Legislation must help not hinder UK businesses on path to recovery, says CIPD

18 November 2009

The CIPD today responds to the following elements of the Queen’s speech:

• The introduction of the Financial Services Bill
• The introduction of the Fiscal Responsibility Bill
• The carrying forward of the Equality Bill
• The Government’s commitment to enact new rights for agency workers

Commenting on the Financial Services Bill, which will increase governance of remuneration in the sector, Charles Cotton, reward adviser, CIPD, says:

‘The Queen’s speech has told us less than this week’s media speculation about how such regulation will work in practice, so the devil will definitely be in the detail. There is a real danger that any regulator will end up focusing on the reward aspects of people management at the expense of the other causes of the crisis, such as organisational culture, performance management and governance. It is dangerous for politicians to overplay the role of remuneration in contributing to the financial crisis and the impact that their reform will have.

‘The reforms will have to make sure it doesn’t become easier for regulators to ‘just say no’ to bank bonuses, otherwise they might have a significant impact on the City’s ability to attract, retain and motivate the best. Not to mention its contribution to the economy.’

John Philpott, chief economist, CIPD, agrees with Labour’s commitment to halve the budget deficit in four years through the Fiscal Responsibility Bill:

‘A credible phased deficit reduction plan is a good idea and it need not stymie the economic recovery as gradual withdrawal of the fiscal stimulus can be offset by low interest rates and continuation of quantitative easing. Big cuts in public expenditure or large tax hikes in 2010-11 would run the risk of tipping the economy back into recession and pushing unemployment even higher at a time when private sector job creation will remain muted.’

CIPD’s diversity adviser, Dianah Worman OBE, welcomes the intent to carry the Equality Bill forward:

‘The CIPD and our members have always welcomed the harmonisation of equality law into this Bill. We will continue to engage with the Government and associated agencies to ensure that the timescales and methods of implementation are as relevant and practical for employers as possible.

‘However, we are still disappointed that the Government has not moved to scrap the default retirement age. It seems counterintuitive to create a bill giving older people new rights and yet keep discrimination at the point of retirement. Hopefully the Government will finally see sense in next year’s review and resolve this issue once and for all.’

Finally, commenting on the Government commitment on agency workers’ rights, Mike Emmott, CIPD Employee Relations Adviser, says: ‘We welcome the move to get the agency workers regulations on the statute books sooner rather than later as this will give employers the maximum time to get to grips with what is expected of them before the 2011 implementation date.

‘We are happy that the regulations leave most of the detailed process to employment agencies rather than the employer, but there are still some thorny issues to be resolved, particularly on the definition of pay and bonuses.’

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