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the issue. It is now time for HARDtalk. | :00:10. | :00:13. | |
Growth figures this week confirmed that two years after one of the | :00:13. | :00:17. | |
worst recessions in history, the British economy is flatlining. The | :00:17. | :00:22. | |
government says there is no alternative to radical surgery. The | :00:22. | :00:29. | |
opposition says the patient was dying on the operation table. Our | :00:29. | :00:33. | |
guest is part of a company representing the private sector | :00:33. | :00:43. | |
:00:43. | :01:06. | ||
employers. Can they deliver jobs, John Cridland, welcome to HARDtalk. | :01:06. | :01:11. | |
Thank you. The government says there is no alternative to a huge | :01:11. | :01:15. | |
public sector spending cuts. That the Budget was the balance, the | :01:15. | :01:19. | |
debt as it passed the cut. But do they need to look again? | :01:19. | :01:24. | |
government is absolutely right. The only way to get the private sector | :01:24. | :01:27. | |
growing is for international money markets to have absolute confidence | :01:27. | :01:33. | |
that all of the places they can invest in around the world, the UK | :01:33. | :01:41. | |
is a good bet. On this, business and government are at one. And yet | :01:41. | :01:46. | |
if the cuts produce such slow growth, to quote you at Moody's, | :01:46. | :01:51. | |
they rate the UK at AAA, however slower growth combined with a | :01:51. | :01:54. | |
weaker-than-expected consolidation efforts could cause them to we | :01:54. | :01:59. | |
consider? It is not the cuts that are producing slow growth. The cuts | :01:59. | :02:04. | |
in UK public spending have only just begun to have a full effect. | :02:04. | :02:09. | |
The reality is that slow growth goes back to the pain and damage we | :02:09. | :02:14. | |
suffered in the crisis in 2009. The debt for that recession, everybody | :02:14. | :02:19. | |
knew it was going to be a very slow and very bumpy recovery. You say | :02:19. | :02:23. | |
everybody knew but there are still revisions and repeated revisions on | :02:23. | :02:31. | |
the growth forecast. 2.3% in June last year, 2.1% in of November last | :02:31. | :02:36. | |
year, 1.7% in March this year and now, an average independent | :02:36. | :02:42. | |
forecast has the UK growing at 1.3% in 2011. He say everybody knew but | :02:42. | :02:45. | |
actually what people thought they knew and what they know now, it is | :02:45. | :02:50. | |
getting worse by the day? I have a friend who has a boat and when he | :02:50. | :02:54. | |
heads out in the morning for a day's sailing, he has to hope and | :02:54. | :02:59. | |
expectation of where he will get two. But it depends on the wind and | :02:59. | :03:02. | |
that can change quickly. Those head wins are slowing down the UK | :03:02. | :03:06. | |
economy and I accept what you are saying. We had more head winds than | :03:06. | :03:10. | |
we anticipated and they are tough. Why are they worst that -- worse | :03:10. | :03:20. | |
:03:20. | :03:22. | ||
for the UK than other economies? There is too 0.5% growth in the US | :03:22. | :03:27. | |
40,011, 2.5% growth, why is the UK recovery so easily blown off where | :03:27. | :03:34. | |
others are not? If you look at the European Union as a whole, the | :03:34. | :03:39. | |
growth will be 1.5% for some time to come. Germany, in particular, is | :03:39. | :03:43. | |
the great stand out. To answer your question, Germany provides some of | :03:43. | :03:48. | |
the answers because it is exporting. They are getting out there and | :03:48. | :03:52. | |
hoovering global demand. They are parts of the world that are growing | :03:53. | :03:57. | |
strongly. This is a story in two hearts. The old economies of the | :03:57. | :04:01. | |
world, the mature economies of the Western hemisphere, are finding it | :04:01. | :04:05. | |
tough. Sorry, is Germany not a mature economy? Yes but it stands | :04:05. | :04:10. | |
out as a feeder. The real growth opportunities are in East Asia, in | :04:10. | :04:13. | |
the emerging economies and Germany has being more successful than | :04:13. | :04:18. | |
Britain in taking those export opportunities. Why is that? Because | :04:18. | :04:22. | |
for too long, the strength of the pound in the run-up to the crisis, | :04:22. | :04:26. | |
we had a decade with the strength of the pound made it quite | :04:26. | :04:30. | |
difficult for Britain to export in those economies. We got used to | :04:30. | :04:34. | |
selling ourselves in the home market. For the European Union | :04:34. | :04:38. | |
