‘Do more for poor’ says ex CBI chief Lambert
FORMER CBI director-general Sir Richard Lambert has urged the Government to consider raising some benefits or cutting VAT as a way of kickstarting the UK economy.
Sir Richard said it was time to take the advice of the International Monetary Fund and look for ways to put money into the hands of poorer people who are more likely to spend and therefore create demand.
In a speech at the University of York, the Cheshire-born former editor of the Financial Times argued that the widening gulf between rich and poor was having a damaging effect economically, socially and politically on the UK.
Sir Richard pointed to evidence that concentrating wealth in fewer hands has reduced consumption in economies such as the UK’s and argued the experience of countries such as India showed wealth does not “trickle down” to the poor.
“The poor are more heavily dependent on public services than the rich, and so are more vulnerable in times of government austerity. And since the level of economic activity in the UK, according to the Bank of England, is likely to remain subdued for another couple of years to come, it is now time to try the IMF’s medicine,” he said.
“You could do this in different ways, such as by stopping the cuts in benefits, and maybe going for increases in selected areas, or by cutting VAT which hits those on low incomes the hardest. You could also increase public spending on activities which generate economic activity and lots of jobs, like construction.
“And you could finance all this by removing incentives for the rich to save, by cutting tax breaks on pension payments and tax efficient savings schemes, and/or by permitting a time-limited relaxation of fiscal policy.”
Sir Richard also set out a series of longer term policies to reduce the gap between rich and poorer including reforms to the education system, ending the corporate culture of short-termism and changes to taxes.
And he criticised universities for not doing enough to give opportunities to students from disadvantaged backgrounds.
