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Business leaders have warned the government its plans to give workers a swathe of new rights from their first day in the job will lead companies to shed staff.
CBI chairman Rupert Soames predicted an “ugly rush” to let people go before the new measures come into force. He also hit out at Rachel Reeves accusing her of undermining business confidence and trust with her surprise national insurance hike in the Budget.
Mr Soames, who is Winston Churchill’s grandson, launched an extraordinary defence of a Labour minister last week when he said that the tycoon and Donald Trump ally Elon Musk would have to “come through me first” after he called Jess Phillips a “rape genocide apologist”.
But he hit out at the government’s plans to give workers a host of new rights, including sick pay and protection from unfair dismissal from day one, and the banning of “exploitative” zero-hour contracts, Mr Soames said: “I think not only will they not employ (people), I think they will let people go. I think there could be quite an ugly rush before some of these things come into force. “
“Nobody wants this, but the things like the probation periods in the Employment Rights Bill, we don’t want that to become an adventure playground for employment rights lawyers.”
He also accused the chancellor of having “bruised” the confidence and trust of business by expecting it to fill the hole in government finances with the NI hike.
He told BBC Radio 4’s Today programme: “The Chancellor told us at the time of the Budget that there was an unexpected hole of about £22 billion pounds in the government finances, and business was going to have to fill it.
“In filling in one hole, it’s created another, and that hole is a hole in the confidence and trust that business has in the government.
“I think sometimes it’s not understood, the extent of the impact, particularly on companies that employ lots of people.
“We think the national insurance increases are going to feed through into inflation, we’re going to have a lower growth rate, but also, because of things like the Employment Rights Bill coming along, you’re going to find people laying people off and less likely to employ.”
The warning comes as the chancellor Rachel Reeves flies back from China to an increasing row over her impact on the economy.
In a new warning Deloitte reported that business bosses’ confidence is at one of its lowest points since the Covid-19 pandemic in 2020.
Following a barrage of criticism for going ahead with her controversial trip to China, Ms Reeves has been told her management of the economy is under question from some of the country’s biggest companies.
According to the survey of 63 chief finance officers (CFOs) at major companies a net 26 per cent reported they were more pessimistic about their business’s prospects than three months ago, the first time sentiment has tipped into negative territory since the second quarter of 2023.
The research comes from the 70th quarterly survey of Chief Financial Officers and Group Finance Directors of major companies in the UK.
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