There will be dismay at the government’s decision to kick its flagship employment bill into the long grass. The legislation was going to be a cornerstone of post-Brexit Britain – one of the building blocks of a better, brighter future along with higher environmental standards and a clampdown on bad corporate behaviour.
Now it may make an appearance at the end of the year, though more likely sometime in 2022.
Matthew Taylor, one of the driving forces behind the bill in his capacity as Boris Johnson’s employment tsar, says all the ideas he put forward last year have been met with a “stony silence”.
In his day job as the head of the RSA, the 260-year-old royal society of arts, manufacturing and commerce, Taylor has built up a sizeable reputation as an innovative thinker. He does not want employment to be thought of as something people only do between 9am and 5pm on a weekday, but neither does he want flexibility to become the parent of a precarious workforce bidding for work by the hour.
The former Labour political strategist joined the Johnson bandwagon after the prime minister promised in the December 2019 Queen’s speech to “protect and enhance workers’ rights as the UK leaves the EU, making Britain the best place in the world to work”.
Trade unions will not be surprised that the government has failed to match the rhetoric of “build back better” with concrete plans. They are furious about the continued mistreatment of gig-economy workers who are denied basic rights and union representation by employers that in the unions’ view might as well be wearing top hats and smoking cigars, so closely do they resemble Victorian capitalists.
The courts are doing their bit. Last week the supreme court said any attempt by organisations to draft artificial contracts intended to sidestep basic protections were unenforceable. Judges had in their sights the contracts issued by the taxi service Uber, which they said stopped workers from claiming basic rights.
It is one of a string of cases challenging the self-employed status of gig-economy workers, including action against the minicab firm Addison Lee and the delivery groups CitySprint, Excel and eCourier. As such, the case could have implications for millions of so-called “self-employed” workers.
But if Uber’s reaction is anything to go by, an employment bill is urgently needed. The US-based business believes the ruling only applies to a small group of workers from a period when a particular contract was in operation. It denies that a principle has been set. However, it says it has been making “significant changes” and is “committed to doing more”.
When Britain is moving into an era of internet shopping, and delivery drivers are a growing element of the workforce, it is clear that the need for greater protection is coming. Prior to the pandemic, less than 20% of retail sales were online. Figures for January showed that the proportion has grown to 35.2%.
Keir Starmer, in a speech last week that attempted to reset Labour’s relationship with business, probably reached too far back into history to make his point about the nature of employment. He said: “My dad worked on the factory floor his entire life. A steady, secure job allowed him to build a better life for his family. That’s why, when I think about business I see a source of pride, dignity and prosperity.”
Gone are the days when companies could be relied on to keep enough cash in reserve to see staff through the bad times and accept the risk of funding shortfalls in occupational pension schemes.
That should not mean employers escape all obligations, and especially not those in low-skilled, low-paid sectors.
As Starmer says, this nation needs to provide work that gives pride, dignity and a decent day’s pay.
Sterling’s on the comeback trail
Not so long ago, there was talk in the currency markets that the pound might sink to parity against the US dollar. It was not hard to find reasons to sell sterling: the pandemic news was terrible; the economy appeared to be on course for a double-dip recession; trade talks with the European Union were going badly.
Since the turn of the year, market sentiment towards the pound has improved, culminating in Friday’s move above $1.40 for the first time since 2018. To be fair, some of this has been the result of the weakness of the dollar but it is mostly a UK story.
First, the economic impact of Brexit has not been nearly as damaging as it was feared it might be. A bare bones deal between London and Brussels was signed; the M20 has not been turned into a gigantic lorry park; the latest CBI survey of manufacturing pointed to little immediate impact on output from the new trade rules.
Second, and much more importantly, the success of the UK’s vaccine programme has come as a pleasant surprise after the frequent policy blunders of 2020. Even though the economy will shrink in the first quarter of 2021, consumer and business confidence has picked up in anticipation of better times to come.
Nor are the currency markets overly concerned by the message from the government that the unwinding of lockdown restrictions will be slow and steady. Indeed, the feeling seems to be that the longer consumers are trapped in their homes, the stronger the eventual recovery will be.
Put simply, the pound is rising because the flow of bad news has diminished while the flow of good news has increased. Given that it has been trading at historically low levels against the dollar since the 2016 Brexit vote, it could go still higher.
Asda’s debt burden could weigh on its prospects
It was a brave new world for Asda’s chief executive, Roger Burnley, as ownership of the UK’s third-largest supermarket passed last week from US retail giant Walmart to private equity paymasters, who are saddling the company with debts approaching £4bn.
The £6.8bn sale to petrol forecourt billionaires Mohsin and Zuber Issa and TDR Capital has been finalised, although nothing much will now happen until the Competition and Markets Authority gives its verdict on the deal.
It is the largest British leveraged buyout in more than 10 years, with the new owners stumping up less than £800m for a controlling stake. Nearly £4bn is being borrowed and £1.7bn raised by selling Asda’s warehouses and petrol stations.
The amount of debt being loaded on to the company has raised eyebrows, given that the retailer was struggling in a fiercely competitive grocery market even when it had no debt and £3.5bn of freehold property to its name.
Figures published last week showed Asda had an acceptable Christmas trading period but was still the weakest performer among the big four supermarkets. In recent years it has struggled to find a point of difference in a world where the budget chains Aldi and Lidl have stolen its low-price thunder.
The Issa brothers, who also used debt to build their EG Group petrol station empire, claim Asda has “exciting future prospects” in their hands. But there are plenty of examples of private equity buyouts that have ended in tears – not least in the case of Debenhams.
The entrepreneurs are credited with improving dowdy petrol forecourts with branches of fast-food chains such as KFC and Krispy Kreme, but it is not clear how their expertise helps Asda. On paper it is already a weaker business and Burnley’s fightback looks a whole lot harder.
