The think-tank behind Sir Keir Starmer’s leadership campaign has privately criticised Angela Rayner’s workers’ rights agenda.

Labour Together sent MPs a provocative paper describing the Employment Rights Bill, which finally became law earlier this week, as a ‘safety blanket’ that ‘saps dynamism’ from the economy.

It said that the Government should ditch 80 per cent of the new regulations to be imposed on firms under the legislation championed by the former Deputy Prime Minister, and instead embrace ‘easy firing’ while also providing unemployment insurance for those laid off.

The document accused ministers of ‘going backwards on labour market regulation’ despite making progress on planning reform.

It also opened with the words ‘Tony Blair was right’, in what will be seen as a further rebuke to those on the left of the party such as Ms Rayner.

According to The Times, the paper was circulated among Labour MPs this week just as the Employment Rights Bill cleared its final parliamentary hurdles after a stand-off in the Lords forced ministers to water down some of its ‘day one’ protections for workers.

It comes after Labour Together, which masterminded Sir Keir’s bid to take over the party in 2020, added to the speculation about the Prime Minister’s future by surveying members on their preferred candidates in a future leadership election.

On Friday night sources insisted the think-tank had not been calling on the Employment Rights Bill to be scrapped but was merely considering possibilities for the future of the economy.

A spokesman for Labour Together said: ‘Labour Together totally supports this week’s Employment Rights Act.

‘This paper was a provocation for private discussion about how to build a political economy centred on technological change and innovation.

‘It looks beyond current policy, exploring ideas for spreading innovation and investment outside the South East and how to support workers through technological change with a bigger welfare state rather than regulation alone.

‘But given the welfare state we inherited from the Conservatives, that is far away. The Employment Rights Act is the best way to give workers much more security now.’