BBC On The Record - Broadcast: 05.11.00

Film: IAIN WATSON describes the causes and tensions in the relationship between business and Labour.



IAIN WATSON: When we come to remember, remember the 5th of November 2000, it may be as much for the floods and the transport chaos as bonfire night. But businesses are much more worried about the underlying costs which companies face. The high price of fuel, an uncompetitive pound against the Euro and to make matters worse, they say the government is stoking up discontent by piling on costly regulations. There's been a long tradition of challenging the government in Britain. But, over the centuries, the methods have changed somewhat. The CBI are saying the government has simply lost the plot when it comes to intervening in industry, introducing fifteen major pieces of employment legislation since 1997 and the TUC say the government should listen more to the voice of the workers than the bosses but both sides are capable of ganging up when it comes to criticising the Government's record on helping industry. DIGBY JONES: To have a regulatory frame work that becomes more burdensome by the day, is very damaging, not maybe, it is damaging to the growth of the UK economy. JOHN MONKS: At the moment they're crying about red tape, when what they should be crying about is an over valued pound, a lack of skills in this country and a productivity gap that's alarmingly wide compared to France, Germany and the United States. WATSON: The biggest employers' organisation, the CBI, say regulation is a problem and their member companies are more concerned than ever about the impact of the government's employment laws. These give workers new rights, but business says those rights come at a price. They're having to bear the cost of administration. In a new CBI survey, fewer than one per cent of companies felt the administrative burden had decreased over the past year, twelve and a half per cent of those surveyed said it had remained constant. But 86.7% - nearly nine out of every ten companies - believe that the impact of the government's employment policies was hitting them harder than before, diverting resources from running their businesses. JONES: At the end of the day a lot of that energy and enthusiasm is being dissipated in to complying with administration, complying with regulation and what worries me, is if we carry on like this, they will start to actually ignore it WATSON: Those concerns are reflected here in Huddersfield, in West Yorkshire, at the Black Cat Fireworks factory, one of the CBI's member companies. The technical director, Ron Rapley, says that more and more of his time is taken up by paperwork and if he's to get through it, he needs a breathing space without yet more rules imposed by government. RON RAPLEY: The fact that it must take fifty per cent of my time to comply with regulations, if not maybe even more than that, it takes a lot of time and a lot of resource from a company that's relatively small, more regulations would take more resource. WATSON: The CBI have set off a series of complaints about red tape. Labour's own supporters in business are now striking a discordant note too, including the spokesman for the Small Business Federation, who is on Labour's list of approved candidates. STEPHEN ALLEMBRITIS: The worry of course is that if we want to move to full employment, as the Chancellor seems to want to do, then the basis of that is on small employers, say one million of them taking on an extra person each. Now if their eye is taken off the ball in terms of regulations and they worry about red tape, then they may not just take on that extra person. WATSON: The government has given the job of suggesting how to streamline regulation to the Labour peer Lord Haskins, the chairman of Northern Foods. He says while the government is attempting to listen to business concerns, they still display a tendency to step in and regulate too quickly LORD HASKINS: Most business people want to do the right thing. Let's be clear on it. The number of people who want to get it wrong is quite small. And if we've encouraged the vast majority to get on with and do and carry out what the government, what the public wants them to do, without regulation, so much the better WATSON: The CBI says that unless the government restricts the future volume of regulation, products such as these fireworks, could become uncompetitive. They're not asking the government to repeal existing employment legislation, instead they want to stave off whatever is in the pipeline. But that includes a Green Paper as a first step into delivering paid parental leave. RAPLEY: Paid parental leave will affect our business. We have a very specific industry, explosives and the staff are trained, and take a long time to train. We just can't go and replace them by somebody down the Job Centre, they won't have that necessary experience and by the time you've trained them, they'll be replaced by the people coming back from that leave. WATSON: The European Commission wants to force companies such as Black Cat - with more than fifty workers - to open up business decisions to consultation. The CBI wants Britain to go on blocking this move. JONES: Those European union members who are currently holding the line on information and consultation, have got to stand firm. They understand just what something like that could do to harm this big surge for productivity that every western democracy is having to make. WATSON: So British businesses are saying there's too much regulation at the moment and they fear there's more on the way, they say this will hit employment levels and diminishes economic performance. But now the fur is flying - Labour's more traditional allies are saying British business is taking too blinkered an attitude. This is a medium sized enterprise, not dissimilar in size to Black Cat Fireworks in Huddersfield. But here staff have very generous parental leave as of right and are consulted over all issues that affect the workplace. That's because of regulation. So where is this proletarian paradise? Well, as you've probably guessed, it's not in Huddersfield. It's in Holland. The Brakel Group employs around two hundred people at their factory