Politicians must “get a grip”
Britain finds itself at a “burning platform moment”, threatened by critical issues that must be tackled urgently, Richard Lambert, CBI Director-General, warned last night. Politicians across the parties must “get a grip”, he said.
Speaking at the CBI South East Annual Dinner for businesses leaders in the South East, Mr Lambert gave a stark warning of the huge, long-term problems facing the country, from rising government debt to energy security, and fast-rising youth unemployment, which require urgent attention.
He criticised the apparent failure of politicians across the parties to address these huge challenges.
“The time has come for our politicians to get a grip. The United Kingdom faces some of the biggest economic, social and environmental challenges of our lifetime – challenges that go right to the very heart of what kind of country we want this to be,” he said.
“Britain finds itself at what you might call a burning platform moment. We can either take the bold steps that will be necessary to take us forward to a prosperous but different kind of future. Or we can pretend to ignore the need for change, and risk going down with the ship.”
“But instead of focusing on this big picture, politicians appear wholly preoccupied with what’s going on within the Westminster village, and in doing what they can to strengthen their own positions over the short term.”
Mr Lambert touched on the anger generated by the expenses “fiddles” of a number of MPs and the lack of public confidence in the political system.
“In response to this public rage, politicians are airily throwing around ideas for constitutional reform – ideas which may be desirable in themselves and will need serious discussion in calmer times — but which are a massive diversion at a time when so many urgent policy decisions have to be agreed and implemented.”
Mr Lambert went on to set out the huge challenges for Britain, commenting on each.
On rising public debt:
“The UK faces a fiscal deficit this year on a scale which has never been experienced before in peacetime. The bulk of this deficit is structural in nature, which means that it won’t simply disappear when the recovery occurs. On the Treasury’s own forecasts, it will be eight years before the Budget is back in balance. And the outstanding stock of Government securities will have to double over the next four or five years in order to plug this spending gap.
“Think about it this way. Back in the year 2000, public spending as a share of gross domestic product – a rough proxy for the size of the state – was about 15 percentage points lower in the UK than was the figure in France. Next year, the gap will probably be down to 4 percentage points. In 10 short years, we will have almost turned ourselves into France.
“But there will still be two big differences between our two countries. French public services, taken as a whole, are consistently a lot better than ours. And their tax burden is a good bit higher than is ours. That’s why they can afford this size of Government. And it’s why we can’t.
On the need for public sector reform to save money and improve services:
“We need to be giving serious thought to two critical issues: the way in which public monies are managed and disbursed, and the need for radical reforms in the way that our public services are delivered.
“The official statistics show that productivity in the public sector has picked up in the past couple of years, but has declined noticeably since 1997. That’s not surprising, given the enormous increases both in the pace of public spending and in the number of public sector jobs.
“But now the emphasis has to change. We have to start squeezing more out of all this extra capacity – finding better ways of giving citizens services of the quality and breadth that they have a right to expect, whether it’s in health, education, transport infrastructure or whatever.
“And we cannot achieve this through the traditional approach to budget management in the public sector. Cuts simply handed down from the centre, salami-style, cannot improve efficiency in the way that is needed.”
“At some point in the next couple of years, these crucially important questions are going to be inescapable. And to address them, we need a much greater sense of urgency than is anywhere now visible.”
On energy security and climate change:
“Decisions taken – or not taken – on energy policy in the next year will have a major impact on the health of the British economy over the next two decades and more.
“If we just sit on our hands, bad things will be starting to happen by around 2016-2017.
“Either the lights will be going out, as our current electricity generating capacity fails to cope with demand. Or we will have had another dash for gas, except that this time round most of our energy will be coming not from the North Sea, but from countries where you wouldn’t want to go for your holidays.
“And we will be set for a future over the following 20 years in which our energy costs are likely to be much higher and more volatile than those of our big European neighbours.
“Moreover, in the absence of decisive action the commitments we have made to reduce our greenhouse gas emissions dramatically by 2020 and 2050 will have turned out to be so much hot air.”
“I don’t sense the feeling of urgency that will be required if we are really going to make the shift into a low carbon economy and grasp the economic opportunities which that will create.”
On the need for infrastructure strategy:
“Important parts of our road infrastructure are creaking at the seams, and big decisions have to be made about rails, airports and ports. We are now on our fourth Secretary of State in three years, which may not be exactly the best approach to building long-term strategies.”
On the ongoing credit crunch:
“There are big policy decisions to be made, too, about the future of the financial services sector. The banking system may just about be moving out of intensive care but it’s going to be in the recovery ward for some time to come. In the meantime, credit conditions remain severely constrained, and it’s hard to see how the economy can start to gain any real momentum while this remains the case.
On the issue of financial regulation, and the threat from Europe to Britain’s financial services sector:
“It’s especially important that we demonstrate strong political engagement in Brussels at a time when the Commission has published a draft directive that could severely damage London’s private equity and hedge fund industry, and when it is also pushing a new framework for pan-European financial supervision in a document that the Economist magazine describes this week as “a bombshell” for Whitehall.
“Financial services remain one of the country’s key areas of comparative advantage in the world. A new approach to regulation is certainly going to be required given the disasters that have struck in the past few years. But heavy handed intervention from the Continent would be a real threat to this very important part of our economy, employing more than one million people across the length and breadth of the land.”
On the broader issue of EU regulation:
“We also need to be taking the European Union a lot more seriously in other ways. Are we working hard enough to ensure that the next Commission – due to be appointed in the second half of this year – will be fully committed to strong competition policies, free trade, and a dynamic financial services sector?”
On the future of the UK motor industry:
“The industry is fragile. The supply chain has shrunk dangerously over the past decade, and our vehicle manufacturers have been caught up in the turmoil that has swept through the industry around the world.
“The Government is full of warm words – but so far very little action to show for them. The opposition parties have been just about mute.
“We can’t be the only major European country to sit by and do nothing. Again, let’s get our minds out of the Westminster village and focus on the stuff that really matters.”