market. Now, there is not enough growth there. Some in Germany but | :04:38. | :04:43. | |
not enough in the West -- the rest of the EU. We have to learn the | :04:43. | :04:47. | |
habit of exporting in far flung parts of the world. To look at | :04:47. | :04:53. | |
other examples, you say Germany is the stand-out, but to look at other | :04:53. | :04:59. | |
examples. Our closest ally and neighbour, the US, the US Treasury | :04:59. | :05:03. | |
says there are people who would like to make deep cuts that would | :05:03. | :05:07. | |
undermine the recovery. He says, that is not the responsible way to | :05:07. | :05:11. | |
do it. That point endorsed by Ben Bernanke who told the Senate | :05:11. | :05:14. | |
Banking Commission earlier this month in the very near turned the | :05:14. | :05:18. | |
recovery is still rather fragile. Sharp and excessive cuts in the | :05:18. | :05:22. | |
very short-term would be potentially damaging to that. So | :05:22. | :05:27. | |
they are making the link between the level at which you cut and the | :05:27. | :05:31. | |
speed up the to grow. America is in a different place to ask because | :05:31. | :05:36. | |
America still has the world reserve currency. Even given the level of | :05:36. | :05:41. | |
concern there is about possible debt default in the US as we speak, | :05:41. | :05:46. | |
the reality is, American dollars are much stronger in the world than | :05:46. | :05:50. | |
other currencies. They are not likely to see the flight of capital | :05:50. | :05:56. | |
that comes from international money markets saying we do not trust the | :05:56. | :05:59. | |
government in this particular country, in this case Britain, to | :05:59. | :06:03. | |
look after public finances. But it is a Germany is a special case, the | :06:03. | :06:07. | |
US is a special case, let's go to France. They are putting in place | :06:07. | :06:11. | |
spending cuts that are only about one third as big as ours. Their | :06:11. | :06:15. | |
growth is better. I am questioning this connection between spending | :06:15. | :06:20. | |
cuts and growth because I think there is an issue here where the | :06:20. | :06:24. | |
extent to which spending cuts will take a percentage of the growth | :06:24. | :06:28. | |
rate, that is something for the future. The reason we are suffering | :06:28. | :06:33. | |
on growth today, and the answer to your question, we do they be hit in | :06:33. | :06:37. | |
this recession than most other European main competitors, France | :06:37. | :06:41. | |
and Germany, because of our greater dependence on financial services | :06:41. | :06:46. | |
growth. The reason why it -- we are still find it hard to take our fair | :06:46. | :06:50. | |
share of that export opportunity is because our financial services | :06:50. | :06:54. | |
market, one about big exporters, is still relatively challenged it in | :06:54. | :06:57. | |
international markets. Tackling that head-on, you were talking | :06:57. | :07:01. | |
about taking advantage of rebalancing the economy, but the | :07:01. | :07:04. | |
figures for the last quarter out this week are disappointed on that | :07:05. | :07:09. | |
score for the UK as well. For sterling is no, it ought to be | :07:09. | :07:14. | |
making exports competitive. But manufacturing is down yet again. -- | :07:14. | :07:19. | |
sterling is low. The decrease in the past quarter. This is where we | :07:19. | :07:23. | |
come to the special factors that the Office for National Statistics | :07:23. | :07:32. | |
talk about. They, the statisticians, told us that growth would have been | :07:32. | :07:40. | |
0.7 rather than 0.2. If it hadn't been for things like the Japanese | :07:40. | :07:44. | |
tsunami. That argument about special factors has been derided in | :07:44. | :07:54. | |
many quarters and quite apart from biggest -- be distracted us, too | :07:54. | :07:58. | |
cold, too hot and the rest of it, if you look ahead to the next | :07:58. | :08:04. | |
quarter, it will not exactly be sure of head wins when you | :08:04. | :08:07. | |
mentioned the American problem and the problems of the eurozone and | :08:07. | :08:12. | |
the public sector cuts coming down the line. There are going to be | :08:12. | :08:17. | |
special factors and even greater dimension, probably. Indeed. And I | :08:17. | :08:20. | |
am not hiding behind special practice. But do not underestimate | :08:20. | :08:24. | |
the effect of the tsunami because it had a much bigger effect on the | :08:24. | :08:31. | |
modern economy when so many companies were depending on. Lots | :08:31. | :08:34. | |
