:00:10. > :00:13.the issue. It is now time for HARDtalk.
:00:13. > :00:17.Growth figures this week confirmed that two years after one of the
:00:17. > :00:22.worst recessions in history, the British economy is flatlining. The
:00:22. > :00:29.government says there is no alternative to radical surgery. The
:00:29. > :00:33.opposition says the patient was dying on the operation table. Our
:00:33. > :00:43.guest is part of a company representing the private sector
:00:43. > :01:06.
:01:06. > :01:11.employers. Can they deliver jobs, John Cridland, welcome to HARDtalk.
:01:11. > :01:15.Thank you. The government says there is no alternative to a huge
:01:15. > :01:19.public sector spending cuts. That the Budget was the balance, the
:01:19. > :01:24.debt as it passed the cut. But do they need to look again?
:01:24. > :01:27.government is absolutely right. The only way to get the private sector
:01:27. > :01:33.growing is for international money markets to have absolute confidence
:01:33. > :01:41.that all of the places they can invest in around the world, the UK
:01:41. > :01:46.is a good bet. On this, business and government are at one. And yet
:01:46. > :01:51.if the cuts produce such slow growth, to quote you at Moody's,
:01:51. > :01:54.they rate the UK at AAA, however slower growth combined with a
:01:54. > :01:59.weaker-than-expected consolidation efforts could cause them to we
:01:59. > :02:04.consider? It is not the cuts that are producing slow growth. The cuts
:02:04. > :02:09.in UK public spending have only just begun to have a full effect.
:02:09. > :02:14.The reality is that slow growth goes back to the pain and damage we
:02:14. > :02:19.suffered in the crisis in 2009. The debt for that recession, everybody
:02:19. > :02:23.knew it was going to be a very slow and very bumpy recovery. You say
:02:23. > :02:31.everybody knew but there are still revisions and repeated revisions on
:02:31. > :02:36.the growth forecast. 2.3% in June last year, 2.1% in of November last
:02:36. > :02:42.year, 1.7% in March this year and now, an average independent
:02:42. > :02:45.forecast has the UK growing at 1.3% in 2011. He say everybody knew but
:02:45. > :02:50.actually what people thought they knew and what they know now, it is
:02:50. > :02:54.getting worse by the day? I have a friend who has a boat and when he
:02:54. > :02:59.heads out in the morning for a day's sailing, he has to hope and
:02:59. > :03:02.expectation of where he will get two. But it depends on the wind and
:03:02. > :03:06.that can change quickly. Those head wins are slowing down the UK
:03:06. > :03:10.economy and I accept what you are saying. We had more head winds than
:03:10. > :03:20.we anticipated and they are tough. Why are they worst that -- worse
:03:20. > :03:22.
:03:22. > :03:27.for the UK than other economies? There is too 0.5% growth in the US
:03:27. > :03:34.40,011, 2.5% growth, why is the UK recovery so easily blown off where
:03:34. > :03:39.others are not? If you look at the European Union as a whole, the
:03:39. > :03:43.growth will be 1.5% for some time to come. Germany, in particular, is
:03:43. > :03:48.the great stand out. To answer your question, Germany provides some of
:03:48. > :03:52.the answers because it is exporting. They are getting out there and
:03:53. > :03:57.hoovering global demand. They are parts of the world that are growing
:03:57. > :04:01.strongly. This is a story in two hearts. The old economies of the
:04:01. > :04:05.world, the mature economies of the Western hemisphere, are finding it
:04:05. > :04:10.tough. Sorry, is Germany not a mature economy? Yes but it stands
:04:10. > :04:13.out as a feeder. The real growth opportunities are in East Asia, in
:04:13. > :04:18.the emerging economies and Germany has being more successful than
:04:18. > :04:22.Britain in taking those export opportunities. Why is that? Because
:04:22. > :04:26.for too long, the strength of the pound in the run-up to the crisis,
:04:26. > :04:30.we had a decade with the strength of the pound made it quite
:04:30. > :04:34.difficult for Britain to export in those economies. We got used to
:04:34. > :04:38.selling ourselves in the home market. For the European Union
:04:38. > :04:43.market. Now, there is not enough growth there. Some in Germany but
:04:43. > :04:47.not enough in the West -- the rest of the EU. We have to learn the
:04:47. > :04:53.habit of exporting in far flung parts of the world. To look at
:04:53. > :04:59.other examples, you say Germany is the stand-out, but to look at other
:04:59. > :05:03.examples. Our closest ally and neighbour, the US, the US Treasury
