Pipping Rishi Sunak to the prime ministerial post might be a crucial moment for former foreign secretary Liz Truss, but her new role will also see her inherit some tough challenges, including spiralling inflation rates, post-pandemic recovery and the ongoing cost of living crisis.
After being announced as the winning candidate yesterday (5 September), Truss will now officially take over from her former boss, Boris Johnson, following a formal ceremony held by the queen at Balmoral Castle, Scotland.
So, as Truss becomes only the third female prime minister after Margaret Thatcher and Theresa May, People Management delves into her campaign promises and what they might mean for employers.
Cutting tax and addressing the cost of living crisis
Truss appealed to the masses with one of her main campaign promises: to cut tax by reversing the national insurance hike announced by her political opponent Rishi Sunak – a decision he took to fund the NHS, which came into effect in April 2022.
If enforced by Truss, the practicalities of this change will “remove the requirement on employers and payroll teams to list this separately on payslips” and “employers will need to adjust their payroll and payslips to reflect this”, Alan Price, CEO of BrightHR, explains.
In addition, Truss has also pledged to scrap Sunak’s proposed rise in corporation tax, due to increase from 19 per cent to 23 per cent in 2023, and instead has promised £30bn worth of tax cuts, as a way to revive the struggling economy.
While she has been at times cautious in her response to tackling the raging cost of living crisis, Truss has also pledged to help with energy bills within a week of taking office and to hold an emergency budget as soon as possible.
Samantha O’Sullivan, policy lead at the Chartered Institute of Payroll Professionals, which represents about 10,000 payroll professionals across the UK, says that whether ‘from day one’ is feasible or not is “up for debate”, adding that “the coming days will be key to understanding what pledges will be realised”.
“Payroll is the largest cost for businesses, and many are desperately trying to find ways to further support their staff. As an example, our own research recently noted a 19 per cent surge in firms [that] consider offering pay on-demand, easing household cashflow,” says O’Sullivan.
Clamping down on industry action disruption
Another substantial leadership promise is Truss’s pledge to introduce a new law on minimum staffing levels during strikes within the first 30 days of becoming prime minister – with a threshold set individually for each industry, including transport, education, healthcare, postal workers and energy.
By doing this, she aims to reduce the amount of disruption industrial action has had, with transport and postal workers being the latest to walk out of their jobs and protest poor working conditions, pension cuts and reduction in real pay.
In addition, Truss has mulled removing the right of public sector workers to use paid leave to carry out trade union activities, including organising strikes, a move she estimated would save the economy £137m a year.
Martin Williams, head of employment and partner at Mayo Wynne Baxter, says that “throughout the leadership campaign, and before, Liz Truss adopted a visual style reminiscent of Margaret Thatcher. Now she wants to continue the battle that Mrs Thatcher had with the unions.”
While acknowledging that reducing the ability to call strikes and the extent of their impact with guaranteed staffing levels “will have an appeal for those using public transport”, Williams cautions that any challenges to such ideas will be “mired in the detail about the effect this may have on interfering with the right to strike”.
“Employers will also like the idea of not having to pay employees when they undertake union activities. Framing and enforcing this will be difficult, but the thrust of the argument is political, not practical,” he adds.
Cutting diversity and inclusion jobs
Truss has also stated her intention to get rid of standalone diversity and inclusion roles in the civil service, as she has allegedly previously referred to such roles as ‘woke’ and has vowed to stand up to “risk averse” Whitehall’s “groupthink”.
The new PM promised this as part of an effort to save £12m a year, but the unprecedented pledge has been widely questioned by businesses and HR professionals.
Commenting on the development, Sandra Kerr CBE, race director at Business in the Community, says that while the organisation congratulates the new prime minister on her historic win, “the cost of living crisis is the priority and we must think about diversity and inclusion as part of that”.
Kerr says Truss’s idea is “disappointing”, and adds it “shows that now, more than ever, we need champions and executive sponsors for race at the top table, mentors and sponsors for employees who are black, Asian, mixed race and from ethnic minority backgrounds”.
In addition, Kerr urges the government to deliver on its promise to provide guidance for employers to voluntarily publish their ethnicity pay gaps – “a new prime minister has not eradicated the existence of racial inequality at work just by removing a few standalone roles”, she says.
Another intention voiced by Truss is to reform the Working Time Regulations beyond the limit of 48 hours on the working week, which is easy to opt out of. Williams deems this step “one of the most interesting targets for reform”, adding that “the shaping of paid holidays for those working irregular hours – an increasing part of the workforce – will also face close scrutiny with a new prime minister at the helm”.
A further set of promises includes the idea of altering tax obligations to make it easier for people to stay at home as carers as well as reform education admissions.
But while this may appear beneficial on the surface, Barry Stanton, partner and head of employment law at Boyes Turner, warns that the real need is “to fund a health service that can provide support and care to enable those who are able to go out to work to help drive the economy forward".
As Truss intends to take a more holistic approach on equipping people with strong employability skills, she has also promised to expand successful academies, introduce more free schools and reform university admission procedures so that places in higher education are offered only based on actual, not predicted, grades.
Commenting on this pledge, Stanton says unleashing a wave of free schools to replace failing academies is a great headline, but he asks: “What does it mean, why have they failed, how will a new school enhance the education?”
At the same time, he welcomes the idea of allowing successful educational institutions to expand and take on more students. “Of course, if there is the space and capacity to do so”, he says.
What do businesses actually need?
While most are clear that the new PM is about to step into the role with numerous priorities, Ben Willmott, head of public policy at the CIPD, says the immediate priority for the new prime minister should be to take action and support individuals and businesses through the cost of living crisis, especially as it spikes during the winter.
“Effective and targeted support will be required to help workers and companies impacted most severely by spiralling energy costs,” he says.
Willmott cautions that the new government should strongly resist any temptation to “water down” employment rights and protections for workers: “The UK is already one of the most lightly regulated labour markets among developed economies, with above-average employment levels and a high proportion of workers in permanent employment.”
“Instead, the government should focus on delivering previous commitments to reform labour market enforcement and support the creation of more flexible workplaces. These changes to policy can help raise employment standards overall and create more better-quality jobs.”
Echoing this, Roan Lavery, co- founder and CEO of FreeAgent, also emphasises that businesses, especially small and medium enterprises (SMEs), need all the help they can get to bounce back and recover.
Referring to SMEs as “the backbone of the economy”, he says: “I would urge the new prime minister to consider introducing a new support scheme specifically for SMEs that can support businesses through the increasing pressures of the cost of living crisis and the impending recession. The more help we can provide to smaller businesses now, the quicker they will be able to drive the UK’s recovery in the future.”
And while Truss has already pledged to reform the IR35 off-payroll working rules to bolster the UK’s economy, Tania Bowers, global public policy director at the Association of Professional Staffing Companies, says introducing the long-awaited employment bill, simplifying global trade deals and tackling skills shortages with targeted training and apprenticeships are now more crucial than ever.
“We believe it is crucial that the employment and skills agenda is moved back up the list of priorities. The UK economy is facing a wealth of struggles from the cost of living crisis to concerning skills shortages and staff strikes across a range of sectors. A huge number of these challenges can be alleviated to some extent by a stronger and more dynamic labour market,” she says.