Retail chiefs warn Labour’s Employment Rights Bill could stifle growth and shake business confidence.
Chancellor Rachel Reeves is facing a mounting backlash as the British Retail Consortium (BRC) issued a stark warning about the Labour Party’s flagship Employment Rights Bill, citing its potential to damage job creation and flexibility across the retail sector.
According to the latest BRC survey, over 50% of retail HR leaders believe the bill will curb hiring and diminish job flexibility. Alarmingly, 70% said the legislation is likely to harm their businesses.
The criticism lands as the House of Lords prepares to debate the bill this week, with economic tensions already running high.
Helen Dickinson, chief executive of the BRC, didn’t hold back: “Those in charge of retail hiring are clear – unless amended, the bill will make it even harder to keep and create jobs and reduce the flexibility that defines many existing retail roles.”
Ms Reeves, already under pressure over a sluggish economy, faces a storm of criticism over Labour’s economic direction. Frustration is mounting over recent rises in national insurance and cuts to welfare, including benefits for disabled individuals and winter fuel payments affecting 10 million pensioners.
Her efforts to promote the UK economy during a recent visit to Washington DC – and to seek warmer ties with Donald Trump’s circle – have done little to quiet discontent at home.
Optimism now hangs on the outcome of renewed Brexit talks. EU trade commissioner Maroš Šefčovič is due in London ahead of a possible breakthrough deal on 19 May. Planning reforms have also been promised, aimed at unlocking a building boom, but confidence remains shaky.
The Confederation of British Industry (CBI) has also issued a sobering update. Its latest Growth Indicator Survey shows businesses expect activity to drop in the coming quarter, with a weighted balance of -21%.
Key findings include:
- Services sector volumes expected to decline by -26%, the weakest since November 2022.
- Business and professional services forecast to shrink by -22%.
- Consumer services are projected to fall sharply by -41%.
- Distribution sales to drop by -23%.
- Manufacturing output to dip slightly by -5%.
Alpesh Paleja, deputy chief economist at the CBI, noted: “Global volatility is another drag on business sentiment, already hit by the rise in National Insurance Contributions and the National Living Wage, and continued concern over the Employment Rights Bill.”
But Labour’s traditional allies in the trade union movement are firm in their stance. The TUC insists the legislation is long overdue and essential to protect workers.
Paul Nowak, general secretary of the TUC, said: “Stronger workers’ rights mean a happier, healthier and more productive workforce. The government has been at pains to engage unions and employers, large and small, in designing these new reforms. Most businesses already do the right thing, and this will level the playing field for those good employers.”
As economic storm clouds gather, the Resolution Foundation has released a report urging the government to focus its limited financial resources where they matter most, particularly in health and housing.
Other areas highlighted for potential investment include the prison system and public transport, though these were flagged as “secondary priorities”.
The Treasury is currently finalising a comprehensive spending review, which will determine departmental budgets for the next three years. While departments like defence, health, and education remain protected, others – including justice, local government, and culture – face greater scrutiny.
“The chancellor must now decide how to allocate a limited pot of capital spending in a way that both addresses the UK’s legacy of frayed infrastructure and supports future ambitions for growth and higher living standards,” the report states.
Ms Reeves previously told the BBC: “We can’t just carry on like we have been, spending on the same things that the previous government spent on.”
At the October 2024 Budget, she outlined four fiscal “guardrails” to ensure better value for money. The Resolution Foundation estimates that between £20bn and £50bn in capital spending will be available for allocation over the next five years.
With the House of Lords preparing to scrutinise the Employment Rights Bill, Rachel Reeves finds herself squeezed between growing business anxiety and unrelenting demands from trade unions.
The coming weeks will test her ability to balance economic caution with social reform, while trying to revive a faltering economy under the unforgiving spotlight of public and political pressure.