:05:03. > :05:07.says there are people who would like to make deep cuts that would
:05:07. > :05:11.undermine the recovery. He says, that is not the responsible way to
:05:11. > :05:14.do it. That point endorsed by Ben Bernanke who told the Senate
:05:14. > :05:18.Banking Commission earlier this month in the very near turned the
:05:18. > :05:22.recovery is still rather fragile. Sharp and excessive cuts in the
:05:22. > :05:27.very short-term would be potentially damaging to that. So
:05:27. > :05:31.they are making the link between the level at which you cut and the
:05:31. > :05:36.speed up the to grow. America is in a different place to ask because
:05:36. > :05:41.America still has the world reserve currency. Even given the level of
:05:41. > :05:46.concern there is about possible debt default in the US as we speak,
:05:46. > :05:50.the reality is, American dollars are much stronger in the world than
:05:50. > :05:56.other currencies. They are not likely to see the flight of capital
:05:56. > :05:59.that comes from international money markets saying we do not trust the
:05:59. > :06:03.government in this particular country, in this case Britain, to
:06:03. > :06:07.look after public finances. But it is a Germany is a special case, the
:06:07. > :06:11.US is a special case, let's go to France. They are putting in place
:06:11. > :06:15.spending cuts that are only about one third as big as ours. Their
:06:15. > :06:20.growth is better. I am questioning this connection between spending
:06:20. > :06:24.cuts and growth because I think there is an issue here where the
:06:24. > :06:28.extent to which spending cuts will take a percentage of the growth
:06:28. > :06:33.rate, that is something for the future. The reason we are suffering
:06:33. > :06:37.on growth today, and the answer to your question, we do they be hit in
:06:37. > :06:41.this recession than most other European main competitors, France
:06:41. > :06:46.and Germany, because of our greater dependence on financial services
:06:46. > :06:50.growth. The reason why it -- we are still find it hard to take our fair
:06:50. > :06:54.share of that export opportunity is because our financial services
:06:54. > :06:57.market, one about big exporters, is still relatively challenged it in
:06:57. > :07:01.international markets. Tackling that head-on, you were talking
:07:01. > :07:04.about taking advantage of rebalancing the economy, but the
:07:05. > :07:09.figures for the last quarter out this week are disappointed on that
:07:09. > :07:14.score for the UK as well. For sterling is no, it ought to be
:07:14. > :07:19.making exports competitive. But manufacturing is down yet again. --
:07:19. > :07:23.sterling is low. The decrease in the past quarter. This is where we
:07:23. > :07:32.come to the special factors that the Office for National Statistics
:07:32. > :07:40.talk about. They, the statisticians, told us that growth would have been
:07:40. > :07:44.0.7 rather than 0.2. If it hadn't been for things like the Japanese
:07:44. > :07:54.tsunami. That argument about special factors has been derided in
:07:54. > :07:58.many quarters and quite apart from biggest -- be distracted us, too
:07:58. > :08:04.cold, too hot and the rest of it, if you look ahead to the next
:08:04. > :08:07.quarter, it will not exactly be sure of head wins when you
:08:07. > :08:12.mentioned the American problem and the problems of the eurozone and
:08:12. > :08:17.the public sector cuts coming down the line. There are going to be
:08:17. > :08:20.special factors and even greater dimension, probably. Indeed. And I
:08:20. > :08:24.am not hiding behind special practice. But do not underestimate
:08:24. > :08:31.the effect of the tsunami because it had a much bigger effect on the
:08:31. > :08:34.modern economy when so many companies were depending on. Lots
:08:34. > :08:38.of people slow down production because they could not get
:08:38. > :08:42.components and parts they needed. Looking forward, I talked about
:08:42. > :08:47.head winds first. I think they are really pretty strong in the UK
:08:47. > :08:51.economy. We have the dollar and the US debt crisis, we have the
:08:51. > :08:55.eurozone, we have concerns about overheating in those emerging
:08:55. > :09:00.economies where the opportunities lie. Ask me which of the ones I am
:09:00. > :09:06.most bothered about, I still think the biggest problem for us is the
:09:06. > :09:13.eurozone because the talent we all have if German growth slows down,
:09:13. > :09:19.Germany catches a cold, we also do. -- the challenge. Do you accept the
:09:19. > :09:24.growth forecast of 1.7% in the UK, it will not hit that for 2011?
