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Why making it easier to quit will boost the UK economy · Week in Business

• 0:00
  SPEAKER_00: I think Andy Burnham might be about to do something really, really smart.
• 0:04
  SPEAKER_00: Something good for growth.
• 0:06
  SPEAKER_00: Something that should have been done a while ago, and something that I've been calling for.
• 0:10
  SPEAKER_00: And I'm not alone in that.
• 0:12
  SPEAKER_00: Welcome to the week in business.
• 0:13
  SPEAKER_00: I'm talking about tackling or reforming or abolishing even non-compete clauses.
• 0:22
  SPEAKER_00: Now stay with me.
• 0:23
  SPEAKER_00: I'm not about to deliver a 10-minute conversation on the intricacies of HR policy, but non-compete clauses appear to be in the Prime Minister's scope.
• 0:35
  SPEAKER_00: He's giving a speech and it looks like he's going to respond to a number of people, particularly from the tech sector, who have been calling in recent weeks to take action to outlaw these very restrictive non-compete clauses and also long and restrictive notice periods, etc.
• 0:56
  SPEAKER_00: Now non-compete clauses are quite common, particularly in the city.
• 1:01
  SPEAKER_00: There will be opposition to this, parts of the professional services sector in particular, but they effectively impose all sorts of restrictions on people when they leave a job, how long they have to wait before they can go and work for a competitor.
• 1:16
  SPEAKER_00: These can be very harshly enforced and very long notice periods as well.
• 1:20
  SPEAKER_00: The reason people have been saying, can we do something about this?
• 1:23
  SPEAKER_00: Can we get rid of these?
• 1:25
  SPEAKER_00: is because it it does act as sort of a way of gumming up the labour market.
• 1:31
  SPEAKER_00: You know, it's it's it's not good for productivity.
• 1:35
  SPEAKER_00: It's not it's the opposite of dynamism to have people who are itching to work and be productive and move on, um stuck in gardening leaf for six months, twelve months, even eighteen months is non-compete terms.
• 1:49
  SPEAKER_00: So I think this is a really good idea.
• 1:51
  SPEAKER_00: The government has been lobbied by people at this sort of start-up uh and scale-up side of the tech sector in particular to do this.
• 1:59
  SPEAKER_00: I think it would be great.
• 2:01
  SPEAKER_00: Um it is an idea that first came across my radar um about uh nine or ten months ago when Brent Hoberman, who's also a very advocate of this idea, spoke at the CTAM awards and specifically took aim uh at these restrictive non-compete clauses and said we've got to get rid of them.
• 2:20
  SPEAKER_00: Why?
• 2:20
  SPEAKER_00: Well, let me put it to you in the way it was put to me by a tech founder in the US who said that all great tech companies and AI companies are born in Boston, so sort of born out of uh great universities on the East Coast, and then they grow in California.
• 2:40
  SPEAKER_00: Why?
• 2:40
  SPEAKER_00: Because California has banned non-compete clauses, so you could leave your job at a startup A on Monday and start at startup B on a Tuesday, and it's completely dynamic and it's part of the culture of risk and reward and failure and creative destruction and growth and innovation.
• 3:01
  SPEAKER_00: So maybe we could get a little bit of that uh over here in this country.
• 3:06
  SPEAKER_00: It's not the silver bullet, but I think it would be really sensible, and I know that there will be parts of financial services industry and others who are forever suing people for poaching staff and going against non-compete clauses.
• 3:18
  SPEAKER_00: So there will be backlash to um what it looks like the government's about to do, but I would welcome it.
• 3:24
  SPEAKER_00: Um I think it could have uh a really galvanizing effect um on parts of our economy that that need that agility and to be able to operate quickly and make quick decisions and hire people and yes, fire people.
• 3:38
  SPEAKER_00: Notice periods is another thing that I think is is really interesting.
• 3:42
  SPEAKER_00: It should be the case that if an employer and an employee want to cut down the notice period or do away with it, they should be allowed to do that too.
• 3:51
  SPEAKER_00: Um so there's always a balance there.
• 3:53
  SPEAKER_00: This government, the Labor government, um, has focused very much on employment rights and workplace protections, and you know, I often said I think they go far too far.
• 4:04
  SPEAKER_00: Um I really just can't believe quite how ludicrous some of the provisions of the Employment Rights Act are.
• 4:11
  SPEAKER_00: But if the government now does do away with non-compete clauses, the restrictions around that and crazy notice periods, then they might go some way, alas, not the whole way, but some way towards uh undoing some of the damage that their crazy labour market regulations um have uh have led to.
• 4:30
  SPEAKER_00: Uh and it got me thinking, this is just a great policy for all sorts of reasons that I've just tried to explain, but also because it doesn't cost anyone anything.
