Labour’s Achilles heel?

Rayner has rejected criticism of her flagship workers’ rights policies. But with City bosses and now even party grandee Mandelson urging caution, will the plans prove to be...

ANGELA Rayner’s flagship policy to reform workers’ rights is Labour’s ‘Achilles heel’, business leaders have warned Sir Keir Starmer.

One of the City’s most prominent figures, Sir Martin Sorrell, led renewed criticism of the deputy leader’s plans after Lord Mandelson – the architect of New Labour’s 1997 election victory – urged the party to tread carefully so it did not cripple thriving British businesses.

Sir Martin was joined by a chorus of industry leaders worried about the prospects for the private sector if, as the polls predict, Sir Keir is swept to victory at the next general election, with warnings that the proposed policies could see many firms collapse, widespread job losses and the welfare bill soaring.

The party plans to put forward reforms to the labour market within its first 100 days of winning power. The policies, fronted by Ms Rayner, a former union shop steward, would see workers given rights from day one in new jobs as well as a crackdown on zero-hours contracts.

Labour also plans to abolish all trade union reforms enacted since 2010, when it was last in power, and scrap Tory moves to restrict workers from going on strike.

In a recent newspaper article, Lord Mandelson urged caution, saying any reform ‘ must not be rushed but it must be done in consultation with business’. Ms Rayner yesterday hit back at such ‘squealing’, insisting the private sector would be on board.

But Sir Martin, an ad industry mogul and now chief executive of S4 Capital, told the Mail: ‘He [Mandelson] is dead right. It’s Labour’s Achilles heel.’

Prominent business people, including a host of entrepreneurs, added to the criticism.

Charlie Mullins, founder of Pimlico Plumbers, said: ‘ The problem with Labour and workers’ rights is that they have no respect for employers’ rights. And that’s plain stupid, since it’s business owners who generate wealth. Give Labour a couple of years in power and businesses will be going bust all over the place and benefits will be going through the roof. It’s the same old story – more people taking out and less paying in.

‘ People who might have started a successful business won’t bother because the workers will end up calling the shots and a Labour government will be taxing them to death.’

Julian Metcalfe, co-founder of Pret A Manger and the founder of Itsu, also warned that Labour’s reforms will come at a cost to the country. He said: ‘Nothing is free. The cash-strapped consumer ends up having to pay much more for goods and services as costs, taxes and red tape so easily cripples motivation and sensible commerce.’

Des Gunewardena, founder and former chief executive of restaurant chain D&D London, added: ‘Given the stark challenges UK business is facing on productivity and economic growth, Labour would be wise to take Mandelson’s advice.’

But Ms Rayner has not backed down in her determination to carry out her changes, despite the warning from Lord Mandelson, who 27 years ago created the template for a Labour leadership to woo business and ease fears over the party’s economic record.

She told the Financial Times

‘No respect for employers’

yesterday: ‘ This idea that you’re either pro-business or pro the workers is for the birds,’ adding that the plans are ‘more evolutions than revolution’.

She said: ‘Once people see what we’re trying to achieve, they get on board and are really happy to move with it.’

Kate Nicholls, boss of UK Hospitality – which represents thousands of firms from hotels and pubs to bars and restaurants, urged Labour not to ‘turn back the tide’ on flexible contracts for workers, saying: ‘If it’s implemented poorly, it is workers who will pay the price.’