UK Politics

Take on Lib Dems over economy, says Liam Fox

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Media captionLib Dems have been 'more free to voice what they want' than the Tories, says Liam Fox

Conservatives need to do more to "take on" their Lib Dem coalition partners over calls to make it easier to hire and fire people, Liam Fox has said.

The former defence secretary said changes to employment laws were vital to the UK's "economic survival" - amid reports Lib Dems are resisting changes.

He said there was an "argument within the coalition" on the issue.

A Lib Dem spokesman said they backed plans to make business easier - but not giving firms powers to "fire at will".

Mr Fox, who quit the cabinet in October following a row about his lobbyist friend Adam Werritty, has given interviews this week in which he has called for more action to cut taxes on employers to boost job creation - and to deregulate the labour market.

Last year the government received a private report by businessman Adrian Beecroft supporting an easing of unfair dismissal rules for underperforming staff.


The government said it would consider whether small firms should be able to dismiss staff without being at risk of an industrial tribunal, as long as they paid compensation.

This week the Telegraph reported that the Lib Dems were resisting plans for a formal legal consultation on the issue, which Conservative ministers had hoped to announce in the Budget on 21 March.

Mr Fox told BBC One's Sunday Politics labour market deregulation was "crucial" if the UK was to remain globally competitive, but there was "obviously an argument inside the coalition about it".

He added: "The objections inside government and outside government, but yes, including some of the arguments put forward by our coalition partners, they need to be taken on and in my view overridden - otherwise we become about managed decline for Britain, not international competition."

Asked if he meant the prime minister should override Lib Dem Business Secretary Vince Cable on the issue, he said: "It's not just David Cameron, the government itself... needs to understand the importance of this."

'Tax cut for many'

Ahead of the Budget, Lib Dem deputy PM Nick Clegg has called for the government to go "further and faster" in its plans to raise the level at which people start paying income tax to £10,000.

The income tax threshold was raised by £1,000 to £7,475 in the 2010 Budget, and the government plans to increase it further to £8,105 this year.

Mr Clegg says it is a "tax cut for the many" that would put money into people's pockets and get them spending - benefiting the economy.

But Mr Fox said the cuts for employers should be the priority, to get more unemployed people into work.

He said Mr Cameron had a difficult balancing act in the coalition - and a Conservative agenda on welfare reform and deficit reduction was being followed.

'Fire at will'

However, he added: "Among Conservative activists there is the perception that the Liberal Democrats are far more free to voice what they want than some of the Conservatives are.

"It's very important to show the Conservative Party in the country that there is a very active campaign to try to persuade the chancellor on some of the issues that we would find important.

"Remember that the Conservatives make up five-sixths of the coalition, not half."

In the interview he also said he hoped he would be back on the front bench at some point but was not seeking "an early return".

A Lib Dem spokesman said there were "ongoing discussions" over unfair dismissal rules and the party did recognise that there was a lot that could be done to make business easier and boost growth.

But he added: "We are not going to stand by and allow organisations to get the power where they can simply fire at will."

Lib Dem deputy leader Simon Hughes told the BBC he thought Mr Fox had been "very measured" and the Lib Dems agreed on the need for growth. But he said they were entitled to put forward their argument for raising the tax threshold for millions in public.

Chancellor George Osborne told Sky News he did not want to get into speculation about what would be in the Budget.

He said the Lib Dem ambition to raise the threshold at which people start paying income tax to £10,000 was "well known" - and he always listened "very carefully" to Mr Clegg.

But he said any tax cut would have to be paid for elsewhere - by a tax rise or spending cut.

Labour's deputy leader Harriet Harman said Mr Osborne was "still on Plan A" and called on him to use the Budget to take action to stimulate growth.

She told Sky: "We want to see the government producing a budget for jobs and growth that will actually stimulate the economy. We think the best tax measure for doing that would be a cut in VAT."

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