CBI hits out at handling of pits

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The Independent Online
THE CONFEDERATION of British Industry yesterday backed the Government's decision to go for a policy of growth but combined that support with a blistering attack on its 'irresponsible, insensitive and maladroit' handling of the pit closures.

Sir Michael Angus, president of the employers' organisation, said that industry had taken heart from John Major's announcement that future economic policy would give priority to growth and jobs.

But he castigated the way ministers had dealt with the coal crisis, saying that industry's confidence in the Government had been 'severely bruised' by what had been a 'monumental cock-up'.

Following the monthly meeting of its ruling council in London, the CBI said it would press for a four- pronged strategy for growth based on:

Further reductions in interest rates;

Protection of the Government's capital spending programme with emphasis on infrastructure projects;

Fresh emphasis on training programmes;

A freeze on public sector pay, with wage increases linked strictly to productivity gains.

Sir Michael said: 'The council expressed very serious concern at the depth of the recession, at the worsening unemployment situation and the possible knock-on effects of any pit closures that come about.'

He said business had a key role to play in rebuilding Britain's 'badly eroded manufacturing base' and looked forward to hearing the Chancellor, Norman Lamont, flesh out the Government's new strategy in his mansion House speech and in the Autumn Statement.

The CBI said there should be no cuts in capital projects in the public spending round. Because of the deflationary forces at play in the economy there was no danger of a policy built around growth and interest rate cuts causing inflation to spiral.

Sir Michael also disclosed that he had been invited to see Mr Lamont last week at short notice in the wake of business alarm that the Government was drifting and lacking coherent policies to lift the country out of recession. The Chancellor, he said, had listened more intently.

But the CBI was clearly still bristling from the Government's inept handling of the pit closures and the effect it had on consumer and business confidence, which remained at a very low ebb.

Howard Davies, the CBI's director general, said he had been concerned by, among other things, the fact that ministers had not possessed an energy policy within which to explain the pit closures, much less justify them.

'We need the commercial economics of this spelt out,' he said, but added that the CBI had not yet developed a view on whether the coal closures and 'dash for gas' would result in excessive electricity prices.

Separately, the CBI took the Government to task over its rail privatisation plans, suggesting that ministers should halt the programme temporarily to re-assess whether it would work properly.

The privatisation proposals lacked 'clarity and detail' and more consideration needed to be given to assessing the problems tied up with franchising out British Rail services to private contractors.

'Privatisation should not be a substitute for investment in the rail sector and that worries us quite a lot,' Mr Davies said. On a list of business priorities, rail privatisation would not come in the top ten.