Cameron 'risking Lib Dem split on workers' rights'

Music to watch polls by: David Cameron gets his headphones around Pink Floyd (Rex Features)

David Cameron is risking an open split in the Coalition if he backs a report that calls for changing the safeguards that protect employees from being sacked, Liberal Democrats warned yesterday.

Vince Cable, the Business Secretary, is fighting a fierce battle behind the scenes against plans which David Cameron is reported to be backing, put forward by Adrian Beecroft, a multi-millionaire venture capitalist who has given more than £530,000 to the Tory party.

Liberal Democrat sources said yesterday that most of the Beecroft Report, which is expected to be published soon, will consist of what is already government practice – apart from a highly controversial section covering employees' rights. Mr Beecroft's views on employee protection are similar to those of David Cameron's former political adviser, Steve Hilton, who wanted the Government to refuse to sign an EU directive on the rights of agency workers.

A source close to Mr Cable expressed surprise that, with Mr Hilton gone, Mr Cameron should risk taking controversial advice from a prominent Tory donor.

"Britain has one of the most flexible labour markets in the world," the source said. "It is surprising that No 10 backs a report compiled by one of the Tory party's biggest donors." The report contains 20 proposals, several of which make it easier or cheaper for companies to shed staff.

Labour's shadow Business Secretary Chuka Umunna said: "Our economy is not in recession... because of the rights we all enjoy at work. It's because of economic incompetence."