The last thing the British business needs is the working culture and labour relations of the public sector. Unfortunately, this is what they are going to get from the Labour government. The British government is going to have to learn the hard way about opportunity costs and the reality of the modern workplace.

In last month’s King’s Speech, the Government announced an Employment Rights Bill, based on the Labour Party’s green paper, “Labour’s Plan to Make Work Pay”. This includes a suite of new regulations designed to send a shiver through the boardroom, and usher in “a new deal for working people” in Britain. 

The Telegraph reported that new rules demanding employers take “all reasonable steps” to stop harassment could lead to the end of office parties and workplace socialising all together, because “all reasonable steps” could easily mean an “almost infinite number of steps.” This framing was greeted with mockery online. Some suggested that anyone opposed to it was either guilty of sexual harassment in the workplace or not taking it seriously enough. 

While this accusation is clearly untrue, it misses a wider point about the unintended consequences that will follow from such a policy, and whether such a policy is even the right way to guard against workplace harassment. If enacted, it will create another round of form-filling, additional administration, new processes and training sessions, and a continued expansion in productivity-destroying compliance culture. This is great for lawyers, consultants and those looking for a career in human resources, rather less great for those who care about businesses turning a profit. It will create a cottage industry for regressive ideas. Yesterday, Keir Starmer talked about the importance of growth, but actions speak louder than words.

The idea that form-filling and process will stop harassment or bad behaviour is silly

This is indicative of the Government’s approach to rules and regulation, putting process first and sense second. It is government by risk assessment, and it is indicative of a public-sector attitude that is dominant in the Labour Government. Labour today is the party of the public sector. This is reflected in the career background and policy preferences of Labour ministers and MPs. In an environment without the need to turn a profit, and one already accustomed to vast amounts of process — risk assessments, staff networks, facility time, and countless other quirks — it isn’t all that surprising that Labour ministers feel no need to push these practices on the private sector, which funds the public. 

The idea that form-filling and process will stop harassment or bad behaviour is silly. In the case of office parties, as covered by The Telegraph, it will just decrease the likelihood of any such parties happening at all. If the choice before an employer is to conduct a potentially infinite list of actions to meet the “all reasonable steps” stipulation to be able to put on a drinks party at work, or just not go ahead with holding one, many will simply not bother. It would be far easier to avoid doing anything which would incur unnecessary costs, even if it means morale in the company declines. 

As is the case with new regulations of this kind, the organisations happiest to oblige are either public sector bureaucracies or corporate giants, which function more like a government department the larger they get. With armies on hand to manage regulatory compliance, another form on top of the pile makes little difference. This could not be further from the truth for a small business trying to grow as fast as possible. The same case can be said for regulations like GDPR, the REACH chemical regulations, or the Working Time Directive. Unsurprisingly, all of these are European Union policies originally, the organisation which truly embodies the process-first, sense-second attitude. This is a recipe for setting the economy in aspic: competition and innovation will fade away, and entrepreneurs will find another reason not to set up a business in Britain.

… this would be a woeful step backwards for labour relations and the economy

The solution is much simpler. If the Government wants to make workplaces happier, more productive, and free from harassment, they should focus on the quality of employees, rather than process. Hiring good people, and — importantly — being able to sack bad people as quickly as possible is the best way of doing this. Surely the risk of the sack is a far better incentive against harassment at an office party than tedious wasted hours writing a risk assessment which will be stashed away in a dusty lever-arch folder. 

Unfortunately, the Government wants to make this harder, not easier. Labour’s New Deal for Working People intends to strengthen trade unions, get rid of probation so employers cannot dismiss poorly performing employees early, and make it easier for unions to strike. It feels trite to talk about the return of the 1970s, but this would be a woeful step backwards for labour relations and the economy. The Employment Rights Bill has not been presented to Parliament just yet, but its arrival will be the strongest signal yet that Britain is closed for business.