroft Report is unlikely to be realised to anything like the extent its author has envisaged. For one thing, relations within the Coalition are strained enough as it is without heaping more pressure on in the form of legislation that is unthinkable to many Lib Dems, particularly in the wake of the 'granny tax' fiasco.
Perception is everything in politics and for all the logical benefit of being able to replace lazy staff with more diligent ones, you just know that the proposed Compensated No Fault Dismissal will be branded a ‘licence to sack’, which, with unemployment at 2.6m, is a headline the government could do without.
The truth is, even if the recommendations were implemented in full, the likely impact on growth would be negligible. As Vince Cable has stated in his official response to the report, "very rarely" in his daily conversations with businesses has the ability to dismiss underperforming staff been raised as a barrier to growth. Access to finance and weak demand remain the major obstacles.
On the second of those two fronts, the news this week that inflation has fallen to 3% - just 1% over the target figure – for the first time since February 2010, gives some limited scope for optimism.
However, finance remains the bigger problem and with a run on the banks in multiple southern European countries a very real possibility – and the impact that would have on lenders throughout Europe – it is one that is unlikely to improve in the near future and may get significantly worse.
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