Cut debt, but not yet: CBI
THE Confederation of British Industry (CBI) will today call for a faster, more aggressive approach to solving Britain’s public debt crisis as it sets out its business recommendations for a new government ahead of next year’s election.
CBI deputy director-general John Cridland said the emphasis should be on balancing the government’s books by 2015/16, two years ahead of the schedule set out by chancellor Alistair Darling in this year’s Budget.
He said that bringing the public finances back under control should be achieved not by hiking taxes but by a combination of spending cuts and a drive to improve public sector efficiency, including outsourcing services to private and third sector providers.
“Private sector management expertise allows the public sector to achieve better services at a lower unit cost,” he said. “The emphasis is on us to show that huge efficiency savings can be transferred to the front line.”
But though he stopped short of criticising the budget plans put forward by any of the political parties so far, Cridland reiterated the CBI’s view that the “fragile economy needs time to recover” and said the next government should wait until 2012 before implementing policies to balance the budget. The remarks put the group on a collision course with the Conservatives, who plan to introduce sweeping spending cuts from next year.
Cridland also said the next government should focus on reassessing public pension liabilities by providing reliable estimates of the size of the problem and considering the best way to cap them over time.
“The current system will become unsustainable in its current form,” he said.
AT A GLANCE: THE CBI SETS OUT 12-POINT BUSINESS PLAN FOR NEXT GOVERNMENT
PUBLIC FINANCES
AIM TO BALANCE THE PUBLIC FINANCES BY 2015
The next government should lay out clear plans for bringing the country back to fiscal health two years sooner than planned by Labour, concentrating on spending cuts and efficiencies rather than tax hikes.
RE-ENGINEERING PUBLIC SPENDING
The CBI says spending cuts are necessary, but should be a catalyst for reforms addressing inefficiencies in the public sector, including using private and third sector providers to deliver better outcomes at a lower cost.
PRIORITISE INFRASTRUCTURE INVESTMENT
Transport and other infrastructure projects should not be cut as an easy route to reducing pressure on public spending, the CBI argues.
ADDRESS PUBLIC SECTOR PENSIONS
The next government should publish reliable estimates of the size of the public sector’s current pension liabilities and establish plans as to the best way to cap them over time.
BUSINESS
IMPROVE THE UK’S TAX COMPETITIVENESS
The new government to focus on improving the UK’s competitiveness as a global business centre by driving the headline rate of corporation tax down to 18 per cent over the medium term, from the current main rate of 28 per cent.
DEVELOP A STRONG BANKING SYSTEM
In the CBI’s view, the single most important factor in strengthening the UK banking sector is to focus on managing systemic risk by implementing minimum capital requirements for banks.
DEVELOP A GLOBAL VOICE FOR UK BUSINESS
The UK government should seek constructive engagement with the EU and on the global stage but ensure it is strong in defending the UK’s national interests.
SUPPORT ENTERPRISE AND INDUSTRY
Ensuring viable businesses gain access to credit is essential to helping the UK economy rebalance after the recession, the CBI argues.
JOBS
FOCUS ON EDUCATION REFORM
A focus on reforming and improving secondary and higher education is needed to increase the UK’s future competitiveness in knowledge-intensive, high value-added sectors.
TACKLE YOUTH UNEMPLOYMENT
Employers should be given incentives to offer more apprenticeships to young people, in order to tackle the rising youth unemployment rate, which currently stands at over 1m.
ENVIRONMENT
Prioritise energy security
The CBI says large chunks of the UK’s energy infrastructure need replacing urgently to combat a serious energy shortfall by 2016.
CUTTING CARBON EMISSIONS
The new government needs to decide ways to tackle barriers to low-carbon investment and set out a clear framework in order to attract capital.