of people slow down production because they could not get | :08:34. | :08:38. | |
components and parts they needed. Looking forward, I talked about | :08:38. | :08:42. | |
head winds first. I think they are really pretty strong in the UK | :08:42. | :08:47. | |
economy. We have the dollar and the US debt crisis, we have the | :08:47. | :08:51. | |
eurozone, we have concerns about overheating in those emerging | :08:51. | :08:55. | |
economies where the opportunities lie. Ask me which of the ones I am | :08:55. | :09:00. | |
most bothered about, I still think the biggest problem for us is the | :09:00. | :09:06. | |
eurozone because the talent we all have if German growth slows down, | :09:06. | :09:13. | |
Germany catches a cold, we also do. -- the challenge. Do you accept the | :09:13. | :09:19. | |
growth forecast of 1.7% in the UK, it will not hit that for 2011? | :09:19. | :09:24. | |
not in the UK will grow at 1.7% this year. We are already halfway | :09:24. | :09:28. | |
through end I do not think we will hit back. It will be some way below | :09:28. | :09:34. | |
that. What about the point about the Shadow Chancellor, he says | :09:34. | :09:38. | |
slower growth, high employment, the policy is making a vicious circle | :09:39. | :09:44. | |
with borrowing already said to be �46 billion higher. His point is | :09:44. | :09:47. | |
that the policies of the government will actually make growth forecast | :09:47. | :09:53. | |
worse. If I am concerned with the private sector. We need to take the | :09:53. | :09:58. | |
unpleasant medicine in the public sector. At the same time, what we | :09:58. | :10:02. | |
are demanding of government is we support them on the necessary but | :10:02. | :10:05. | |
painful cuts but they have to deliver a strategy for growth in | :10:05. | :10:09. | |
the private sector. Where I differ from the Labour Party is I do not | :10:09. | :10:14. | |
think we deliver growth in the private sector by more public | :10:14. | :10:19. | |
spending. You deliberate by liberating the private sector. | :10:19. | :10:22. | |
Public sector doing less and the private sector doing more. Let's | :10:22. | :10:26. | |
look at some other suggestions that there is analysts have suggested | :10:26. | :10:33. | |
for dealing with that growth in the private sector. There is a camp | :10:33. | :10:37. | |
which says austerity is too tough and killing growth. What you could | :10:37. | :10:43. | |
do on physical policy is take out, this is coming from John Walker are | :10:43. | :10:47. | |
from the Federation of Small Businesses, take out VAT on | :10:47. | :10:52. | |
construction and tourism. Bring it down to 5%. Would that kind of | :10:52. | :10:59. | |
targeted tax cut hold? I would look more at targeted action on National | :10:59. | :11:04. | |
Insurance to try to get people into work. National Insurance being an | :11:04. | :11:09. | |
employment tax? A tax on jobs. Let's be realistic about this. | :11:09. | :11:13. | |
Whether he is proposing VAT or I am looking at national insurance, the | :11:13. | :11:19. | |
government does not have very much money. The cupboard is empty and we | :11:19. | :11:22. | |
do not help ourselves by going back to government with a wish-list that | :11:22. | :11:26. | |
cost a large amount of money. We will have to be very targeted in | :11:26. | :11:30. | |
the future. So the National Insurance, that is one that is | :11:30. | :11:36. | |
endorsed by the London mayor as well. What he suggests he's cutting | :11:36. | :11:42. | |
be 50% rate of tax on high air in comes. Yes or no? It is an | :11:42. | :11:46. | |
interesting study been done by the Chancellor to see whether the | :11:46. | :11:50. | |
British higher rate tax of 50p brings in as much money as it used | :11:50. | :11:54. | |
to at 40p. That will answer the question. If a high tax rate is | :11:54. | :11:57. | |
bringing in no more money than it would have been at its old rate, | :11:58. | :12:02. | |
then it is not achieving any purpose. And his point, that it | :12:02. | :12:06. | |
discourages business, but it on to that -- bedded entrepreneurs want | :12:06. | :12:11. | |
to make money it will not cover the country, they have pretty high tax | :12:11. | :12:18. | |
rates at the upper end? Yes but they struggle with employment | :12:18. | :12:21. | |
creation and they struggle with attracting new businesses and | :12:21. | :12:25. | |
investment from outside of their shores. We have got the most open | :12:25. | :12:29. | |
economy in Europe. We have one of the most open economies in the | :12:29. | :12:35. | |
