Business leaders are urging Sir Keir Starmer to reconsider plans for a significant expansion of union powers, warning that the move could hamper economic growth and deter investment in the UK.

The Labour Party is reportedly developing proposals that would compel companies to recognise and negotiate with trade unions, even if only a minority of employees are union members. These measures could also grant unions a new “right to access” workplaces, enabling them to recruit and organise within businesses that currently have no union presence.

The proposals have sparked concern among employers and business groups, who fear they could be “held to ransom” by small groups of activists. These concerns were reportedly raised in a recent meeting with Deputy Prime Minister Angela Rayner and Business Secretary Jonathan Reynolds.

Some senior Labour figures have advised Starmer to moderate the proposals, cautioning that an overly aggressive approach could undermine business confidence and investment, particularly as Labour has prioritised economic growth in its policy platform.

Under current laws, unions must demonstrate majority support among workers to gain recognition, and at least ten per cent of employees must be union members before a ballot can be held. Labour’s proposed reforms would simplify these rules, removing the 50 per cent support threshold and allowing unions to secure recognition with just a simple majority.

However, business leaders are alarmed by the potential impact. One executive from a leading FTSE company expressed concerns about the future of industrial relations in the UK, noting that unions are already preparing to leverage the proposed new powers. The Confederation of British Industry (CBI) echoed these worries, highlighting the risk of deteriorating employment relations if unions representing only a minority of workers are granted negotiating rights.

Matthew Percival of the CBI stated, “While business supports employee representation, it’s crucial that unions only negotiate on behalf of those who genuinely wish to be represented. Forcing firms to engage with unions that represent a minority could lead to worse outcomes for all involved.”

Kevin Hollinrake, the shadow business secretary, also voiced concerns, suggesting that Labour’s proposed reforms, combined with changes to strike laws, could allow a small group of workers to exert disproportionate influence over companies.

Despite these warnings, Paul Nowak, General Secretary of the Trades Union Congress (TUC), defended the proposed changes, arguing that union recognition benefits both employees and businesses. He contended that the government’s plans would prevent “union-busting” tactics and ensure that employees have the right to decide their representation.

As Labour prepares to unveil these reforms in the autumn, business leaders are calling for thorough consultation and careful consideration of the potential economic consequences. Jane Gratton of the British Chambers of Commerce urged the government to ensure that any changes are both proportionate and affordable, emphasising the need for dialogue with the business community.