Due to various volcano and Cleggmania-related news, something that escaped my notice this morning was this letter in the FT from Sir John Rose, the CEO of Rolls Royce.
He is a member of Gordon Brown's business council, yet he seems very much at odds with Labour's economic approach - the latest of many leading businessmen to speak out in this way. Not only is he critical of the Government’s claim that cutting waste this year will endanger the recovery or threaten frontline services, but his view that the country must get wealth creation right echoes Conservative concerns at Labour's planned national insurance rise.
Here's what he had to say:
Sir,
Articles last week by Martin Wolf, Max Hastings and Luke Johnson had a common theme. That we must be realistic about the state of the UK economy, that a rebalancing is necessary and that there will be no quick fix to restoring public finances to some sort of sustainable balance. I agree.
To draw an analogy, if the UK was a business, the shareholders would be asking serious questions. The current model appears to be that we can grow our business by growing overhead, by applying better terms and conditions to support functions than to wealth creators, and by paying dividends out of borrowings not all of which are recognised on the balance sheet.
We are also asked to believe that service levels will inevitably suffer if the costs of delivery are reduced. This need not be the case. As any business will confirm, service levels will reflect prioritisation, proper definition of desired outcomes, concentration on reducing waste and investment in productivity.
In the UK, the debate now needs to focus on how to make the pie bigger, rather than how it is sliced. We must concentrate on creating an environment where the enablers of wealth creation, which government can influence, are world class. In defining the right policies, there are many examples against which we can assess ourselves, but we must measure honestly and then take the necessary actions to be competitive. Importantly, there must be the will to apply policy consistently and over the long term.
If we get wealth creation right, distribution and consumption will follow. It cannot be done in the reverse order.
