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Breakfast with Frost
Digby Jones
Digby Jones, director general, CBI

Please note "BBC Breakfast with Frost" must be credited if any part of this transcript is used

DAVID FROST: Britain's business leaders are gathering in Manchester today for the annual conference of the CBI and it seems they're far from happy with some aspects of the Government's economic policy. Before Labour came to power Gordon Brown and his team set out to woo the business community and they did pretty well. But now some employers say he's loading them with too much tax and too much red tape. I'm joined now by the Director General of the CBI, himself, Digby Jones. Good morning Digby.

DIGBY JONES: Good morning.

DAVID FROST: Does that, too much tax, too much red tape, does that summarise what you're worried about?

DIGBY JONES: It does because we have these two jewels in the crown about British business environment and it gives us a competitive edge over so many other countries, and they're the two things that are under threat. In other areas, we can't shout so loudly about where we, we have good transport and skills and the health service and everything else, it's getting there but it's taking time. But those two are real competitive advantages and they're the two things which are under threat from this Government right now. Employment flexibility, the whole flexible labour market is so important to stay competitive in a fiercely competitive world, and business taxation is going up alarmingly - and the guy in the street doesn't think taxes are going up. But businesses, we're paying more tax than we've ever paid.

DAVID FROST: Well now, you quote this figure of 47 billion.


DAVID FROST: Now, but that's up to 2005 isn't it?

DIGBY JONES: Yeah, 47 billion more over a period, over a cycle, over seven years than in the seven years previously. But you see corporation tax has come down, in rate, but that's only 30 per cent of all business taxes. There's, there's 70 per cent of business taxes, we pay about 108 billion pounds a year in tax, British business does, and we're pleased that we can put more money into the health service and education - we've got to play our part in society - but what's important is you don't actually kill the goose that lays the golden eggs because then there aren't the profits, that means at the end of the day there won't be the schools and hospitals. It's all part of the same thing.

DAVID FROST: And the two, the most recent thing is National Insurance, that one per cent is going to cost eight billion.

DIGBY JONES: Yeah, and you see people say, I hear lots of people say, oh but they treated everybody fairly, they put a per cent up for employees, and a per cent up for employers. An employee only pays it if he earns money. An employer pays it if he employees someone - even if he's losing money. So it's actually a tax on employment. Now, where you've got a skill shortages, and you've got, we've got full employment, nearly, then fair enough if people are earning money, pay it. Employers pay it. I'm worried about the people at the fringe of the labour market, ex-offenders, working mums, young people. Those sorts of people, we've got to get them into the world of work. I want business to be an agent for social inclusion. We can't have it that those big employers, retailers and leisure, we've got to encourage them to get them into work.

DAVID FROST: All right. Gordon Brown comes to your conference this week.

DIGBY JONES: Yeah tomorrow.

DAVID FROST: And he says Digby, come over here for a minute, what would you like me to do? Specifically, what would you like me to do Digby?


DAVID FROST: And you say, well Gordon.

DIGBY JONES: First and foremost, above all else, do not hurt the one thing that you've delivered for business and for the country more than anything, which is macro economic stability. Low interest rates, low inflation, low unemployment and some good sustainable growth. There's not an economy on earth that's delivering it like Britain right now. And he, he's done that, together with his colleagues, together with Sir Edward George, and I have to say business would say well done. Now nothing you do should harm that and that means don't give in to firefighters. It means don't tinker with the things that can hurt it. And if we have one more piece of employment legislation which gives trade unions even more ability to stay rigid in their flex, in the labour market, not flexible; if we have any more business taxation than we've got right now, Gordon Brown, you'll start hurting the very thing that you've delivered - and that is the message to him.

DAVID FROST: Right. And you mentioned the firefighters. So you were relieved that the Government didn't rubber stamp the so-called agreement? You were very relieved.

DIGBY JONES: I am relieved that they don't rubber stamp an agreement gives them more money, other than four per cent, without modernisation. We have to get flexible working into public services if we're going to deliver more value for every tax pound everybody in Britain pays. And you know there's a lot of quality trade unionists in Britain, working in lots of my members, who've gone through every hoop, who've changed every trading and working practice to be in work. And they didn't get extra money for it. They did it because it was the way to get a competitive Britain. So we, firefighters are no different to them.

DAVID FROST: Right. So if they got 16 per cent with absolutely convincing modernisation, would you say you could live, the economy could live with that?

DIGBY JONES: Over a three year period, 11 per cent - Bain said 11 per cent for two years of modernisation. If 16 took it to the three year deal, of modernisation, and they delivered, then I don't see what is wrong with that as long as the modernisation happened and as long as it wasn't just a way, a fudge, an opaque way of getting them more money. They, they get four per cent as more money, every single penny after that has to be paid for by modernising the fire service. And at the end of the day, the taxpayer wants that. They want it in the health service, they want it in education, they want it in the prison service. There's nothing wrong with wresting more money but if all we're going to have is all the old-fashioned way of putting the employee first, and not the consumer, then at the end of the day we'll pay with higher inflation, high unemployment, and actually the tax payer will think what did I get for my money.

DAVID FROST: Digby, thank you very much.

DIGBY JONES: My pleasure.

DAVID FROST: Always good to see you. Digby Jones there.


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