:09:24. > :09:28.not in the UK will grow at 1.7% this year. We are already halfway
:09:28. > :09:34.through end I do not think we will hit back. It will be some way below
:09:34. > :09:38.that. What about the point about the Shadow Chancellor, he says
:09:39. > :09:44.slower growth, high employment, the policy is making a vicious circle
:09:44. > :09:47.with borrowing already said to be �46 billion higher. His point is
:09:47. > :09:53.that the policies of the government will actually make growth forecast
:09:53. > :09:58.worse. If I am concerned with the private sector. We need to take the
:09:58. > :10:02.unpleasant medicine in the public sector. At the same time, what we
:10:02. > :10:05.are demanding of government is we support them on the necessary but
:10:05. > :10:09.painful cuts but they have to deliver a strategy for growth in
:10:09. > :10:14.the private sector. Where I differ from the Labour Party is I do not
:10:14. > :10:19.think we deliver growth in the private sector by more public
:10:19. > :10:22.spending. You deliberate by liberating the private sector.
:10:22. > :10:26.Public sector doing less and the private sector doing more. Let's
:10:26. > :10:33.look at some other suggestions that there is analysts have suggested
:10:33. > :10:37.for dealing with that growth in the private sector. There is a camp
:10:37. > :10:43.which says austerity is too tough and killing growth. What you could
:10:43. > :10:47.do on physical policy is take out, this is coming from John Walker are
:10:47. > :10:52.from the Federation of Small Businesses, take out VAT on
:10:52. > :10:59.construction and tourism. Bring it down to 5%. Would that kind of
:10:59. > :11:04.targeted tax cut hold? I would look more at targeted action on National
:11:04. > :11:09.Insurance to try to get people into work. National Insurance being an
:11:09. > :11:13.employment tax? A tax on jobs. Let's be realistic about this.
:11:13. > :11:19.Whether he is proposing VAT or I am looking at national insurance, the
:11:19. > :11:22.government does not have very much money. The cupboard is empty and we
:11:22. > :11:26.do not help ourselves by going back to government with a wish-list that
:11:26. > :11:30.cost a large amount of money. We will have to be very targeted in
:11:30. > :11:36.the future. So the National Insurance, that is one that is
:11:36. > :11:42.endorsed by the London mayor as well. What he suggests he's cutting
:11:42. > :11:46.be 50% rate of tax on high air in comes. Yes or no? It is an
:11:46. > :11:50.interesting study been done by the Chancellor to see whether the
:11:50. > :11:54.British higher rate tax of 50p brings in as much money as it used
:11:54. > :11:57.to at 40p. That will answer the question. If a high tax rate is
:11:58. > :12:02.bringing in no more money than it would have been at its old rate,
:12:02. > :12:06.then it is not achieving any purpose. And his point, that it
:12:06. > :12:11.discourages business, but it on to that -- bedded entrepreneurs want
:12:11. > :12:18.to make money it will not cover the country, they have pretty high tax
:12:18. > :12:21.rates at the upper end? Yes but they struggle with employment
:12:21. > :12:25.creation and they struggle with attracting new businesses and
:12:25. > :12:29.investment from outside of their shores. We have got the most open
:12:29. > :12:35.economy in Europe. We have one of the most open economies in the
:12:35. > :12:39.world. That generally works to the benefit of the British citizens.