world. That generally works to the benefit of the British citizens. | :12:35. | :12:39. | |
What we have to know international economies is people have choices. | :12:39. | :12:43. | |
Not just market traders in the City, engineers and other high-value | :12:43. | :12:47. | |
individuals, situs, they do not have to come to our engineering | :12:47. | :12:54. | |
companies and our universities. -- cities. What we see at the moment | :12:54. | :13:04. | |
:13:04. | :13:06. | ||
is that 50p rate is putting them Higher-rate taxpayers in the | :13:06. | :13:11. | |
economy one to pay their fair share of fiscal austerity but the measure | :13:11. | :13:19. | |
may be pernicious. Your predecessor Richard Lambert used his outgoing | :13:19. | :13:23. | |
speech in January to criticise the Government. He said, it is not | :13:23. | :13:33. | |
:13:33. | :13:34. | ||
enough just to slam on the spending breaks. 400,000 jobs are to the | :13:34. | :13:41. | |
public sector. He says what is needed is growth in the private | :13:41. | :13:47. | |
sector that will offset this impact. Do you think the Government is | :13:47. | :13:55. | |
guilty of imagining that jobs will disappear by magic? We created 0.5 | :13:55. | :14:03. | |
million jobs in the last period. We have created these in the private | :14:03. | :14:09. | |
sector. In each of the last 20 years apart from the two years we | :14:09. | :14:17. | |
were in recession we have created many private sector jobs every year. | :14:17. | :14:22. | |
Britain has a good track record of creating jobs. It has kept | :14:22. | :14:25. | |
unemployment lower then it should have been for the depth of the | :14:25. | :14:31. | |
recession. Most of us thought it would hit 3 million. In your view | :14:31. | :14:36. | |
the private sector at can soak up those employees that are falling | :14:36. | :14:45. | |
out of the private sector? Are they the same employees? The complaint | :14:45. | :14:50. | |
is that the new employees in the private sector are coming from | :14:50. | :14:59. | |
outside the UK. A very exciting opportunity for the Government to | :14:59. | :15:02. | |
help the private sector make sure when they want to recruit someone | :15:02. | :15:07. | |
there is someone in the UK with the right skills base. We will have to | :15:07. | :15:14. | |
go abroad for talent if we do not have the right skills in the UK. I | :15:14. | :15:18. | |
cannot say that every month we are creating enough private sector jobs | :15:18. | :15:26. | |
every -- for those losing their jobs in the public sector but I | :15:26. | :15:32. | |
want a labour market that can provide our own labour. We should | :15:32. | :15:39. | |
just be employing a small number of highly skilled people - university | :15:39. | :15:45. | |
professors and scientists. Science and technology, that is something | :15:45. | :15:54. | |
we need to look at. The skills problems in these countries -- this | :15:54. | :15:59. | |
country. Nearly half of employers are saying they already have | :15:59. | :16:07. | |
difficulty employing people who have skills in science, technology | :16:07. | :16:17. | |
and mass. -- mathematics. Most young people in school do not want | :16:17. | :16:20. | |
to do science, technology, engineering and mathematics. Those | :16:20. | :16:25. | |
that due to those degrees do not always go into the productive part | :16:25. | :16:35. | |
of the economy. They take jobs outside of the industry. They | :16:35. | :16:41. | |
sometimes take jobs in the finance industry. We're facing a problem at | :16:41. | :16:48. | |
the old apprenticeship level. I was with a company the other day that | :16:48. | :16:57. | |
had 200 engineers. There were almost all aged over 55. When that | :16:58. | :17:02. | |
generation retires we will struggle with the skills base. And strut or | :17:03. | :17:08. | |
even sooner if you listen to academics involved -- struggle. | :17:08. | :17:13. | |
They say, how can we deal with these problems when tuition fees | :17:13. | :17:22. | |
are trebling for many people and education subsidies have been cut. | :17:22. | :17:26. | |
One expert says, we are one of the many countries in the world that is | :17:26. | :17:36. | |
:17:36. | :17:37. | ||
not increasing investment in science and technology. I think | :17:37. | :17:41. | |
businesses will sponsor students and they will sponsor students when | :17:41. | :17:46. | |
they are taking courses that business find most variable. We | :17:46. | :17:55. | |
will see it in the Science and Engineering. I am an historian | :17:55. | :18:03. | |
