Gail's chairman says some of his companies won't survive Labour

The chairman of Gail's has warned some of his businesses 'might not survive' the Labour government as he criticised it for 'crushing' the private sector.

Luke Johnson, a former boss of Pizza Express who is director and co-owner of companies employing 10,000 people, criticised plans by ministers to impose a raft of new workers' rights on British businesses.

He told the Employment Rights Bill committee: 'Even if we don't suffer a technical recession next year, it's odds on there will be a serious slow down. In some cases, some of my companies might not survive next year.'

The serial entrepreneur said insolvency specialists would be 'rubbing their hands' with glee at the prospect of an approaching surge in company collapses.

He added: 'The timing of this is beyond belief... it's death by a thousand cuts. If you crush the private sector, you crush jobs.'

Mr Johnson did not specify what businesses he had concerns about.

He has a wide range of commercial interests, including investments in firms ranging from swimwear brand Zoggs to Giraffe restaurants and ten pin bowling business All Star Lanes.

He also sits on the board of the Brighton Pier Group, Revolution Bars and Brompton bicycles.

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Angela Rayner's overhaul of workers' rights contains more than 70 measures aimed at improving conditions for employees and boosting trade union power.

They include ending exploitative zero-hours contracts, establishing day-one rights for paternity and parental leave, and making flexible working the default where practical.

The Government had admitted the workers' rights overhaul could cost businesses up to £5billion a year, but watchdog Regulatory Policy Committee (RPC) has said this figure may need 'clarifying'. 

Appearing before MPs yesterday, Mr Johnson warned smaller companies could become overwhelmed by the increase in costs and time-consuming red tape. 

'The idea that companies that can barely afford any form of HR could stomach a big new bill of 150 pages in 28 measures – they won't even have time to read it,' he said. 

'You never know, until you get a big tribunal, what the real cost is.'

The entrepreneur said the timing of the employment bill just a few months after businesses were clobbered in Labour's first Budget was 'beyond belief'. 

He added: 'Jobs don't just fall from the sky – they appear because companies are created by risk takers. Jobs only exist because they are helping that business to progress. If you crush the private sector, you crush jobs. Without jobs, you don't have civilization.'

The RPC believes the new measures will cost employers more than officials have anticipated. 

In particular, it highlighted the cost of an agreement on adult social care pay which may be 'much higher' than the £1billion the Department for Business and Trade claimed.

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The watchdog deemed eight of the 23 individual impact assessments into the measures not fit for purpose. Because six are in the 'highest impact' category, the overall opinion was that the impact assessment as a whole is 'not fit for purpose', the RPC said.

It added the estimate 'does not account for the likelihood employers may offset the costs of regulation and mandated benefits through wage adjustments, benefit reductions or other compensatory mechanisms which would eventually be borne by the employee'.

Earlier this week, business groups issued fresh warnings about the impact of Labour's plans.

The Federation of Small Businesses said the RPC's findings were a 'sharp wake-up call' for ministers, who must 'think again about the dangers of a cavalier approach to jobs and work'.

Policy chairman Tina McKenzie said: 'The country cannot afford to pile further cost and risk on to small employers based on such an overwhelmingly weak evidence base.'

Tory business spokesman Andrew Griffith said: 'Businesses up and down the country knew this already. Just like the National Insurance jobs tax, this Bill is the second wave of an attack on job creators.'

The Prime Minister's spokesman said: 'These initial indicative assessments of the primary legislation represent the best estimate of likely impact at this stage. However, we intend to refine our analysis and conduct further assessments.'