Julian Smith: Jobs must be priority before extra leave for dads

THERE are over four million small businesses in this country. Around 1.3 million employ staff. While the number of small businesses grew under Labour, the number of small businesses which employ staff remained stagnant.

Not only has the Government been left with over a trillion pounds in debt, but it has been bequeathed a small business sector stifled by ever increasing burdens of regulation and red tape.

If you are running a small business, like I did for over 11 years, regulation takes you away from your core business and distracts you from your clients and markets. And the biggest red tape culprit for most small businesses is employment law.

It is not just small business. For foreign companies looking at the UK as a place to invest, the flexibility of our labour market compared to countries more hungry for their jobs can be a deciding factor.

Running an executive recruitment company working with global organisations, time and again I saw our clients choosing to locate staff in the US or Asia, citing the increasing complexity of employment conditions and contracts here in the UK.

There was no fanfare, no standing down ceremony, just quietly and without fuss, small units, then departments and then whole divisions moved elsewhere. Our tax rates and the skills of our people are rightly major factors in companies choosing Britain as a place to invest, but the ease of taking on, managing and exiting staff is also a major factor.

So at a time when we are desperate for jobs and when we need companies to have the confidence to hire, Labour's employment law legacy has left companies small and large wary.

The coalition Government is well aware of this and has made a number of important announcements to bring a better balance between employers and employees.

Increasing from one year to two the period where an employer can decide to let go an employee without being subject to unfair dismissal claims will allow a longer period in which employers can judge a new recruit's abilities.

The decision to make a modest charge for taking a case to an employment tribunal will help to deter vexatious claims. And the root and branch consultation and review of employment law that has been announced will allow British business to present its case to Government for a fair deal for both employer and employee.

The direction of travel from these announcements is positive. This Government understands business and wants to do everything it can to support it.

But there is tension ahead in the area of flexible working, parental leave and family-friendly policies. It is a tension that can be creative and positive but which requires much greater sensitivity and realism about business and particularly the pressures on those running small businesses.

Ministers have rightly identified that we need to do more as a society to support families. It is determined to learn from the clear evidence that larger amounts of parental time, especially in the early years have a positive effect on children. I support this. I also support their desire to give greater opportunities to those who wish to work part time. But we also need to get down to brass tacks – we need jobs and we need them now.

Nick Clegg's announcement that he aspires for fathers to be able to get up to ten months parental leave seems more appropriate for discussion when the economy picks up.

It is in fact not intended to be implemented until 2015 but it has worried many businesses, particularly small businesses, and I have called for a debate on the policy proposal in Parliament. For a small business of only a few employees it could be an administrative and business nightmare as all employees are at risk of going on parental leave or working shorter hours.

How will it be administered? How much notice will be given? What happens if the father doesn't realise he is to be a father until late in the day – how much notice will he have to give?

The removal of the default retirement age, motivated by the clear, if unfortunate need for Britons to work for longer, also leaves many unanswered questions for business. Even with the very best performance management systems, managing the consequences of this policy and avoiding discrimination cases will be very tough.

Small and large business alike across our county and country should be consulted fully as to the impact on business of current and proposed employment law. Under Labour, consultation seems to have meant talking to a handful of companies. But we need companies of all sizes to voice their concerns and feedback to the Government in order that the legislation that emerges enables job creation rather than holds it back.

We must seize this opportunity to look at every aspect of employment law, from the EU and from Westminster, to ensure it is as straightforward as possible for small business and as competitive as possible for those investing in our country.

As someone coming from outside politics with a practical view of the huge strains and pressures on business owners, I want every business in Britain, large or small, to get a clear message from Government – if you take on staff and make every effort to be reasonable and fair we, in turn, commit to rebalance employment law so it is fair to you, not just those who work for you.

Julian smith is the Conservative MP for skipton and ripon.