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IoD: reform employment laws to help companies

Employment and planning laws should be overhauled in favour of companies to kickstart the economy, business leaders told the Government today.

The Institute of Directors (IoD) is concerned that the Government is not doing enough, quickly enough, to improve the supply-side of the economy and has produced a paper containing 24 suggestions it believes would help the economy grow at little or no cost to the taxpayer.

The Government was recently criticised by Sir Richard Lambert, the outgoing boss of business body the CBI, for making cutbacks but not setting out its vision to promote growth, as the economy contracted by 0.5% in the final quarter of 2010.

The IoD's suggestions include overhauling some of the employment laws to make them more friendly towards businesses and revolutionising the planning system to open up the greenbelt to developers.

Miles Templeman, director-general of the IoD, said: "The Government's deficit reduction strategy is central to improving growth prospects and the overall business environment, but the Government also needs to reform the supply-side of the economy to boost the private sector.

"Many of the measures we have proposed today are long overdue and would improve the UK's infrastructure and the functioning of its labour market. We urge ministers to seize this opportunity."

The paper suggests the Government should drop plans to abolish the default retirement age, asking: "Why does the Government want to make it harder to remove staff who are no longer effective?"

Collective pay bargaining in the NHS and education sector should also be ended to boost productivity. It also calls for the abolition of the right to request flexible working and the right to request time off for training, which it claims creates red tape for firms.

In planning, a fast-track system for key national infrastructure projects should be created that could override local objections.

Regional growth funds should be targeted at winners rather than losers, as money is pumped into the areas likely to show the biggest return on investment, it said.