Starmer’s employment rights U-turn is a sharp move few will cheer him for

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Editorial: The six-month qualifying period for protection from unfair dismissal is a step in the right direction, which should have been taken long ago – but this dangerous habit of breaking manifesto pledges is compounding a crisis of trust in politics

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It should not have taken so long for the prime minister to see sense and accept that the right to protection from unfair dismissal from “day one” of employment was a bad policy to begin with.

Of course, protecting employees from unfair dismissal is a good thing, but the trade unions allowed sentiment to overcome what is actually in the best interests of workers, especially the young and the low-paid. Giving employees full legal rights from their first day in the job would make it less likely that an employer would take a risk with a new hire – a risk that a young person looking for their first job needs an employer to take.

The government was right, therefore, to agree to a compromise, and to reduce the qualifying period for protection from the current two years to six months instead of making it effective from day one.

This means that the deadlock between the House of Lords and the House of Commons has been broken and the Employment Rights Bill can finally become law.

It should come as no surprise that this has provoked furious denunciations from well-meaning but mistaken Labour MPs and trade unionists. Rachael Maskell, the Labour MP for York Central, said “workers will have every reason to fear” what others of her colleagues called a “betrayal”. Justin Madders, the employment minister who worked on the bill and who was sacked in September, said “it most definitely is a manifesto breach”.

Sharon Graham, the general secretary of Unite, said the bill had become “a shell of its former self”, which is somewhat hyperbolic, as this is the only change of substance that has been made on its passage through parliament.

A more pragmatic view was taken by Paul Nowak, the general secretary of the TUC, representing the wider union movement, who said the “absolute priority” was to get the legislation onto the statute book. His is an unanswerable point: any decent trade union negotiator, even if they preferred full rights from day one, should recognise that it is more important to enact all the other pro-worker provisions in the bill now than to allow the Lords to delay the bill for a year.

Thus, the government has ended up with a better bill than it started with, which will be enacted more quickly than if the diehards had their way.

It is still not a good bill. The additional regulatory burden that it loads onto employers is almost as damaging to employment prospects as the unfair dismissal clause. Lifting the cap on compensation for unfair dismissal could be particularly expensive.

The government’s own impact assessment found that the bill would add £5bn a year to employers’ costs – a figure that is not going to be much reduced by the U-turn on full rights from “day one”. Added to the national insurance rise last year, which discouraged employers from hiring young and low-paid workers in particular, and the excessive rise in the minimum wage, this government seems determined to suppress job creation.

This U-turn may be an improvement to the bill – but what a terrible way to run a legislative programme.

The problem with “day one” protection from unfair dismissal was known years before the election. It was a legacy of the Jeremy Corbyn era that was defended by Angela Rayner in her personality feud with Sir Keir Starmer. Sir Keir lacked the courage to ditch the policy before the election.

Worse than that, he failed to ensure that Ms Rayner did the necessary work of preparation – work that would have exposed precisely the problem that Labour ended up facing in government: that the Lords would delay it.

The policy should never have appeared in the manifesto. Not only would the result have been a better policy, but Sir Keir would have avoided breaking a second manifesto promise after the Budget broke the promise on taxes.

What’s more, his chancellor has today been accused of misleading voters over the state of the public finances in the run-up to the Budget by claiming there was a hole in the public finances even though official figures showed it did not exist.

A letter published by the Office of Budget Responsibility revealed Rachel Reeves knew about its revised prediction that the £20bn “Budget black hole” would be significantly smaller than it had anticipated well before she changed course to raise taxes. Downing Street denies the claims, but the furious backlash threatens to heap more gloom on No 11.

As it stands, Sir Keir has compounded the crisis of trust in politics. He has only himself to blame.

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