CBI boss: Coalition lacks vision

The outgoing boss of the business body CBI has accused the coalition of failing to come up with policies that support economic growth.

"It's failed to articulate in big picture terms its vision of what the UK economy might become under its stewardship," Sir Richard Lambert said in a speech.

Sir Richard said business supported the government's spending cuts.

But some politically motivated initiatives were damaging, he said.

The government has "taken a series of policy initiatives for political reasons, apparently careless of the damage they might do to business and to job creation", Sir Richard said in his last major speech before his departure on Friday.

'Making matters worse'

Spending cuts and initiatives such as this month's VAT increase from 17.5% to 20% would help fix the UK's structural deficit over time, Sir Richard said.

"But to bring the public finances back to full health, they will have to be accompanied by increased output and employment - which bring with them higher tax revenues," he stressed.

"Public spending cuts and private sector growth are two sides of the same coin."

Hence, without initiatives supporting private sector growth, the spending cuts would not only be futile; they would be actively detrimental, he reasoned.

"It's not enough just to slam on the spending brakes," he said.

"Measures that cut spending but killed demand would actually make matters worse."

Graeme Leach, Institute of Directors's chief economist and director of policy, added: "To assist economic growth, the Government should be making it easier for businesses to employ people, not harder."

'Major wake-up call'

Ed Balls, Labour's shadow chancellor, urged the government to heed the warning from Sir Richard.

"These are damning criticisms from such a respected figure in the business world," he said.

Shadow business secretary John Denham, meanwhile, insisted: "Vince Cable's credibility is once again called into question".

Len McCluskey, Unite general secretary-elect, also agreed with Sir Richard's assessment.

"It's not often that Unite and the CBI find common ground in criticising the government," he said.

"Sir Richard's views are a major wake-up call for David Cameron and George Osborne; the medicine they're feeding the patient will kill, not cure.

"Now that even the CBI are warning that the coalition's policies are ruinous, it's time to end the experiment by this out-of-touch elite and start generating jobs and economic growth."