:12:39. > :12:43.What we have to know international economies is people have choices.
:12:43. > :12:47.Not just market traders in the City, engineers and other high-value
:12:47. > :12:54.individuals, situs, they do not have to come to our engineering
:12:54. > :13:04.companies and our universities. -- cities. What we see at the moment
:13:04. > :13:06.
:13:06. > :13:11.is that 50p rate is putting them Higher-rate taxpayers in the
:13:11. > :13:19.economy one to pay their fair share of fiscal austerity but the measure
:13:19. > :13:23.may be pernicious. Your predecessor Richard Lambert used his outgoing
:13:23. > :13:33.speech in January to criticise the Government. He said, it is not
:13:33. > :13:34.
:13:34. > :13:41.enough just to slam on the spending breaks. 400,000 jobs are to the
:13:41. > :13:47.public sector. He says what is needed is growth in the private
:13:47. > :13:55.sector that will offset this impact. Do you think the Government is
:13:55. > :14:03.guilty of imagining that jobs will disappear by magic? We created 0.5
:14:03. > :14:09.million jobs in the last period. We have created these in the private
:14:09. > :14:17.sector. In each of the last 20 years apart from the two years we
:14:17. > :14:22.were in recession we have created many private sector jobs every year.
:14:22. > :14:25.Britain has a good track record of creating jobs. It has kept
:14:25. > :14:31.unemployment lower then it should have been for the depth of the
:14:31. > :14:36.recession. Most of us thought it would hit 3 million. In your view
:14:36. > :14:45.the private sector at can soak up those employees that are falling
:14:45. > :14:50.out of the private sector? Are they the same employees? The complaint
:14:50. > :14:59.is that the new employees in the private sector are coming from
:14:59. > :15:02.outside the UK. A very exciting opportunity for the Government to
:15:02. > :15:07.help the private sector make sure when they want to recruit someone
:15:07. > :15:14.there is someone in the UK with the right skills base. We will have to
:15:14. > :15:18.go abroad for talent if we do not have the right skills in the UK. I
:15:18. > :15:26.cannot say that every month we are creating enough private sector jobs
:15:26. > :15:32.every -- for those losing their jobs in the public sector but I
:15:32. > :15:39.want a labour market that can provide our own labour. We should
:15:39. > :15:45.just be employing a small number of highly skilled people - university
:15:45. > :15:54.professors and scientists. Science and technology, that is something
:15:54. > :15:59.we need to look at. The skills problems in these countries -- this
:15:59. > :16:07.country. Nearly half of employers are saying they already have
:16:07. > :16:17.difficulty employing people who have skills in science, technology
:16:17. > :16:20.and mass. -- mathematics. Most young people in school do not want
:16:20. > :16:25.to do science, technology, engineering and mathematics. Those
:16:25. > :16:35.that due to those degrees do not always go into the productive part
:16:35. > :16:41.of the economy. They take jobs outside of the industry. They
:16:41. > :16:48.sometimes take jobs in the finance industry. We're facing a problem at
:16:48. > :16:57.the old apprenticeship level. I was with a company the other day that
:16:58. > :17:02.had 200 engineers. There were almost all aged over 55. When that
:17:03. > :17:08.generation retires we will struggle with the skills base. And strut or
:17:08. > :17:13.even sooner if you listen to academics involved -- struggle.
:17:13. > :17:22.They say, how can we deal with these problems when tuition fees
:17:22. > :17:26.are trebling for many people and education subsidies have been cut.
:17:26. > :17:36.One expert says, we are one of the many countries in the world that is
:17:36. > :17:37.
:17:37. > :17:41.not increasing investment in science and technology. I think
:17:41. > :17:46.businesses will sponsor students and they will sponsor students when
:17:46. > :17:55.they are taking courses that business find most variable. We
:17:55. > :18:03.will see it in the Science and Engineering. I am an historian
:18:03. > :18:09.services tough for me. I think we need to spend money on science
:18:09. > :18:19.because that is the way to get growth moving. You only need to go
:18:19. > :18:21.
