No fault dismissal plan expected to be shelved

Whitehall is expecting Downing Street to abandon its support later this summer for one of the central recommendations in a controversial report by a Tory donor which called for companies to be given the right to sack workers at will.

A lack of support from business leaders and a furious backlash fromVince Cable, who has warned ministers that the proposal would leave a “dead hand of fear” hanging over employees, is expected to persuade No 10 that the proposal should be quietly dropped later this summer.

The prime minister was giving no public indication of a climbdown last night when he said he was still interested in the Beecroft proposal that employers should be allowed to sack unproductive staff without explanation, known as no fault dismissal.

“On the issue of no fault dismissal and other proposals like that, I am interested in anything that makes it easier for one person to say to another person: ‘Come and work for me,’ because we need to make our economies flexible,” the prime minister said in Chicago. “We need to make our labour markets work as flexibly as possible and we will obviously need to examine each proposal on its merits.”

Government sources indicated last night that Cameron is expected to accept that the proposal should be quietly dropped when Cable eventually finalises his plans. A six month “call for evidence” on a diluted version of the original Beecroft proposal – that the “no fault dismissal” should apply to micro companies employing fewer than ten staff – is due to end on 8 June. It is understood that the evidence so far shows little support among businesses for the proposal.

One source close to Cable said of the proposal: “The last thing employees want is the dead hand of fear hanging over them about losing their jobs.”

The coalition partners appeared to be at loggerheads yesterday when the Sunday Telegraph reported on its front page that the prime minister was poised to endorse the controversial report by the Tory donor Adrian Beecroft. The report was commissioned by Steve Hilton, Cameron’s long serving policy guru, who is leaving on a year long sabbatical to the US amid frustration that the prime minister is failing to be sufficiently radical in trimming the state.

The Sunday Telegraph made little mention of the no fault dismissal plan, the central recommendation in the Beecroft report. The newspaper instead focused on areas which have either already been introduced by the government or are not controversial.

One Lib Dem source said the Sunday Telegraph report was designed to show No 10 was standing firm when in fact it is backing down. “This is all part of Steve Hilton’s epic leaving bash,” one source said.

Cable will this week publish the Beecroft report after a series of requests, from the Guardian and the shadow business secretary Chuka Umunna among others, for it to be released under Freedom of Information rules. It is understood that Cable believes that the publication of the report will come as a surprise to many because the 24-page report is seen as thin.

One senior minister told the Guardian last year: “It is a flimsy piece of work. If an official sent me a piece of work like that I would send it back.”

Cable showed his irritation with the report when he told friends that he was surprised that No 10 has shown such interest in a report from a donor. Cameron faced embarrassment after the recent resignation of the Tory treasurer Peter Cruddas when it emerged that he encouraged donors to put their thoughts down on paper.

A source close to Cable said: “It is surprising that No 10 backs a report compiled by one of the Tory party’s biggest donors. But it has been noticeable that since last Wednesday, No 10 has been moving towards more evidence-based policy. The reasons for that remain to be determined, but we can assume that as a result reports like this will be a less prominent in the future.”


About elaineonyc

HR generalist who is passionate about the benefits of good HR practice. Experienced in delivering strategic and operational HR initiatives to clients in both public and private sectors. Specialises in working with SMEs.
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