The think tank that played a key role in Sir Keir Starmer’s campaign to become Labour leader has produced a new document which calls for much of Angela Rayner’s workers’ rights agenda to be abolished.
The unpublished paper by Labour Together criticises the reforms in the Employment Rights Bill, due to become law in January, saying they “sap dynamism” from the economy and that 80 per cent of them should be scrapped.
The think tank admitted it produced the paper but said it was a “provocation” for discussion, and was looking to the future rather than the present. A spokesperson said: “Labour Together totally supports this week’s Employment Rights Act.”
But the proposals risk sparking a major row within the party amid suggestions that a challenge to Sir Keir’s leadership after May’s local election results, widely expected to be disastrous, could see a battle for its future political direction.
Earlier this week Sir Keir praised the changes as “the biggest upgrade to workers’ rights in a generation”.
Union leaders hailed the reforms, saying they would ban exploitative zero-hours contracts, create sick pay for all and repeal anti-union laws.
But businesses have warned that they will lead to a decrease in employment and hold back growth.
The document said the reforms had left the government’s economic agenda “going backwards” as it called on ministers to embrace “easy firing” while hiking taxes on firms and workers to fund higher unemployment insurance for those who lose their jobs, according to the Times, which reported that it had been circulated to some Labour MPs.
It said that the government should “scrap 80 per cent of the Employment Rights Bill and build out unemployment insurance”.
“This could be funded by higher taxes on employers (cheaper than the compliance cost of ERB (Employment Rights Bill)) and small contributions from workers.”
It also said new technology makes the “creative destruction” of job losses inevitable and urged the government to have the “most flexible markets” of superpowers such as the US and China, while “easy firing means easy hiring” which would benefit both companies and workers. The paper also suggests ending spending on infrastructure projects in the southeast of England, saying it can “pay for its own stuff”.
“The brave churn of technology — a political economy for Labour in the 21st century”, which has no listed author, opens with the words: “Tony Blair was right.”
It comes just a week after it emerged that Labour Together was canvassing party members on candidates to replace him, in another sign of trouble for the beleaguered prime minister.
The think tank, previously run by Sir Keir’s chief of staff Morgan McSweeney, asked activists for their opinions on Labour leadership contenders amid growing concern over the direction of the government and devastating approval ratings.
Alongside Sir Keir, eight Labour politicians were named, including cabinet ministers Wes Streeting, Shabana Mahmood, Bridget Phillipson, Ed Miliband and Darren Jones.
Also listed were former deputy prime minister Angela Rayner, Greater Manchester mayor Andy Burnham and deputy Labour leader Lucy Powell.
It came just days after Sir Keir said the “hugely talented” Ms Rayner would return to his cabinet amid growing speculation she could make a bid for the Labour leadership.
There have been reports that she could run on a joint ticket with Mr Streeting to challenge the prime minister.
When asked if he missed his former deputy, Sir Keir said: “Yes, of course I do. I was really sad that we lost her. As I said to her at the time, she’s going to be a major voice in the Labour movement.”
Pressed as to whether she will be back in the cabinet, he added: “Yes. She’s hugely talented.”
Earlier this week, Sir Keir defended Ms Rayner’s reforms and said: “I couldn’t be prouder to lead the government that made this happen.”
A Labour Together spokesman said: “Labour Together totally supports this week’s Employment Rights Act.
“This paper was a provocation for private discussion about how to build a political economy centred on technological change and innovation.
“It looks beyond current policy, exploring ideas for spreading innovation and investment outside the South East and how to support workers through technological change with a bigger welfare state rather than regulation alone.
“But given the welfare state we inherited from the Conservatives, that is far away. The Employment Rights Act is the best way to give workers much more security now.”