Opinion from Lord Digby Jones

Open for Business

Published Thursday 28 October, 2010

Time to reflect on two major announcements over the past few days. The public spending review of last week and the quarterly growth figures from this week. Above all else last week's statement put a big sign up over the UK that we are open for business with a stabilised economy whose management means business, putting the nation before political popularity. So the world will continue to lend us money at competitive rates which means we can still afford our mortgages and credit cards and car loans. The alternative does not bear thinking about: Greece is where we want to holiday, not live!

The public sector job losses are over four years not four days. Over half will be achieved by natural retirement and wastage. An increasingly active private sector will absorb the rest. But there will be something of a culture shock coming down the pipe for someone who has for some years done an administrative job in a local authority and now switches to doing a similar job for the local business down the road. Longer hours, probably less pay, save for your own pension, unpaid overtime when that rushed job has to get out of the door to get the wages paid.

Last week was a bit of good news for one part of the economy. There is a man or woman working on the line at the Jaguar plant in Birmingham who is fed up to the back teeth with a public sector wailing about no pay rises and possible redundancy, when he or she has jumped through every hoop over the past few years to keep the plant open. No pay rise? Pay cuts and short time working have been the norm. Why should the public sector not share the pain? He (or increasingly she) fails to understand why his tax should pay child benefit to people on a hundred grand a year. As she drags herself out of bed on a cold winter's morning and gets the kids off to the school before getting down to the Castle Bromwich plant she has become increasingly infuriated that her taxes pay for an enlarged family permanently on benefits down the road worth more than her family brings home. Last week changed all that.

But cuts never grew anything. Only business will get us out of this mess by trading this country out of its deficit. Only business will earn the money to pay the tax or pay the people who will pay the tax.   

For business, especially small business, to employ one more person it needs to believe that the economy is going in the right direction. This week's growth figures surprised everyone in a pleasant way. Construction doing better than expected ; exporting manufacturers really doing the business. Making money... paying tax... employing more people.

So now we need government action to maintain this good news. Less, not more regulation. Keep building that infrastructure. Produce more and better skilled people.

None of this is rocket science. All of it gives grounds for cautious optimism.

Yes... last week and this week might just prove to be the end of the beginning.