in Hilversum, near Amsterdam. They design and manufacture office equipment. The Bank of England and the Palace of Westminster are amongst their clients. There are a series of works committees here where management and unions come face to face to discuss any problems. The company says that regulations are fine - so long as they are implemented flexibly. They can cope with workers taking far more time away for parental leave than in Britain. PAUL TERLOUW: The overall entitlement is a period of six months, and usually what happens in our company is that the person that wants to take that kind of leave discusses with his or her manager if he wants to do that in one period of six months, or maybe three periods of two months and then come back for a month in between, or maybe even to start to work three days a week, instead of five. WATSON: The TUC says a lesson from Holland is that the government should be less defensive about regulation. They say good employment rights don't diminish economic performance, in fact they can be the building blocks of a strong economy. MONKS: Well the Dutch performance on unemployment, the Dutch performance on productivity, the Dutch performance on skills are better than ours. And their living standards are higher and they're not afraid of regulation. They've just brought in a rule saying that people have got a choice of working part time if they wish. Now Britain's employers would hold up their hands in horror at such a thing. But actually the Dutch cope with it. It's about giving people extra freedom, giving them extra choice and they trust their people if they're treated well, to work well and they do. WATSON: The TUC point to a range of recent statistics to claim that heavy regulation in economies such as the Netherlands does not stem the flow of wealth. Throughout the Nineties lightly regulated Britain created new jobs at a much slower rate than the more regulated Dutch economy although once in employment, the Dutch worked fewer hours. Last year in the UK we worked on average more than forty three hours a week, while the Dutch put in just thirty nine. Despite this, we took home on average �1,700 a year less than our Dutch counterparts and while Britain has relatively few people out of work by international standards, last year our unemployment rate was twice as high as the Dutch, who had the lowest levels in the European Union. It's not just the TUC who are saying it's only fair that we start enjoying similar rights to the Europeans. The argument is also being taken in that direction by some of Labour's young modernisers. They say that the party should not be put off by complaints from business, if people are encouraged to take more time off with their families, then that's a message which could pay dividends at election time but parental leave must be paid at a rewarding rate. RUTH KELLY: I've been arguing for a rate of about a hundred and fifty pounds a week, which surveys show would attract reasonable numbers of both women and men to take up the leave. I also think that businesses when they reflect on the issues and the detail of any proposed legislation, will realise that it's in their interests as well, to take on board these legitimate demands from people right across the country. Certainly parental leave, paid at an appropriate rate, could improve the morale of the workforce, could improve recruitment and retention and certainly reduce absenteeism and casual sickness rates. MONKS: The government's a bit nervous about offending employer opinion and employer lobbyists by shouting long and hard about parental leave in particular at the moment and about information and consultation rights from Europe. They're seeking to exploit the government's rather tentative approach. I hope they will be bolder and knock it for six and get on with some good regulation. WATSON: But the government is also being urged to turn its attention elsewhere. Labour prides itself these days on being the party of one nation but recently perhaps they've had a rougher ride than they would have anticipated. Business and the traditional trade union allies seem to be far apart on the issue of future regulation. In order to rebuild that kind of consensus, the government may need some political courage, they'll have to start talking about the sort of issues that the wider public perhaps don't find too popular. Most of the big unions along with many of Britain's biggest exporters are worried about the high level of the pound against the Euro. Although the new single currency isn't popular with the public, one of Labour's big business backers thinks that staying out will increasingly cause problems for British industry. LORD HASKINS: I think it's going to put us at an increasing competitive disadvantage against other members of that European single market and eventually I have no doubt that most of the great British public say this, even if they're not very enthusiastic about it, they say in the long term, we'll have to join the Euro. Now from my point of view I'd prefer to see that sooner rather than later. WATSON: Small businesses who employ six out of ten UK workers are sounding off about the cost of fuel. They want to see a signal from the Chancellor that he's listening to them. ALLEMBRTIS: We would like to see on behalf of all small businesses a straight cut, in the tax on fuel. I think helping just hauliers or helping just farmers, or motorists in rural community is all very well, but the fuel protests were across the country fairly supported by most people and therefore a tax measure that would benefit most people is one that would actually be better received. WATSON: Business wants the government's plans for new workers' rights to be put to the torch, while Labour's supporters say the flame of Socialism mustn't be extinguished entirely. But unless the government shows that it understands business concerns over rising costs, their previously warm relationship could turn cold.
NB. This transcript was typed from a transcription unit recording and not copied from an original script. Because of the possibility of mis-hearing and the difficulty, in some cases, of identifying individual speakers, the BBC cannot vouch for its accuracy.