Angela Rayner’s new labour laws will cripple British businesses and wreak devastation on the economy, critics have warned. The reforms are likely to drive up unemployment further because firms are less likely to take on staff, they say.

In an open letter to company bosses, the Conservatives have urged them to speak out against the Deputy Prime Minister’s radical plans – or be “sleepwalked into disaster”. The proposals, currently being debated in the Lords and due to take effect later this year, will make it more burdensome to employ workers and will leave businesses vulnerable to ruinous strikes. Central to the plans are the repeal of Tory trade union laws which will reduce the threshold for strike action and make union funding of the Labour Party automatic.

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Other measures include the end of zero-hours contracts, strengthened redundancy rights, more flexible working and the power for ministers to take companies to employment tribunals on behalf of employees even if they do not want to sue.

Cabinet tensions have flared over the Bill, with Chancellor Rachel Reeves trying to dilute the measures as she battles to revive the economy.

In the letter, Shadow Business Secretary Andrew Griffith says he has been moved to act because he is “genuinely concerned that British businesses are being sleepwalked into disaster” and the Tories cannot oppose it alone.

He writes: “We need more voices to persuade the Government to listen.

“The Government’s own calculations – which many consider to be an underestimate – say this will cost British businesses £5billion a year and the economy 50,000 jobs… This is not good for the economy.

“I know it and every business I speak to around the country knows it.

“I urge you to please share this letter with others, seek advice on the impact of the Bill from your professional advisor and encourage business groups to speak up clearly on your behalf.”

Mr Griffith told the Mail on Sunday: “The economy badly needs the growth that only business can create.

“Yet Labour’s Bill for Unemployment is a trade union charter that will increase strikes, slash jobs and raise prices.

“Going back to 1970s-style domination by the unions is the very last thing Britain needs right now and shows just how little this socialist government understands business. Angela Rayner is taking a wrecking ball to the UK economy.”

Lord Karan Bilimoria, founder of Cobra beer and UK chairman of the International Chamber of Commerce, also warned of problems ahead.

He said: “Making it easier for workers to strike will inevitably increase their number and frequency. This is like the 1970s, and look where that got us. We were called the sick man of Europe.

“We don’t want to go back in time. Of course, you want fair employee rights, but there’s got to be a balance.

“If you create the environment this bill is putting us on the path towards, it’s going to be very damaging to business and our economy.”

Luke Johnson, entrepreneur and former chairman of Pizza Express, said: “At a time when unemployment is rising, the economy is weak and the number of failing businesses is on the increase, introducing a new swathe of burdensome regulations is, to me, little short of madness.

“In the 1970s our country was going broke and we had to go to the International Monetary Fund for a bailout.

“It feels as if we are headed back towards that period. I lived through that time. But a lot of the MPs writing and supporting this bill are too young to remember what it was like.

“[Angela Rayner] doesn’t even speak the same language as people who work in the private sector.

“She has no clue what it’s like to build a business and have your house on the line if you go broke, or struggling to pay wage bills and bank loan repayments each month.

“She just doesn’t care. She only ever talks to people in the public sector, civil servants and trade unionists. But eventually, their ideology is going to collide with reality and unfortunately, they are going to drag the economy into a serious recession.”

Alex Veitch, of the British Chambers of Commerce, said: “There remains a high risk of unintended consequences that could limit employment opportunities and economic growth.”

And Luiza Gomes, from the British Retail Consortium, said: “Maintaining a 50 per cent threshold for strikes is important to ensure ballot results legitimately and accurately reflect the consensus amongst workers, rather than the minority view.”

A Labour spokesman said: “The public will see right through the sheer hypocrisy of a party that crashed the economy and family finances now opposing better rights for workers.

“Labour do not think it’s fair for workers to be sacked without any good reason or denied sick pay from the first day they are ill. The Tories and Reform need to explain why they do.

“These measures are developed with business, and good for workers and the economy.”