:18:21. > :18:31.to China and to be reminded that they Iran hundreds of thousands of
:18:31. > :18:33.
:18:33. > :18:41.people that are coming out qualified with these degrees.
:18:41. > :18:51.must not let those sectors be starved of key staff. That is a
:18:51. > :18:51.
:18:51. > :18:55.specific area of the labour market but let's look at other things. I
:18:55. > :19:02.want to quote from the Director General of the Institute of
:19:02. > :19:12.needs to be in a relentless drive to repeal of laws and regulations
:19:12. > :19:22.and remove the hand of government from wealth-creation. To endorse
:19:22. > :19:25.
:19:25. > :19:33.that? I think that language is a bit dramatic. Its ambitions are
:19:33. > :19:41.commendable and its actions have not proved good. To give government
:19:41. > :19:50.so am -- some credit I think it is committed to one in, one out. Every
:19:50. > :19:58.lake -- regulation they put in they have to take one out. What about
:19:58. > :20:05.strike laws? You are famously dependent on the viewpoint of the
:20:05. > :20:10.Observer, committed to pressing for a tightening on laws in which
:20:10. > :20:16.unions can take strike action. Does that have a direct bearing on
:20:16. > :20:25.employment growth? 80% of the workforce are in the private sector
:20:25. > :20:32.where union membership is very low. 14% across the private sector. It
:20:32. > :20:42.is a story about disruption for ci ciking it harder to get
:20:42. > :20:42.
:20:42. > :20:47.goods and services to the market. I do not think the public should be
:20:47. > :20:51.messed around in monopoly services like transport or education by
:20:51. > :20:55.unions bringing people out on strike without a very clear
:20:55. > :21:00.demonstration that they have the support of the majority of the
:21:01. > :21:06.people they are asking to down tools. We say that a strike ballot
:21:06. > :21:13.should require 40% of those eligible to vote to vote in favour
:21:13. > :21:22.of the proposition. The leader of the union movement's says the UK
:21:22. > :21:32.has some of the toughest legislation on at the right to
:21:32. > :21:32.
:21:33. > :21:39.strike. The UK has one of the lowest totals of days lost due to
:21:39. > :21:44.industrial action because of industrial action. In the UK the
:21:44. > :21:52.public are vulnerable to being messed around in monopoly services.
:21:52. > :22:01.Some of the strikes in London have only had 20% of those eligible to
:22:01. > :22:07.vote voting in favour. I think that the right of citizens not to be
:22:07. > :22:14.messed around is very important. will quote you a lawyer. They have
:22:14. > :22:24.done at an analysis of global industrial action. He says,
:22:24. > :22:27.
:22:27. > :22:34.legislation which favours employees have reduced - has reduced
:22:34. > :22:39.industrial action in some countries, the best way is to reach a
:22:39. > :22:47.compromise and negotiate. These things are best sorted out around
:22:47. > :22:55.the negotiation table. I do not want to leave an impression that we
:22:55. > :23:00.want to wave a big stick against the unions. For most businesses
:23:00. > :23:05.unions are not an issue. But if a public sector is to be slimmed down
:23:05. > :23:15.according to what we can afford, we cannot afford to allow unions to
:23:15. > :23:18.
:23:18. > :23:28.stand in the way of legitimate reform. As you pointed out, and a
:23:28. > :23:30.
:23:30. > :23:39.government. They want us to believe, it is the private sector that is
:23:39. > :23:46.important in economic growth. According to some we're seeing the
:23:46. > :23:51.beginnings of a real growth in manufacturing. Two years ago our
:23:51. > :23:55.automotive sector was suffering because people were not buying cars.
:23:55. > :24:02.Now we're producing cars that taking a bigger share of the market.
:24:02. > :24:06.There are huge opportunities in low-carbon. We will have
:24:06. > :24:11.manufacturing increasingly decay agonising in years ahead because it
:24:11. > :24:19.is the right thing to do. The companies that will grow up the