CBI: Coalition is harming growth

Julian Harris
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SIR RICHARD Lambert, the outgoing head of employers’ organisation the CBI, launched a scathing attack on the government yesterday, accusing it of pursuing policies that may harm economic growth.

“It has taken a series of policy initiatives for political reasons, apparently careless of the damage that they might do to business and job creation,” said Lambert.

Taking no prisoners, Lambert also attacked the previous Labour administration for creating a “mess” of the UK’s public finances.

“The tax and spending policies of the last government created a substantial structural deficit,” he said.

Yet while the coalition government’s spending cuts are necessary and “strongly supported by business,” other policies are harming private sector job creation, Lambert argued.

“Public spending cuts and private sector growth are two sides of the same coin,” he explained. “Measures that cut spending but kill demand would actually make matters worse.”

The government “should not attempt to pick winners”, Lambert said. “Small and medium sized enterprises are the main source of new jobs. Big multinationals – the companies the Prime Minister usually gathers around the Cabinet Office table – taken together and over time are reducing their headcount in the UK.”

Regulations have hammered small businesses at a time when the private sector is expected to make up for job losses in the government sector, Lambert said.

The immigration cap, the abolition of a the retirement age, and policies over localism, carbon reduction and against aviation were all cited by Lambert as stunting business activity.

And the government has done nothing to simplify health and safety regulation, or “to tackle the abuse of the employment tribunal system.”

His sentiment was echoed by economist Graeme Leach of the Institute of Directors: “To assist economic growth, the government should be making it easier for businesses to employ people, not harder.”

Senior Labour figures rounded on the coalition. New shadow chancellor Ed Balls said “these are damning criticisms from such a respected figure in the business world.”

Yet shadow business secretary John Denham said Labour support some of the regulations brought in by the government.

“So we do not accept everything in Lambert’s speech, but the great bulk of it is absolutely on the nail,” Denham said.