The chair of the Confederation of British Industry, Rupert Soames, accused the government of treating employers as a “cash cow” on Monday as he urged ministers to water down plans for workers’ rights.
“It’s been tough on business. In the budget, business has been the cash cow and it’s been milked. Don’t go and whack it,” Soames warned at the CBI’s annual conference in Westminster.
He was speaking shortly before Rachel Reeves took to the stage to face down the backlash against her budget. The chancellor told business leaders she had taken the decision to “draw the line”, once and for all, under what she called the “fiction” of the public finance projections left by the Conservatives.
“We’ve done that now, and businesses can now be certain that we’re never going to do a budget like that again,” she said. “I’m not coming back with more borrowing or more taxes.”
The budget on 30 October included £40bn of tax rises to fund public services, with the biggest revenue-raiser a £25bn increase in employer national insurance contributions (NICs). Business groups have blamed the move for hitting confidence, with big retailers writing to Reeves last week to warn of potential job losses.
Earlier on Monday, the CBI’s chief executive, Rain Newton-Smith, highlighted a recent survey of 266 firms that suggested half were considering cutting jobs and almost two-thirds were rethinking plans to hire new staff, as a result of the extra costs.
The Conservative leader, Kemi Badenoch, also addressed the CBI conference on Monday. She attacked what she called Labour’s “unprecedented raid on business”, but refused to commit to reversing the employer NICs rise.
“What I’m not going to do is comment on every bit of micro-policy,” she said. Pressed on whether she could suggest an alternative way of raising the revenue – or public services cuts to make up the shortfall – she insisted: “I disagree with the premise of the question. We need to stop looking at everything as if it’s just a ledger.”
Reeves was keen to stress that the budget does not represent the totality of Labour’s business policy, pointing to pro-growth reforms such as changes to planning and pensions. “Whenever there’s been decisions that aren’t around making the sums add up, I think you can see that I have always prioritised growth,” she said.
Soames suggested businesses might be prepared to forgive the NICs increase if other policies were tweaked.
“I think they need to see this in the round,” he said. “And if we can come to a position where business can say: ‘Well OK, the budget was a bit shit but we can live with the rest,’ then there’s probably a landing ground we can get to, where the government can retain the confidence of business.”
Labour published its employment bill last month, with scores of policies aimed at boosting workers’ rights. Soames criticised aspects of the plans, including enhanced obligations on firms to consult on proposed redundancies, and an obligation on employers to offer full workplace rights after a short probation period, instead of the current two years. He suggested that, taken with the NICs rise, these changes would work against the government’s plans to increase employment.
He said: “There appears to be a dissonance between, on the one hand, the Department for Work and Pensions saying: ‘We’d like you to get 1 million people back into work.’ We’ve got Treasury saying: ‘By the way, a lot of these people you’re going to be paying NI on.’ And you’ve got the Department for Trade saying: ‘We’re going to make employing people a whole lot more risky and basically you’re going to have to double the size of your HR department.’”
He added: “Businesspeople aren’t dumb and they will get that dissonance.”
The CBI has been battling to rebuild its reputation after Guardian revelations about sexual misconduct allegations that rocked the lobbying organisation.
Soames claimed the CBI was “back in the ring,” after a troubled period, highlighting the 400 meetings it has held with government since the general election.
“Genuinely, within the organisation, it’s got its tail up,” he said. “A lot of the holes in governance and elsewhere that existed in the past, I think a lot of those have been resolved. But one of the things you learn is never to be complacent.”
