Shock Horror! CBI supports Tory economic policy!
Hold the front page! Actually, the Financial Times did hold a bit of the front page. This is for the shock news that the CBI, Britain’s bosses organisation, has, in the FT’s words, “backed Conservative plans to cut the budget deficit swiftly and sharply”.
Before continuing, I should confess that I have a few chums in the CBI. For five years now, I have represented the TUC in meetings with government on manufacturing industry, among other things, and my CBI counterpart and I usually agree much more than we disagree.
But this is serious territory.
In it’s submission to the Government on the Pre Budget Report, the TUC has questioned the urgency of deficit reduction, compared to our number one priority, entrenching economic growth. However, we accept that the deficit must come down eventually. The questions are when, and over what period?
The TUC submission puts forward a number of tax options that we believe are preferable to spending cuts or tax rises. Where does the CBI stand on this? And if the CBI supports spending cuts and tax rises, to repay the deficit, which cuts and which rises?
I’d love to be wrong on this, but I don’t imagine the CBI will call for rises in corporation tax. So if taxes have to go up, that leaves income tax or VAT, the taxes that hit working people and, in the case of VAT, the poorest hardest.
Or perhaps the CBI believes the tax take could remain the same and we could repay the deficit through deep cuts in public spending. If so, where exactly should the axe fall? The TUC supports investment, in skills, in infrastructure, in science, in support of those companies in the real economy which will build our competitiveness in the era of global competition. I suspect the CBI supports this investment as well.
So where else might the cuts happen? In schools? In hospitals? In care for the elderly? Will the CBI tell us?
This has been a hellish downturn and the road ahead will be tough. Getting out of recession, stabilising growth, while investing in the future without tearing the heart out of the social fabric, is the challenge that we face. That’s a challenge that we can meet, but we won’t meet it through the swingeing cuts resulting from an unnecessarily panicky approach to deficit reduction. Come on, CBI. Think again on this one!