Repeal the Employment Rights Act: calculation note

Central fiscal result

-£0.1bn - Net fiscal impact in 2028-29

Low case: -£0.5bn. High case: +£0.8bn. Positive numbers are fiscal costs or borrowing pressure. Negative numbers are Exchequer savings or receipts.

Scenario and baseline

• Model repeal of the 2025 Act by 2028-29.
• Central fiscal saving is small: £0.1bn.
• Baseline uses DBT impact assessments for the Act.
• Business-cost changes are not treated as Exchequer savings.

Affected population

• Affected population is employers and workers covered by the Act.
• Direct employer gains are compliance and flexibility benefits.
• Direct worker losses include weaker rights and predictability.
• Public fiscal channels are tribunal, enforcement and tax effects.

Gross impact

• Central public saving from enforcement/admin: £0.2bn.
• Lower worker income and receipts offset about £0.1bn.
• Business-cost reductions are shown separately from fiscal impact.
• No hiring boom is fiscal-scored.

Fiscal build-up, central case

• Lower enforcement and tribunal costs: -£0.2bn
• Lower tax from weaker worker income: +£0.1bn
• Administration transition: £0.0bn
• Business compliance savings: £0.0bn

Central net impact: -£0.1bn in 2028-29.

Behaviour and pass-through

• Low case assumes business flexibility modestly raises employment and receipts.
• Central case assumes small net fiscal effect.
• High case assumes lower worker income and higher insecurity reduce receipts.
• Employer cost savings are not public savings.
• Pass-through to lower prices is uncertain.

Phasing

• 2026-27: £0.0bn. Preparation or partial implementation.
• 2027-28: -£0.1bn. Main ramp-up year.
• 2028-29: -£0.1bn. Target-year central estimate.
• 2029-30: -£0.1bn. Continuation at steady-state assumptions.

Main source groups

• Department for Business and Trade, "Employment Rights Act 2025: impact assessments" (2026): Impact assessments estimate direct business costs and affected groups for the Act's measures; anchors the counterfactual cost being repealed.
• Office for Budget Responsibility, "Economic and fiscal outlook: March 2026" (2026): The OBR forecast sets the macro, borrowing and receipts baseline used for broad fiscal context; prevents treating tax cuts or spending changes as self-financing.
• Autor, "The Costs of Wrongful-Discharge Laws" (NBER, 2003): Wrongful-discharge protections increased some employer costs and changed labour-market behaviour; relevant to repealing employment-rights changes and estimating hiring flexibility effects.
• Botero, Djankov, La Porta, Lopez-de-Silanes and Shleifer, "The Regulation of Labor" (Quarterly Journal of Economics, 2004): Stronger labour regulation is associated with less informal work protection trade-off simplicity varies by country; supports caution: rights can transfer surplus but may reduce flexibility.
• Conservative Party, "Our Plan for Britain" (2026): Used to define the pledge wording, policy scope and implementation scenario being modelled.