Keir Starmer defends changes to workers’ rights as ‘pro-growth’

Sir Keir Starmer has defended the government’s plans to overhaul and increase workers’ rights as “pro-growth”.

The prime minister also told a major business summit in the UK he would scrap regulation that “holds back investment” and would ask regulators to prioritise economic growth.

The government’s Employment Rights Bill proposes a number of changes including to sick pay and parental leave, but some business groups are concerned about how they would work in practice and there are fears some may put off hiring new staff.

While the government is seeking to support business, citing growing the economy as its top priority, it is also aiming to strike a balance by being pro-worker as well.

Speaking to business leaders at the international summit in London, Sir Keir said greater security for workers would lead to better growth in the economy.

The proposals would see people being able to get sick pay from the first day they are ill and claim unpaid parental leave as soon as they start a job, although most of the planned changes will not take effect for two years.

Former Tory donor John Caudwell, the founder of Phones 4U who came out in favour of Labour ahead of the general election, told the BBC he was “not very keen” on Labour’s plans to increase workers’ rights, calling them “a real burden on business”.

But he said businesses and potential investors, would “swallow the difficulties that come as a result of that extra regulation on employee rights” if the wider goal of growing the economy was met.

The government claimed its summit on Monday secured £63bn of private investment, however, many of the investment commitments had already been announced in advance.

Some of investment pledges from firms include:

• £1.1bn cash injection into Stansted Airport by its owner Manchester Airports Group to expand the airport’s terminal by a third, creating more than 5,000 jobs
• £279m from US pharmaceutical giant Eli Lilly to tackle “significant health challenges”, such as obesity
• £20bn over the next five years from Australian firm Macquarie towards various infrastructure projects including an electric car charging network. Macquarie has been blamed for saddling Thames Water with unsustainable debts when it was its biggest shareholder
• £1bn confirmed by DP World to create 400 new jobs and make London Gateway the UK’s largest container port within five years. The commitment had looked to be in jeopardy after Transport Secretary Louise Haigh called on people to “boycott” DP World’s subsidiary P&O Ferries over their past treatment of staff – comments which were later rebuked by the prime minister

While the investment pledges signal a boost for the government, many business leaders are eagerly anticipating the new government’s Budget at the end of October.

Speculation is growing over the UK’s economic plans, with debate over what tax rises Chancellor Rachel Reeves will announce, given the government has ruled out increasing VAT, National Insurance or income tax.

However, on Sunday, Business Secretary Jonathan Reynolds did not rule out an increase in the rate of National Insurance paid by employers.

Reynolds told Sky News: “That pledge – it was taxes on working people so it was specifically in the manifesto, a reference to employees and to income tax.”

There is also speculation over a potential rise in Capital Gains Tax, which is charged on profits made from the sale of an asset that has increased in value, such as second homes.

Reeves sidestepped questions on her Budget plans, but did hint that she might change the government’s borrowing rules to free up billions of pounds more in spending for big projects.

“We do want to free up investment in those long-term responsible investments that we need to make, to unlock the private investment into our economy,” she told the BBC.

Sir Keir said he wanted to “rip out” bureaucracy obstructing investment in the UK.

He told the summit it was time to “upgrade the regulatory regime”, and pledged to “make sure that every regulator in this country – especially our economic and competition regulators – take growth as seriously as this room does”.

Eric Schmidt, the former chief executive of internet giant Google, told Sir Keir at the event that delays to regulation were “killing you”.

“I think the business community would much rather have a single person who can say yes or no… and then they can move on,” he said.

“The delay is killing you, and furthermore you’re not going to achieve your 2030 energy goal, which is laudable, without fixing this.”

The head of insurance giant Aviva, Amanda Blanc, said simplifying planning procedures was key.

“We can commit to doing projects but if you can’t get the planning permission you could be sitting with a project for two to three years where you’ve got money ready to go to work that isn’t being put in place,” she said.

The boss of Eli Lilly, David Ricks, who also attended the event, said the UK had to take a new approach now that it was no longer part of the EU.

“It’s [the UK] a relatively small market for most multinationals and certainly for Americans, so something needs to be quite different to make it interesting,” he said.

The boss of Norwegian energy company Equinor, Anders Opedal, said that stability of government was key, especially regarding tax, adding the Budget “will be very important for us”.

“I think the government are putting forward a very good strategy for how to improve, working together with the private sector, now it is about execution and getting execution right,” he added.

Earlier this month it emerged that the world’s richest person, Elon Musk, had not been invited to the investment summit.

But Technology Secretary Peter Kyle said the billionaire would have been “very, very welcome”.

“We would love to engage with Elon Musk,” Kyle said. “If he opens up an investment programme and there is global competition for it, believe me we will be first in line.”