Firms need fewer rules to recruit more, says Tory Business Minister Michael Fallon

Britain's smallest firms should be exempted from new regulations as it would help them to recruit staff, the Conservative Business minister Michael Fallon has said.

His comments risked reviving Coalition tensions over employment law. Last year the Liberal Democrats blocked the main recommendations from venture capitalist Adrian Beecroft, including a controversial proposal to allow companies to fire staff at will.

Mr Fallon's intervention came as he appeared alongside the Government adviser Paul Walsh, the former chief executive of Diageo, who called for small companies to be liberated from all new rules.

Asked if he agreed with Mr Walsh, the minister replied: “This is what they did in the US so successfully in the 1980s -specifically exempt small businesses.

”We have six million young people in Europe who have no job at all. Their best chance of getting into work is getting into a business that's growing.“

A Lib Dem source stressed his comments should not be seen as reopening the Beecroft agenda. But the source added: ”This is personal view. It doesn't necessarily reflect Coalition policy.“

Ian Murray, the shadow Trade Minister, said: ”When families across Britain are facing a cost of living crisis, the last thing they need is yet more insecurity at work. The Tory-led Government should be making it easier to hire not fire.“