Damaging growth: Business sector turns on the coalition
By Ian Dunt
The government has come under attack for its economic policy from where it least expected it, as Britain’s most prominent business leader said it had no plan for growth.
The outgoing head of the Confederation of British Industry (CBI), Sir Richard Lambert, launched a blistering speech casting doubt on the government’s economic agenda today.
The attack is particularly devastating coming from an organisation which has acted as cheerleader for the coalition’s public spending cuts.
David Cameron and George Osborne will note that Sir Richard’s attack carries heavy overtones of Labour’s criticism of the deficit reduction strategy – namely that it has no plan for growth.
“[The government] failed to articulate in big picture terms its vision of what the UK economy might become under its stewardship,” Sir Richard said.
“But to bring the public finances back to full health, they will have to be accompanied by increased output and employment – which bring with them higher tax revenues.”
He added: “Public spending cuts and private sector growth are two sides of the same coin.
“It’s not enough just to slam on the spending brakes.
“Measures that cut spending but killed demand would actually make matters worse.”
Policy initiatives had been undertaken for political reasons “apparently careless of the damage that they might do to business and to job creation”, he added.
“The growth white paper that was promised last autumn never materialised, and the impression was given that there simply weren’t enough good ideas around to justify such a publication,” he continued.
“Rather than a big picture of the kind of economic ecosystem that the government wants to champion, we are left with a few rather vague ideas about the scope for supporting a number of predictable sectors, and the promise that more ideas will be forthcoming at the time of the spring budget.”
Sir Richard also insisted that company executives needed to show increased pay restraint during tough economic times.
Labour and the unions greeted the speech enthusiastically.
“It’s not often that Unite and the CBI find common ground in criticising the government,” Len McCluskey, Unite general secretary-elect said.
“Sir Richard Lambert’s views are a major wake-up call for David Cameron and George Osborne, the medicine they’re feeding the patient will kill not cure.”
Ed Balls, Labour’s newly-installed shadow chancellor, said: “These are damning criticisms from such a respected figure in the business world.
“As Sir Richard says, the Conservative-led government has no plan for growth and has taken decisions for political reasons regardless of the consequences for job creation and business.
“He is also right to warn that cuts which go so far that they kill demand would actually make matters worse.
“The fact is George Osborne is just keeping his fingers crossed and hoping for the best, while unleashing a reckless gamble on the economy.”
