Ministers put politics before growth, says CBI

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The Government has put politics before economics, implemented initiatives "for political reasons" and been "apparently careless of the damage that they might do to business and to job creation", according to the outgoing director-general of the CBI, Sir Richard Lambert.

The Government is not "firing on all cylinders", Sir Richard added, especially Vince Cable's Department of Business. "Perhaps it's time in this context for a hard look at the role of the Department of Business. Less of a talking shop, more of an action-oriented growth champion. That's what's required right now." Mr Cable is hosting another "manufacturing summit" at his department this morning.

In a devastating valedictory address, Mr Lambert said that "politics appear to have trumped economics on too many occasions over the past eight months". He called for "bold initiatives", such as a green investment bank and investment in the UK's infrastructure, especially in power generation. "This matters a great deal, because public spending cuts and private sector growth are two sides of the same coin," he added.

While praising the Coalition's plan to eliminate the structural budget deficit by the end of this Parliament, Sir Richard warned: "It's not enough just to slam on the spending brakes. Measures that cut spending but killed demand would actually make matters worse.

"It's easy enough to see how the squeeze could take 400,000 jobs out of the public sector by 2015-16. What's needed above all is the kind of growth in the private sector that will more than offset this impact.

"So the question is, where's the growth going to come from?"

Sir Richard's broadside drew supporting fire from Ed Balls, the shadow Chancellor. He said: "These are damning criticisms from such a respected figure in the business world.

"As Sir Richard says, the Conservative-led Government has no plan for growth and has taken decisions for political reasons regardless of the consequences for job creation and business."

In a long litany of Government failures, Sir Richard highlighted the Growth White Paper "that was expected last autumn never materialised"; "a few rather vague ideas about the scope for supporting a number of predictable sectors, and the promise that more ideas will be forthcoming at the time of the spring Budget".

"Politics appear to have trumped economics on too many occasions over the past eight months.

"I'm thinking of the immigration cap, which is still a source of concern for companies and institutions, like universities, that need to bring international talent into the UK.

The new bribery laws, Local Enterprise partnerships, the mortgage market review, and the plight of smaller businesses needing finance are also singled out. A government spokesperson commented: "Sir Richard is right in two regards. First, about the paramount importance of dealing with the deficit, including the structural deficit run up during the last decade even before the financial crisis struck.

Second, that more needs to be done to promote growth. That's why all the Government's efforts are focussed on a package of measures to promote growth to be set out at the Budget. This includes improving planning, competition policy, reducing the burden of red tape and boosting exports."