Search

Brendan Barber speech to TUC/BCC employment regulation debate

Brendan Barber's opening contribution to 'Is Deregulation Dead', a Trades Union Congress / British Chambers of Commerce debate on deregulation. Held at Congress House, 15 July 2010.

This is certainly a timely and important discussion. And the argument I want to make today is straightforward: we need a new and imaginative approach to regulation in this country.

We need to move beyond the tired clichés about red tape and burdens on business, and instead look at the facts, learn from best practice elsewhere, and create regulatory regimes that promote economic stability, protect workers and consumers, and meet the real needs of business.

As the TUC's Touchstone research shows, regulation is not a hindrance to economic performance and in many cases facilitates it. So I believe the case for fundamental change is compelling.

Indeed the mess we now find ourselves in owes much to the cult of deregulation which dominated political and economic discourse for three decades - with light-touch regulation of the City one of the root causes of the financial meltdown of September 2008.

And we're all living with the consequences of that monumental failure of policy. Not just the £857 billion of taxpayers' money that was spent propping up the banks. Nor just the prospect of savage spending cuts and rising unemployment. But also the failure of so many good, viable businesses -­ David's members ­- starved of credit and then battered by recession.

Given all of this, you would be forgiven for thinking that deregulation is dead; consigned to the economic history books. But no - it's actually alive and kicking.

Set business free we're told. Let's not get too tough on the banks. The best way to tackle unemployment is to get rid of employment protections. You know, it's as if the past few years haven't happened.

But we simply cannot afford to sleepwalk back to the recent past. What we need now is not less regulation, but smarter regulation.

Before I set out the case for a new approach, I want to debunk the myth that British business is over-burdened with red tape.

Fact: the UK ranks 11^th out of 179 countries on the 2010 Index on Economic Freedom published by the US Heritage Foundation and the Wall Street Journal.

Fact: the UK scores 8^th out of 179 countries on their index of Business Freedom, comfortably ahead of the United States itself.

Fact: out of the 26 OECD countries, Britain ranks third lowest on employment protections - with only American and Canadian workers having fewer rights.

I think this puts the BCC's claims into their proper context.

Now I note that the BCC's recent publication claims that the cumulative cost of employment regulation to business over the next four years will be £25.6 billion - as the poster behind David makes clear.

But if you look closely, three-quarters of that sum - £18.8 billion - comes not from regulation or legislation, but from the rise in national insurance planned by the previous government. A tax rise that will now not go ahead.

So I think the BCC is playing hard and fast with the truth here: which takes me neatly onto their Burdens Barometer. This claims the annual cost to business of regulation is £88 billion - to put that into context, that's a massive 6 per cent of our GDP. Figures that simply don't stand up to scrutiny.

Not only does the Barometer ignore the economic gains that result from regulation, nor the cost to many businesses of reversing these measures, but it also suggests a raft of elemental protections are a bureaucratic inconvenience - including the Control of Asbestos at Work Regulations from 2002.

As I mentioned at the beginning, we need to move beyond this red tape delusion and embrace a more intelligent approach - and where better to start frankly than employment regulation?

It's worth noting that the OECD - which has historically favoured flexible labour markets - now points to the success of countries such as Denmark, the Netherlands and Norway, all of which have strong employment protections.

And it's also worth noting an interesting trend here in Britain, because the partial re-regulation of the labour market under the Labour government actually enabled us to better withstand the recession, with unemployment not rising as quickly as during the 1980s downturn.

As the TUC research shows, there is a strong case for further change.

From better childcare to flexible working, stronger rights can help nurture a more effective labour market.

If that sounds a little vague, then think about it this way. In the 1990s the business lobby vociferously opposed the minimum wage, claiming it would cost a million jobs, destroy competitiveness and stoke wage inflation: all claims that proved to be spectacularly wide of the mark.

In fact the minimum wage has been an outstanding success, creating a level playing field for business, stopping the majority of decent employers from being undercut by cowboys, and boosting demand in the economy.

Let's remember that for every 20 pence increase in the minimum wage, consumer spending rises by £400 million - with David's members among the beneficiaries.

What we need now is another 'minimum wage moment'.

Whether it's introducing measures to boost job security, engaging unions in building high-performance workplaces, or investing more in the active labour market programmes the OECD says are critical to employment rates, we have nothing to fear and plenty to gain from taking a more intelligent, nuanced approach to labour market regulation.

So my message today is this. It's time for change. It's time for policy driven by evidence not ideology. And it's time to administer the last rites on the cult of deregulation.

Thanks for listening.

Minutes and agendas (1,000 words) issued 19 Jul 2010