The quiet diplomat who is fighting on behalf of the real squeezed middle

IT is always hard to fill someone else’s shoes, especially if they belong to a larger-than-life figure such as Lord Digby Jones or Sir Richard Lambert. That was the position that John Cridland found himself in when he took the reins at the CBI just under a year ago. The mild-mannered, softly spoken 50-year old couldn’t be more different to his predecessors, but his quiet, behind-the-scenes diplomacy – mastered during a decade as the CBI’s number two – appears to be paying off.

“Frenetic” is how he describes the party conference season when we meet towards the end of the Tory gathering in Manchester. He has been in much demand recently, as the government seeks to develop a growth plan to boost the flagging economy.

Indeed, many of the announcements in George Osborne’s speech, most notably a policy to relax some employment regulation and a scheme to boost credit for smaller firms, are straight off the CBI wish-list. Cridland says he is hopeful that more demands, such as tax reliefs for manufacturers that use large amounts of energy, will be met when the chancellor delivers his autumn statement next month.

At the Tory conference, Cridland finds a chancellor who is at least willing to listen to, and in some cases adopt, his ideas. But he says he was “concerned” by the “anti-business” rhetoric on display at the Labour and Liberal Democrat conferences. Ed Miliband might have claimed his speech wasn’t anti business, “but he certainly left that impression with a lot of business people”. Although there is “the occasional bad apple in the barrel, “most companies are trying to do the right thing and making a good fist of it,” he says.

For businesses, one of Osborne’s most welcome announcements was to allow firms to dismiss workers during their first two years in the job without being taken to an unfair dismissal tribunal, up from one year currently, while also introducing fees to deter spurious claims.

“I pressed the chancellor to make that announcement,” explains Cridland, who says the measure will help smaller businesses the most. “If you’ve got four people and you’ve got just about enough business to take on a fifth, you are very worried about ending up at an employment tribunal. It’s a David and Goliath situation. You end up with a manager who’s also an amateur personnel officer who’s just out of their depth.”

Far from exacerbating unemployment, the measure will actually help bring it down, especially for the young, he says. “If I was a 16 year old who couldn’t find a job, what’s the priority for me: getting a job, or having an extra employment right? Because the alternative is having the right but having no job at all.”

Despite the victory for employers, Cridland admits “frustration” at the fact Britain can’t do more to tackle some of the more pernicious employment regulation coming out of Brussels. “At the same point that this reform is being announced, they’re bringing in the agency workers directive [which guarantees temporary workers the same pay and rights as full-time ones] which I think is really detrimental to the unemployed trying to get back into the labour market.”

He urges the government to do as much behind-the scenes work as it can to prevent similar red-tape further down the line. “The agency worker directive was held at bay for more than six years by Tony Blair. It was passed when Gordon Brown was Prime Minister. So draw your own conclusions. If the government has the will and recruits allies in Europe, it can fight battles and win the arguments.”

Cridland is less certain about credit easing, the radical scheme that will see the government sell tens of billions of pounds worth of gilts and use the proceeds to buy corporate bonds. Although he describes the plan as an example of “exciting, innovative, out of the box thinking”, he wants to see “flesh on the bones” before delivering a final verdict. Asked whether he is worried the government could end up with billions of dollars of toxic assets on its books, he replies: “That’s the $64,000 dollar question. The government should not take risks with the public finances.”

He hopes the scheme will be used to help “the squeezed middle” – not the one coined by Ed Miliband, but smaller, “high growth businesses” that are struggling to get finance. He is keen to make a distinction between these firms and what Americans would call “Mom and Pop” operations. Although he has some sympathy for the micro-businesses who “fill MPs’ postbags” because they can’t get an overdraft extension, he can understand why banks turn them away. It is the drought of credit for “the ‘M’s in SME” that is the much bigger problem, he says.

Unlike many, Cridland doesn’t blame the banks for constrained credit, at least not entirely. Indeed, he raised a few eyebrows when he came out so strongly against the interim findings of the Sir John Vickers report into banking. “I know the CBI putting its name behind a message calling on Vickers to be more careful was potentially quite a challenge. Am I just speaking for the banks? No, I’m speaking for the businesses who would not be able to get finance if Vickers had defined the ring-fence too tightly.”

However, he is clear that banks alone can’t solve the credit problem, especially because “regulatory requirements have gone up, weakening their ability to lend”. Although he is happy that the government is trying to “ginger up corporate debt markets” with its credit easing plan, he is pressing Osborne to consider another radical scheme: tax breaks for big firms who buy equity stakes in their suppliers.

“It’s often larger companies who know who the high growth businesses are, because they’re watching them, keeping an eye on them, they’re in their supply chain. They might actually want to strengthen those companies and see them become more robust. So I think there might be a change for tax credits for large companies that take minority stakes in smaller firms.”

Although we spend most of our time talking about what Osborne can do to boost the economy, he says the Eurozone crisis – largely outside the chancellor’s control – poses “the biggest risk to the UK economy”. I ask him to look into his crystal ball to predict an outcome, and his response, while characteristically understated, is more downbeat than I expected. “It is not obvious that there is a sustainable solution on the cards”.

He qualifies this rather Malthusian statement by saying he still thinks the “most likely” outcome is some kind of transfer union, which would see the richer European states underwrite the debts of weaker peripheral ones. “That’s the only way we will settle this,” he argues, “because the real target is Italy and Spain. In many ways the focus on Greece is a proxy for what comes after.” He has little time for European politicians, who he says have exacerbated the crisis with constant dithering, and fears they may have wasted all their “political capital” by letting the saga drag on.

“It saddens me that there were a number of moments over the last 18 months when European governments could have created a firewall that would have been high enough and wide enough to keep the markets at bay. But they’ve never quite done enough. So the emerging fire has jumped the firewall each time.”

With that in mind, I ask whether his dogged determination to cut red tape can seem a little futile when pitted against the storm clouds gathering over the Eurozone. On the contrary, he argues that the Euro crisis shows exactly why we need to make the UK “a better place to do business, particularly in areas like deregulation, infrastructure and planning.” “The Eurozone crisis doesn’t alter the prescription,” he says. “It just means we must do even more of the same.”

CV | JOHN CRIDLAND, DIRECTOR-GENERAL OF THE CBI
Age: 50

Work: A life-long lobbyist, Cridland joined the CBI as a policy adviser in 1982, rising to become director of environmental affairs and of human resources policy. He was appointed deputy director-general in 2000 and took the top role in November 2010.

External roles: Cridland serves as a UK commissioner for employment and skills and is on the board of business in the community. He was a member of the low pay commission from 1997 to 2007 and vice-chair of the national learning and skills council from 2007 to 2010. In 2006 he received a CBE for services to business.

Education: Read history at Christ’s College, Cambridge.

Family: Married, two children

Lives: Bedfordshire