Anger as Heseltine considers removal of job safeguards

Labour yesterday warned that up to half the UK workforce could lose the right to redundancy pay and compensation for unfair dismissal if the Government carried out recommendations from its Deregulation Task Force.

Michael Heseltine, Deputy Prime Minister, said yesterday that ministers were starting a consultation exercise to examine whether small firms should be exempt from some employment rights. Earlier this year Mr Heseltine had to shelve similar plans after the news was leaked to the press.

Legislation would probably affect firms employing 10 workers or fewer, though the task force said no decisions had been taken about how to grade businesses. In 1993 there were 3.3 million businesses employing fewer than nine people.

Workers gain employment rights after two years' service with the same employer. The new regime, which would affect only new employees, could raise this limit or abolish it.

Francis Maude, the task force head and former Conservative minister who works for the Morgan Stanley investment bank, admitted the job creation impact of the measure was not "scientifically provable". But he said: "Our instincts are probably at the radical end... there is a lot of latent employment that could be created by very small businesses."

Labour claimed the proposals would affect 12 million people by 2000. Ian McCartney, the party's chief employment spokesman, said 4.5 million workers last year changed jobs, of which the bulk, about 4 million, were probably employed by small firms.

"By the turn of the century virtually half the workers in Britain will have no employment rights. These are the kinds of proposals you get from dictatorships," he said.

Mr Heseltine hit back at critics who claimed the deregulation initiative was little more than a propaganda exercise. He insisted the task force, which includes Asda boss and prospective Conservative candidate Archie Norman and the former Tory MP Michael Fallon, had made a "very considerable impact". So far 750 regulations had been repealed or amended and the target was to increase this to 1,100 by the end of the year.

The main concrete measure announced yesterday was to cut the number of official statistical surveys which small firms have to complete. Roger Freeman, the cabinet minister responsible for deregulation, said a three- year "holiday" from official form-filling could save industry pounds 17.5m by 2000.

However many small businesses were unimpressed by the rate of progress. Ronald Stallard, who employs eight staff at a Sussex plant hire company, said: "If anything it has made things worse. They're trying to get round all the regulations which didn't matter and in the process are creating more paperwork, not less."

The Forum of Private Business yesterday released figures showing the burden of red tape and tax rules had become as important a concern as late payment of debt. A spokesman said this suggested that the problem had not been significantly eased.

The task force's second annual report included a collection of recommendations covering everything from regulations on factory machinery to controls over ear piercing.

Another idea under consideration is to replace regulations with private insurance assessed by risk. This could cover the carriage of dangerous goods, inspection of driving instructors and outdoor activity centres.