• 4:37
  SPEAKER_00: Certainly doesn't cost the government anything.
• 4:38
  SPEAKER_00: It's a stroke of a pen policy.
• 4:40
  SPEAKER_00: Make that change, tick, see what happens.
• 4:43
  SPEAKER_00: And we need more of that.
• 4:44
  SPEAKER_00: And it got me thinking, and I made a few suggestions of other other other ideas in exactly the same strand, that don't cost the government anything, that don't need to be woven into a budget, don't come with a finance provision attached in parliament.
• 5:00
  SPEAKER_00: You can just do it.
• 5:02
  SPEAKER_00: So I mean, here's an obvious one.
• 5:04
  SPEAKER_00: Reforming, I mean, lawyers are gonna get in touch and say, actually, I think you'll find that reforming Sunday trading laws does require an act of parliament, whatever.
• 5:12
  SPEAKER_00: My point is it doesn't come with a government uh cost.
• 5:15
  SPEAKER_00: Reform Sunday trading laws.
• 5:17
  SPEAKER_00: I mean, they are pretty archaic.
• 5:18
  SPEAKER_00: If people want to work and want to be open, uh, you want to be able to go shopping on a Sunday evening and people want to work that shift and get paid for it, of course that should be allowed.
• 5:26
  SPEAKER_00: So we can get rid of the archaic restrictions on Sunday trading.
• 5:30
  SPEAKER_00: Again, stroke of the pen stuff.
• 5:32
  SPEAKER_00: Um, more planning liberalisation, obviously, there's been some good moves in this direction, but if we really embraced zonal development rights, whereby you say that we're gonna divide up an area, a city or a town or a region into specific zones.
• 5:46
  SPEAKER_00: This a zone for protecting what's there, a zone for renewing what's there, a zone for growth or building.
• 5:53
  SPEAKER_00: Uh, and as long as an application meets the rules of those zones, it is granted automatic approval.
• 5:59
  SPEAKER_00: So you could just take away the uh case-by-case oversight of local planning committees for somebody who wants to put a loft on their house, I think that would be a win.
• 6:10
  SPEAKER_00: I think you could do things now.
• 6:12
  SPEAKER_00: I appreciate there's no way this government's gonna come close to any of these things, but you should, I think, start to strip out some of the social value requirements that are attached to almost all uh government procurement and infrastructure projects.
• 6:25
  SPEAKER_00: Why is it that if you want to build a small modular nuclear reactor, you have to fill out hundreds of pages that show quite how it's gonna help underrepresented demographics in your community, uh etc.
• 6:38
  SPEAKER_00: etc.
• 6:38
  SPEAKER_00: etc.
• 6:39
  SPEAKER_00: Why can't you just build the thing?
• 6:40
  SPEAKER_00: So I think that would be sensible.
• 6:42
  SPEAKER_00: Um I also think look talking about building, there are some crazy building regulations, and again, this isn't stuff Labour government's gonna touch, but you've got a situation now where the regulations around what a house has to be and how you can build a house, um, it's such that they've become instruments of wider policy.
• 7:01
  SPEAKER_00: So uh the net zero agenda, how these houses have to have you know different forms of energy infrastructure, safety, of course, very important, but now you've got these crazy rules to make sure nobody ever falls out of a window, which means that houses are terribly ugly because they have smaller windows.
• 7:17
  SPEAKER_00: Developing over a certain number of heights, you've got to have an extra staircase in them now.
• 7:20
  SPEAKER_00: That makes it very difficult to get.
• 7:22
  SPEAKER_00: I mean, all of these things are done uh you know from the best of intentions and have led to a situation, not least in London, where house builder after house builder has said, I'm writing off London, it's not viable, the costs are too high.
• 7:35
  SPEAKER_00: Anyway, I think there's a I'm at risk of getting a little overexcited, but it got me thinking you know, there are things that can be done.
• 7:41
  SPEAKER_00: You can just do things, you can just change a law or get rid of one, even better.
• 7:45
  SPEAKER_00: Um, anyway, let's see what comes of this.
• 7:48
  SPEAKER_00: The mood music suggests that the government is going to end uh restrictive non-compete clauses and uh onerous uh notice periods.
• 7:56
  SPEAKER_00: I think it would be great.
• 7:57
  SPEAKER_00: Uh, let's see what happens.
• 7:59
  SPEAKER_00: I'll be back next week.
• 8:00
  SPEAKER_00: We can check in on that.
• 8:01
  SPEAKER_00: Next week it'll be two weeks to the budget.
• 8:04
  SPEAKER_00: So join us.
• 8:06
  SPEAKER_00: And in the meantime, stay up to date and in the know with the City AM app and on cityam.com.