A leaked cabinet memo has revealed the government is considering scrapping plans for new employment rights in a bid to keep business on board.

The rights, thrashed out during a compromise deal with the unions last autumn, were aimed at ensuring that new workers were given the same deal as existing employees and had been backed by Stephen Byers.

But as business begins to show strong signs of disillusionment with the government, the cabinet appears set to ditch the plans in order to ensure that the private sector does not blow cold on PPP deals.

The memo - which is titled "restricted - policy" - also recommends that Patricia Hewitt scraps plans to include occupational pensions in regulations governing contracted-out workers.