services tough for me. I think we need to spend money on science | :18:03. | :18:09. | |
because that is the way to get growth moving. You only need to go | :18:09. | :18:19. | |
:18:19. | :18:21. | ||
to China and to be reminded that they Iran hundreds of thousands of | :18:21. | :18:31. | |
:18:31. | :18:33. | ||
people that are coming out qualified with these degrees. | :18:33. | :18:41. | |
must not let those sectors be starved of key staff. That is a | :18:41. | :18:51. | |
:18:51. | :18:51. | ||
specific area of the labour market but let's look at other things. I | :18:51. | :18:55. | |
want to quote from the Director General of the Institute of | :18:55. | :19:02. | |
needs to be in a relentless drive to repeal of laws and regulations | :19:02. | :19:12. | |
and remove the hand of government from wealth-creation. To endorse | :19:12. | :19:22. | |
:19:22. | :19:25. | ||
that? I think that language is a bit dramatic. Its ambitions are | :19:25. | :19:33. | |
commendable and its actions have not proved good. To give government | :19:33. | :19:41. | |
so am -- some credit I think it is committed to one in, one out. Every | :19:41. | :19:50. | |
lake -- regulation they put in they have to take one out. What about | :19:50. | :19:58. | |
strike laws? You are famously dependent on the viewpoint of the | :19:58. | :20:05. | |
Observer, committed to pressing for a tightening on laws in which | :20:05. | :20:10. | |
unions can take strike action. Does that have a direct bearing on | :20:10. | :20:16. | |
employment growth? 80% of the workforce are in the private sector | :20:16. | :20:25. | |
where union membership is very low. 14% across the private sector. It | :20:25. | :20:32. | |
is a story about disruption for ci ciking it harder to get | :20:32. | :20:42. | |
:20:42. | :20:42. | ||
goods and services to the market. I do not think the public should be | :20:42. | :20:47. | |
messed around in monopoly services like transport or education by | :20:47. | :20:51. | |
unions bringing people out on strike without a very clear | :20:51. | :20:55. | |
demonstration that they have the support of the majority of the | :20:55. | :21:00. | |
people they are asking to down tools. We say that a strike ballot | :21:01. | :21:06. | |
should require 40% of those eligible to vote to vote in favour | :21:06. | :21:13. | |
of the proposition. The leader of the union movement's says the UK | :21:13. | :21:22. | |
has some of the toughest legislation on at the right to | :21:22. | :21:32. | |
:21:32. | :21:32. | ||
strike. The UK has one of the lowest totals of days lost due to | :21:33. | :21:39. | |
industrial action because of industrial action. In the UK the | :21:39. | :21:44. | |
public are vulnerable to being messed around in monopoly services. | :21:44. | :21:52. | |
Some of the strikes in London have only had 20% of those eligible to | :21:52. | :22:01. | |
vote voting in favour. I think that the right of citizens not to be | :22:01. | :22:07. | |
messed around is very important. will quote you a lawyer. They have | :22:07. | :22:14. | |
done at an analysis of global industrial action. He says, | :22:14. | :22:24. | |
:22:24. | :22:27. | ||
legislation which favours employees have reduced - has reduced | :22:27. | :22:34. | |
industrial action in some countries, the best way is to reach a | :22:34. | :22:39. | |
compromise and negotiate. These things are best sorted out around | :22:39. | :22:47. | |
the negotiation table. I do not want to leave an impression that we | :22:47. | :22:55. | |
want to wave a big stick against the unions. For most businesses | :22:55. | :23:00. | |
unions are not an issue. But if a public sector is to be slimmed down | :23:00. | :23:05. | |
according to what we can afford, we cannot afford to allow unions to | :23:05. | :23:15. | |
:23:15. | :23:18. | ||
stand in the way of legitimate reform. As you pointed out, and a | :23:18. | :23:28. | |
:23:28. | :23:30. | ||
government. They want us to believe, it is the private sector that is | :23:30. | :23:39. | |
important in economic growth. According to some we're seeing the | :23:39. | :23:46. | |
beginnings of a real growth in manufacturing. Two years ago our | :23:46. | :23:51. | |
automotive sector was suffering because people were not buying cars. | :23:51. | :23:55. | |
Now we're producing cars that taking a bigger share of the market. | :23:55. | :24:02. | |
There are huge opportunities in low-carbon. We will have | :24:02. | :24:06. | |
manufacturing increasingly decay agonising in years ahead because it | :24:06. | :24:11. | |
is the right thing to do. The companies that will grow up the | :24:11. | :24:19. |