A major donor to the Conservative Party proposed the dilution of workplace rights in a report which won the backing of David Cameron but was blocked by the Liberal Democrats.
Adrian Beecroft, a venture capitalist who has given £593,000 to the Conservatives since Mr Cameron became leader in 2005, recommended that companies be allowed to sack unproductive workers. He argued that "coasting" workers inhibit economic growth and deter employers from recruiting.
Many of his proposals would have gone ahead if the Tories governed alone, Lib Dem ministers claimed yesterday, because Nick Clegg's party could not have mounted its strong rearguard action inside the Coalition.
Following the cash-for-access row, some civil servants are said to be worried about the involvement of a Tory donor in the Government's policy-making process. "It has raised eyebrows," said one Whitehall source.
Peter Cruddas, the Tories' former co-treasurer, claimed to undercover reporters that big donors could have their policy ideas fed into the Downing Street policy unit – a charge denied by No 10.
Cameron allies insist there was no reason to bar Mr Beecroft from advising the Government because he had given money to the Tories. He was not among the Tory donors entertained by Mr Cameron and there is no suggestion that his companies would have benefited directly from the reforms he proposed.
His report, submitted last autumn, remains shrouded in mystery. Unusually for a Government-ordered study, it has not been published. Downing Street is coy about who commissioned it. The driving force is believed to be Steve Hilton, Mr Cameron's strategy adviser, who is leaving No 10 in May for a year's sabbatical in California.
Ministers believe the report has not been published because it is too sensitive. Ideas are said to include watering down maternity rights, which would have jeopardised Mr Cameron's goal of making Britain the most "family-friendly" country in Europe.
Another official said: "His report was full of the Tory millionaires' philosophy that government should not interfere in anything."
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