Labour risks making us poorer, says Currys boss
Party’s plans would make businesses less likely to hire, Alex Baldock tells Hannah Boland
Labour’s workers’ rights plan risks “making people inadvertently poorer”, the boss of Currys has warned, amid nervousness among business leaders about the reforms.
Alex Baldock told The Telegraph that Sir Keir Starmer needed to be “careful” with an overhaul of employment rights if Labour wins the general election.
The party has pledged to secure a “new deal for working people” if it comes into power, which it claims would “strengthen workers’ rights and make Britain work for working people”. Plans include ending zero hours contracts, scrapping qualifying periods for full employment rights and giving staff the right to claim unfair dismissal on day one of a new job.
The Currys chief executive said Labour was “certainly much more business friendly than has been the case at times in the recent past”.
However, he expressed concerns about the labour market reforms being put forward by the opposition.
“Everyone should be careful that – admirably intended though it may be to seek to protect people – that you don’t inadvertently make them poorer.” He added: “The more restrictions that you put in place, the less flexibility you allow in businesses’ relationships with their colleagues, the less likely businesses are to hire and the less likely they are to invest.”
Business leaders have been alarmed by Labour’s plans to introduce “day one” rights for workers. There are concerns that this will effectively mean the end of probation periods, making it much harder to get rid of people if they perform poorly from the start.
Mr Baldock said he would be “very loath” to see probationary periods axed, saying it was a “really important” practice for businesses.
“The colleague and the business get a chance to take a look at each other before both sides commit.”
He said it “wouldn’t be a step in the right direction” to scrap probationary periods. “It’s not about zero hour contracts, we don’t use those. But the relative flexibility of the UK labour market is a point of advantage and we should let go of that with reluctance.”
Labour insists that its changes will not mean the end of probation periods and businesses will still be able to dismiss workers who perform poorly, but instead aims to make workplace rights “fit for a modern economy”.
A Labour spokesman said: “As a pro-worker and pro-business party, Labour will work in partnership to ensure the implementation of our reforms work for the economy and bring security.”
However, the fact that Mr Baldock and others fear that probationary periods will be axed highlights the difficulties Labour has had in relaying its ambitions to business leaders. The Confederation of British Industry and British Chambers of Commerce have both urged Labour to keep the market flexible. Sir Keir and his shadow cabinet are said to be working to reassure businesses over the mooted reforms. Mr Baldock donated £1,200 to the Conservative Party in 2008. However, he insisted he was not taking a “party political position” in raising concerns about Labour’s proposals.
For Mr Baldock, talking about policy is a welcome relief after weeks where the Currys chief has been caught up in a takeover tussle. Since the middle of February, suitors have been circling Currys, a company whose share price has been languishing for some time.
Initially, US hedge fund Elliott tabled a takeover offer for the electricals retailer. Then Chinese retail giant JD.com said it was also considering an approach, sparking hopes of a potential bidding war.
In the weeks that followed, the Currys board rejected two Elliott bids, claiming they “significantly undervalued” the company. JD.com ended up not making an offer. The two companies walked away earlier this month, quashing speculation over an imminent takeover of the chain. Mr Baldock said the takeover speculation “seems to have passed”, adding: “It seems simpler for the moment anyway.”
The 53-year-old, who has run Currys since 2018, seemed flattered by the attention. “I didn’t view it as a painful distraction,” he said. “Maybe it’s my sunny disposition coming out but I took it as a compliment.”
If anything, Mr Baldock said the attention triggered what executives want: more demand for its shares.
“That’s what we’re doing when we’re doing the tour of the City on the investor relations round,” he said. “We want more buyers for shares. That’s how you get the share price up.
“Someone like Elliott, they’re no slouches, they’re very smart people and they saw value here. They believe in what we are doing and they wanted to be a part of it.” If he has one message for the US hedge fund, it is “thank you”. Elliott had initially offered 62p a share, upping its offer to 67p a week later. Currys is now trading at 61.40p compared to 47p a share before the takeover interest emerged.
Still, Mr Baldock is adamant that the price Elliott was willing to pay simply was not good enough – despite the fact it was at a 32pc premium to Currys’ share price before the initial bid.
“Do I think the business is anywhere near its full potential in terms of the share price now? Absolutely not. The board and the top 10 shareholders all turned down a 67p a share offer because we say we can do better.”
The share price is something of a sore spot. The stock has fallen around 67pc since Mr Baldock took over as chief executive and is down around 90pc since its all-time high in 2015. He said wider issues with the London stock market are partly to blame. But he admitted there have also been other hurdles. “I’ve had to deal with a few unpleasant surprises in this business.”
Currys has struggled with heavy losses at Carphone Warehouse, the mobile phone seller that was merged with Dixons Retail to create Currys, as smartphone sales have moved off the high street and declined more broadly.
“Then Covid hit the business. We had the cost of living crisis and then problems in the Nordics.
“If you’re an investor, I think you’re entitled to say, ‘OK, you seem to be turning the corner, but I want you to show me that you’re on the right track.’ I think that’s fair enough.”
He was at pains to stress that the company is truly making progress. Last week, Currys boosted its profit forecasts for the year. It is now on track to post adjusted pre-tax profits of at least £115m for the year to the end of April. It previously said profits would come in between £105m and £115m.
Critics could argue that this is simply a case of a rising tide floats all boats: consumer confidence is on the up and there are hopes that interest rates will be falling by the summer.
However, Mr Baldock believes he and his team are due some credit.
“All of this is self-help. We’ve had no help from the market at all. The story is, in a really tough environment we’ve worked hard to get this business into better shape.”
“We don’t even need a healthy economy to progress as we are,” Mr Baldock said. “We will do it off our own back. It would be nice to get some help along the way, but my job is to carry on making Currys successful.”
This, he said, will remain the case “irrespective of who’s in office”.
‘We don’t even need a healthy economy to progress as we are. We will do it off our own back’