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Business reacts to the Queen's Speech

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Creation of two million jobs; a ban on income tax, VAT and national insurance increases for five years; and an in/out referendum on the EU by 2017 were among the pledges confirmed in the first Conservative Queen's Speech in nearly two decades.

The speech also confirmed the government’s aims to create three million new apprenticeships, reform strike laws to raise the threshold for industrial action, and crack down on illegal immigration.

The government has also pledged to devolve more powers to Scotland, Wales and Northern Ireland, to introduce 30 hours of free childcare a week for three- and four-year-olds by 2017, and to devolve more powers over housing, transport, planning and policing to English cities.

To boost job creation the government has introduced a new Enterprise bill, which pledges to reduce regulation on small businesses by cutting red tape, creating a new Small Business Conciliation Service and improving business rates. 

Meanwhile its Full Employment and Welfare Benefits Bill promises a reduction in the welfare cap and confirms an “earn and learn” model for young people out of work.

These job creation plans have met with positive reactions, but also warnings regarding quality of training and the need for a nuanced solution to the UK’s productivity deficit.

“The new Employment and Welfare Benefits Bill must look beyond just the number of people in work and consider how individuals are equipped with the necessary skills to get into and get on at work,” said Ben Willmott, head of public policy at the CIPD. “The CIPD believes there needs to be a fundamental review of skills policy to complement welfare reform activities. We need a stronger focus on increasing employer investment in skills and improving skills utilisation, more workplace development and more efforts to create the high-performance workplaces the UK needs”.

“The commitment to creating three million apprenticeships is welcome, but this must be supported by better careers advice and guidance in schools and be employer-led. Equally, it’s not just about hitting a target number. We need to look at the quality of the apprenticeships, the industries they’re in and the extent to which they’re part of any strategy to modernise the workplace and upskill the workforce.”

Regarding improving the UK’s productivity, Willmott added: “The productivity weaknesses that continue to undermine economic growth are both deep-rooted and complex. Things like infrastructure investment and ensuring businesses and entrepreneurs have access to finance are, of course, crucial but we also need to consider how we reverse the decline in both public and private sector investment in skills.”

The speech’s Immigration Bill, which includes measures such as making it an offence for businesses and recruitment agencies to hire abroad without first advertising in the UK, provoked further concerns regarding a potential skills crisis.

Alistair Cox, CEO of recruitment group Hays, said: “World class economies are based on world class talent. If Britain is to compete successfully on a global scale, British business must have unfettered access to that talent, wherever it resides. Given the UK’s skills gap, skilled migration is, quite simply, the only way for businesses to support immediate growth plans and fill roles that would otherwise remain vacant.”

“Moreover, restricting businesses’ access to top talent will do nothing to help us address the pressing issue of productivity.”

Daniel Ellis, employment partner at Baker & McKenzie, added: ”Of particular interest is the move by the government to make it an offence for employment agencies to hire abroad without first advertising in the UK. It is not clear exactly how this will be monitored and enforced by the government. Especially so in relation to online recruitment. We will need to see the detail of these provisions and the extent to which this might present any further inconvenience or costs."

Confirmation of reforms to strike laws, which will introduce a 50% voting threshold for union strike ballot turnouts, and a requirement that 40% of those entitled to vote must back action in essential public services, have also met with further criticism.

“Trade union arguments that these reforms will outlaw most strikes are a little wide of the mark,” said Chris Mordue, employment partner at law firm Pinsent Masons. “While the tougher ballot requirements will make it harder to get a mandate for lawful industrial action, it is not an impossible bar to clear.”

“Unions are also making increasing use of leverage tactics – using demonstrations, protests, and social media campaigns to open up new lines of attack on the employer and its senior management, with the aim of getting shareholders, customers, suppliers and the public to put pressure on the employer to back the union demands. These campaigns – which can be very disruptive and difficult to counter- can be run without any industrial action ballot”.

Meanwhile, questions remain over how new childcare provision reforms will work in practice.

Beverley Sunderland, managing director of Crossland Employment Solicitors, explained: "In the autumn a new government scheme comes in whereby employees can buy £10,000 of childcare vouchers from the government directly, but it only costs them £8,000 per child per year for children up to 12. The government needs to clarify if this is in addition to the new free childcare for three- and four-year-olds or whether it is the same scheme."