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Labour has watered down plans to strengthen workers’ rights as Sir Keir Starmer tries to woo corporate leaders and discredit Tory claims that his party is “anti-business” ahead of the next general election.
A pledge to boost the protection of gig economy workers was diluted by the party’s leadership at Labour’s national policy forum in Nottingham last month, according to people familiar with the matter and text seen by the Financial Times.
The party also clarified its position on probation for new recruits, confirming a future Labour government would continue to allow companies to dismiss staff during a trial period.
The moves come ahead of a battle for the support of business leaders before a general election expected next year. Conservative ministers are looking to highlight what they see as a contradiction between Labour’s policies and Starmer’s efforts to court corporate chiefs in what party insiders have called a “smoked salmon and scrambled egg” offensive.
The text agreed last month will be published in the run-up to Labour’s annual conference in October and will form a menu from which it picks its manifesto pledges.
Passages seen by the FT showed that Labour has diluted its 2021 pledge to create a single status of “worker” for all but the genuinely self-employed, regardless of sector, wage or contract type. The policy was aimed at guaranteeing “basic rights and protections” for all workers, including those in the gig economy.
Instead of introducing the policy immediately, Labour has agreed it would consult on the proposal in government, considering how “a simpler framework” that differentiates between workers and the genuinely self-employed “could properly capture the breadth of employment relationships in the UK” and ensure workers can still “benefit from flexible working where they choose to do so”.
Labour also clarified that its previously announced plans to introduce “basic individual rights from day one for all workers”, including sick pay, parental leave and protection against unfair dismissal, will “not prevent . . . probationary periods with fair and transparent rules and processes.”
The policy body also confirmed that businesses would retain the right to fairly dismiss workers — on the grounds of capability, conduct or redundancy — under a Labour administration.
Labour may face further showdowns with trade union officials over its policy programme. Unite, Britain’s largest union and a major financial backer of Labour, gave the document agreed in Nottingham the “thumbs down”, refusing to back its stance on workers’ rights and access to unions.
Momentum, a leftwing campaign group within Labour, declared the party leadership “wrong to water down its commitment on a single tier of status for workers” and accused the party hierarchy of bowing to “corporate interests”.
A party official said: “Labour are listening to business and unions to make sure we’ve got credible plans on the economy.”
Starmer, shadow chancellor Rachel Reeves and shadow business secretary Jonathan Reynolds have led the push to win the hearts and minds of business leaders.
“There has been a very noticeable change in the . . . commitment to engagement with business,” said a corporate lobbyist, who contrasted the approach with the party’s leftwing radicalism under Jeremy Corbyn.
Tory ministers and MPs worry that Labour is “getting away with” harmful policies under the cover of friendly rhetoric. A government official argued business chiefs had not yet “clocked” what Labour was planning on employment and union rights, adding: “Once they realise, they’ll hate it.”
Conservative Campaign Headquarters has drawn up a list of the 20 Labour policy proposals it deems most “anti-business”, with a view to drawing more attention to these in coming months.
These include the proposals that Labour altered last month and an array of other worker protections set out by the party, such as extending the right to flexible working and introducing a new “right to switch off” from emails and calls outside of working hours.
One Conservative official said Labour’s plans amounted to “a Trades Union Congress wish list” that would make the labour market less flexible and increase costs for both the public and private sectors, while benefiting unions directly with measures that include cutting rules that limit their operations.
Sir Jacob Rees-Mogg, the former Tory business secretary, said: “These proposals will make employers, especially small ones, reluctant to take on staff.”
Kemi Badenoch, the business secretary, is expected to challenge Labour’s plans in the weeks ahead. One government insider said: “Rachel Reeves keeps on about ‘securonomics’, which looks like massive market intervention, big statism, government telling business how to run their show. These are themes Kemi will be exploring in the run-up to party conference.”
A Labour official hit back, branding the Tories’ plan to attack the party a “desperate” tactic “from the same Conservative party that said ‘fuck business’,” referring to Boris Johnson’s notorious outburst in 2018 after companies raised concerns about a no-deal Brexit.
Labour has a “serious, credible and ambitious policy programme” designed to build “a strong economy by levelling-up workers’ rights and making work pay”, the official added.
People at multiple companies and business groups said the party’s engagement seemed “genuine” and “sincere”, and businesses are set to flock to Labour’s annual conference.
However, it is not yet clear how Labour will act on information it is receiving from businesses or how substantive the engagement exercise will ultimately be, said an insider at one FTSE 100 financial services company.
There has been only limited follow-up with party officials after many of the meetings with business executives and with the exception of areas such as workers’ rights, Labour has — according to some business people — given few clues as to its priorities.