Britain told to prepare for 'real austerity'

Apr 02, 2014

Britain is ‘barely off the starting blocks’ in the global race and faces a painful bout of ‘real austerity’ in the years ahead. That was the message from UK plc at the annual meeting of the British Chambers of Commerce in central London yesterday.

Business leaders gathered at the Queen Elizabeth II Conference Centre called for a ‘laser like focus’ on growth driven by exports and investment.

John Longworth, director-general of the BCC, slammed critics of enterprise ‘who do not get it’ and said Britain needs politicians ‘to be more economically literate and business orientated’. He also accused the political class of failing young people, in a scathing attack on the education system which has ‘wasted human capital’.

‘Education, education, education – what a meaningless phrase this proved to be,’ he said.

Accusing some schools, colleges and universities of ‘losing the plot’, Longworth said: ‘Preparing this generation for the British workforce is too important to the economy for us to ignore.’

Karren Brady, vice chairman of West Ham United FC and star of TV show The Apprentice, also raised concerns about how badly prepared many youngsters are for the workforce.

She said one business she visited in her role as small business  ambassador for the Government was forced to send young staff on a letter-writing course so they could communicate with clients.

Brady also urged small businesses to take on staff: ‘There are 4.8m small and medium-sized enterprises in the UK. If every one of them hired one person, there would be no more unemployment.’

Addressing the conference, Education Secretary Michael Gove put English and Maths at the top of the agenda as Business Secretary Vince Cable conceded the UK faced ‘big, deep problems’ in terms of training and skills.

Gove said: ‘We need to ensure we eliminate illiteracy and innumeracy in Britain in the same way as developing nations know they need to secure clean drinking water and eliminate malaria if their children are to flourish, and in the same way as our forefathers more than a hundred years ago knew they had to eradicate polio and TB if children were to flourish.’

Longworth accused George Osborne of pulling off ‘a brilliant Houdini-like trick’ in talking tough on austerity but failing to deliver it.

The deficit has fallen from a record £157bn in 2009-10 to £115bn last year but the Chancellor is not expecting to deliver a surplus until 2019. The national debt is on course to top £1.5trillion – or £60,000 per household – in the coming years and will not start shrinking as a percentage of national income until 2016-17.

‘Contrary to popular opinion, we haven’t really seen austerity in the way, for example, it has been applied to many countries around the eurozone,’ said Longworth.

‘The next stage will require more belt tightening, possibly even real austerity in some quarters. Whoever is in government next will face very hard choices.’

Longworth accused successive governments of ducking the big decisions required to improve the country’s rail network, airport capacity and motorways.

‘On investment in infrastructure, the can has been well and truly kicked down the road,’ he said, as he called on businesses to loosen the purse strings.

Turning to the drive to rebalance the economy towards exports, Longworth said: ‘So far the national plan has failed.’

Cable added: ‘If we don’t broaden our horizons, we consign ourselves to the certain fate of becoming a marginal, bit-part player in the global economy.’ The BCC voiced concerns about the impact of the  Scottish referendum, an in/out vote on Britain’s membership of the European Union, and anti-business policies proposed by Labour leader Ed Miliband.

‘In our global race to create great, sustainable growth, Britain is barely off the starting blocks,’ said Longworth.

‘It may be obvious to us in this room why great growth is so important. But surprisingly there are many people out there who do not get it, do not subscribe to it, and do not think it is the most important thing for the UK.

‘The simple fact is that it is only through wealth creation that we can afford all of the things we want like education and the NHS. I have said it before and I cannot repeat it enough – achieving sustainable, great growth should be and must be the number one priority of any government, and our political class needs to be more economically literate and business orientated.’

Read more: This is Money