Tuesday, May 22, 2012

The Beecroft Report; nothing more than a corporatist wish list

Peter Cruddas was forced to resign after detailing the
perks of making financial donations to the Tory party
When it comes to political corruption the British press seem to be pretty thick. The Tory party co-treasurer Peter Cruddas was forced to resign after a Sunday Times "sting" caught him offering direct political access to leading Tories including David Cameron and George Osborne for donations of £250,000 and making claims that donor's "issues" could be discussed at the Number 10 policy unit given a large enough donation, however a story that they have largely failed to pick up on is the astonishing case of a millionaire Tory donor commissioned to actually write Tory party policy for them.

The donor in question is Adrian Beecroft, a millionaire venture capitalist who has donated more than £537,000 to the Tory party in recent years. In his Beecroft Report he proposes introducing measures such as the weakening of employment laws to allow employers to sack their employees at will, the removal of equal equality legislation, the removal of "carry-over legislation" (which allows workers to keep their employment rights when their company is taken over), and a reduction on the amount that can be paid out in unfair dismissal compensation.

Beecroft's report seems like a Victorian mill owner's charter of pro-business, anti-worker reforms, yet supposedly "left-wing" media sources such as the BBC report the story as if it is just a matter of getting rid of some pesky red-tape.

By far the most talked about and controversial recommendation is what is being described as "no fault dismissals" or "sack-at-will". This is a proposal to make it much easier for companies to just sack employees that are no longer needed, employees that complain about poor or dangerous working conditions, employees that are impertinent enough to ask for pay rises or employees they just don't like the look of. I don't need to give too much analysis of why this is a bad thing because the vast majority of sentient workers would already oppose giving their boss the right to sack them without cause. It is quite clear from the Spanish Labour reforms that making it easier and less costly for companies to sack people doesn't boost the economy and employment at all. It actually causes a spike in unemployment as companies are incentivised to make more staff redundant, increasing the welfare burden on government and damaging aggregate demand by reducing household disposable income, further worsening economic conditions and leading to yet more unemployment further down the road.

Some of the other less talked about proposals are just as concerning, such as the proposal to limit the amount that companies must pay out when they are found guilty of unfairly dismissing an employee. Like much of the rest of the document, Beecroft's proposal has absolutely nothing to do with the stated cause of improving the economy and everything to do with protecting corporate interests. If a company is found guilty of unfairly sacking an employee, it is to everyone's benefit that they fairly compensate that worker for their lost earnings. If the corporate sector want to pay out less in loss of earnings compensation, they should unfairly sack fewer of their employees.

Another proposal is the removal of "carry-over legislation" in order to make it easier for new owners of a company to rid themselves of long established workers. This would obviously facilitate Hedge Funds, Private Equity groups and the like, especially the ones intent on laying off staff and asset stripping the companies they have acquired.

Another proposal is that the scrapping of the requirement that employers check the eligibility of their foreign workers, handing the responsibility to the UK Border Agency or the Home Office. This proposal is absolutely absurd, it is basically nothing less than an illegal gangmaster's charter. At a time of dramatic cutbacks in government expenditure to comply with the Tories barmy self-defeating austerity agenda, it is ridiculous to expect that a vast bureaucracy be established to do the job of checking workers credentials that the corporate sector can't be bothered with. The whole proposal looks like a hand washing strategy so employers of illegal workforces can come out with excuses like, "OK my company employs 95% illegal immigrants but it isn't my responsibility to check is it guv'nor?"

So who is this man that is proposing "sack-at-will" legislation, the removal of workers rights and an illegal gangmaster's charter as solutions to Britain's economic woes. It turns out that Adrian Beecroft is the chairman of Dawn Capital, a Private Equity fund that own the payday loan company Wonga.com, a company with a business model based upon making short-term super high interest loans to poor and desperate people with no other choice.

It seems absurd that Peter Cruddas was forced out for boasting about what
 kind of influence donations to the Tories could buy, whilst major Tory
 donors are allowed to continue writing pro-business legislation for them.
It seems that Dawn Capital would certainly be beneficiaries from the spike in unemployment caused by the introduction of "sack at will" legislation. Wonga.com would be there to offer their insane and illegal almost everywhere else (even the US) super high interest loans to the tens of thousands of people dumped into poverty, in desperate need of finance as they try to reduce their outgoings to match their newly unemployed status.

Private Equity groups like Dawn Capital would also clearly benefit from the scrapping of carry-over legislation, allowing them to buy up small businesses and fire any staff they cared to, and the wider corporate sector would benefit from a bonfire of labour rights and the removal of the requirement to check whether their employees are even entitled to work in the UK.

It seems that a heck of a lot of Beecroft's proposals have nought to do with "boosting growth" as the Department for Business like to claim and everything to do with protecting corporate interests and insulating them from risk of fines, compensation claims and court cases.  David Cameron has asked one of the Tories main political donors to come up with a blue sky corporate wish-list, which they actually seem inclined to enact, hardly surprising given their barely concealed contempt for those that actually work for a living.

It is very hard to see how offering dinner with Cameron and co and a bit of influence at the Tory policy unit for large political donations can get a man sacked, whilst the Tories remain free to go about the tawdry business of allowing their financial donors to draw up their economic policies for them.


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