Policy Talks Q4

Tough times for the Chancellor... and mixed messages on tackling business admin burden.

Should the government keep its manifesto tax promise or raise taxes to support public spending?
When YouGov surveyed over 2000 adults in late October 2025 with that question, 52% said it was important not to raise income tax, NI or VAT even if that means less public spending with those identifying as on the right polling above 70%.

Does this reflect our members’ views or is business more pragmatic?
1p or even 2p on income tax does not affect the cost of employment and for most workers would not be the difference between affording a decent quality of life or not. A potential 2p accompanying decrease in National Insurance would net off the difference for workers, but it could be a rather technical sell for a government aspiring to growth that workers “feel in their pockets”.

Statistics over the past few months and research papers including APSCo’s are evidencing fragile but tangible evidence of growth and returning business confidence.
However, the sector is understandably nervous about the Budget. Beyond the political rhetoric and the heat of the ERB, Government is starting to make some big changes such as transferring adult skills and Skills England to DWP – rebranded as the department for jobs. We are talking with them about new initiatives such as the Youth Guarantee and plans to help keep people in work following ill-health absences. However, there remains a frustration amongst members that strategies and plans are not converting fast enough into actions and spending.

And of course, there is the frustration that the Employment Rights Bill and the umbrella reform are creating a lot of new regulations at a time when the government is targeting DBT to reduce red tape!

(https://www.gov.uk/government/news/chancellor-cuts-pointless-admin-in-nearly-6-billion-business-blitz).

Following meetings with policy makers back in the summer, the first tranche of ERB consultations was published in late October. Find links in our latest legal update.

There was a robust, some might suggest heated debate in the Lords on the Employment Rights Bill amendments on the 28th October. The Lords took on board government pushbacks to previous amendments and made some very sensible revisions in their latest amendments. Two are of particular interest to the recruitment sector and will remain in the Bill as it passes back to the Commons.

• Peers have reinserted a six-month qualifying period for unfair dismissal.
  The Peers highlighted that the Resolution Foundation (generally a think tank supportive of Government thinking) considers that a three- or six-month qualifying period is the best option for workers and the economy.
  
  There was discussion that day one unfair dismissal rights will lead to employers taking less risks on younger workers and others, such as ex-offenders. A point we have repeatedly raised in our advisory papers to Parliament and Government. Read more in last week’s blog.

• On zero hours, an amendment remains giving workers the ability to opt out of receiving further guaranteed hour contract offers.
  Peers modified the amendment, so it kicks in after a worker refuses an initial offer at the end of the first reference period, likely to be twelve weeks.

The Liberal Democrat Lord Fox highlighted the burden on SMES of the government’s measure and concluded this is a compromise that can work for both parties.

Reducing business administration will now be a government policy considered in the much-anticipated ERB consultations. It is frankly counter intuitive that the government is so resistant to any amendments that could reduce business burden in the primary legislation.

For more information on the Parliamentary process read our APSCo Explainer - Parliamentary Bills and Secondary Legislation. We will keep you updated on the Bill’s passage back to the Commons. However, it remains an outside chance that the government will accept the Lord’s amendments, and the Lords cannot ultimately stop Royal Assent which is now expected sometime in November.