As the outspoken Director-General of the CBI comes to the end of his tenure, he attacks the UK’s "decrepit" planning system, red tape, education and European regulation. Edward Simpkins meets Sir Digby Jones.

Previously little known outside the Midlands, where he worked as a finance consultant, Jones has reinvented the CBI and become a quasi-celebrity since he became Director-General of the business lobby group in January 2000.

He has positioned the CBI as a combative but well-informed voice of business whose reputation has never been higher.

Courted by every politician on the make – as well as those who have made it, from the Prime Minister and Chancellor down – the CBI makes sure that the case for UK business is made to all who matter.

"I was just telling a load of our CBI troops that 2005 was a great year for the organisation," Jones says. "We had record membership, we opened up in Beijing, and we have become the voice for business – through not just my efforts but the efforts of a hell of a lot of different people who have made a contribution."

Planning blight
But despite all his achievements in putting business issues firmly on the agenda and having a government that claims to be a friend of enterprise, Jones is in little doubt about whether the environment for business has got better or worse during his time in office.

"Oh worse!" he says. And the main culprit it seems is something close to every surveyor’s heart – the planning system.

"The planning regime in this country is decrepit," he says. "It was created in 1947 for a different society with different needs in a different world, and it is now trying to deal with the fourth-largest economy on Earth trying to beat China.

"That hasn’t changed in six years," he continues. "In fact, it has got worse. It is expensive, it is unpredictable, it is slow, and the quality is poor – in a world where China wants your lunch and India wants your dinner. It is a huge inhibitor to productivity enhancement in this country."

Jones argues that the planning system is failing to deliver the infrastructure that the UK needs in order to compete in the new globalised economy. "It is just completely ill equipped," he says.

"Whether it is building a port, getting a runway at an airport, building a bypass or doing something with the trains, the planning regime is serving Britain very badly, and there is seemingly very little political will to change it."

He recognises that reforming the system would have required some tough choices but blames the government for having squandered the huge amount of political capital it was gifted in 1997 by simply avoiding the issue.

"For a government that had a huge majority in the House of Commons and no effective opposition to have left this sort of issue is not acceptable," he says.

Bound up
The other big issue that Jones feels has worsened over the past six years is the amount of regulation to which businesses are now subject.

"Red tape and regulation have got worse," he says. "At last the government has woken up to it, and I’m very pleased with the initiatives that the government has finally brought in to reduce it; but the jury is still out on whether it will be effective."

Jones says that whatever noises the government may be making about deregulation it is up to civil servants to implement the measures – and he expects that to be problematic.

"Turkeys don’t vote for Christmas," he says in his typically blunt style. "If you’ve got civil servants who are the promoters and implementers of health and safety regulation or environmental legislation then they are hardly likely to do themselves out of a job."

He says that the root of the issue is the rise of the compensation culture, whereby people can sue at the drop of a hat and insurers settle immediately just to make it go away.

"It creates the kind of compensation culture where risk doesn’t exist," says Jones. "It is always someone else’s fault, and if you try to implement health and safety legislation in that kind of culture then you have big trouble."

Pensions crisis
The big new issues on the CBI’s agenda are pensions and energy.

The causes of the pensions crisis are complex and include the correction in the stock market after the burst of the 'dot.com' bubble, the pension contribution holidays that companies awarded themselves during the good years and various pieces of legislation by both this and previous governments.

"The enormous cost to UK business of dealing with their obligations under final-salary pension schemes is absolutely debilitating to the ability of businesses to succeed," says Jones.

He observes that most businesses are cooperating constructively with their workforces and their union representatives, and that in general employees understand that they are likely to have to work longer and pay more into their pensions.

However, Jones is angry that the government is undermining all this constructive effort and has done little to address the problem – even exacerbating it through its failure to provide strong leadership in its treatment of public sector employees.

He says that the government has caved in to excessive demands from the public sector unions:

"What do businesses get by way of example from the government as an employer?" he asks. "They get surrender – at the first whiff of gunshot from an irresponsible and selfish trade union the government frankly just keeled over and gave in.

"It is an absolute disgrace," he continues. "How on earth can you run British Airways, BT, BAE Systems – all the companies that used to be nationalised industries which have been huge successes in the private sector and become global champion businesses?

"How on earth can you reform your pension system when staff walk in and say ‘Well, my mates in the public sector union say their employer has just given in – so why don’t you?’ "

The nuclear option
The cost of energy and security of supply have also become big issues for business, Jones says, declaring that he is glad that the UK government is at last opening up a debate on the subject of developing a new generation of nuclear power stations.

"How else are we going to create the energy that Britain needs without throwing huge amounts of carbon into the air?" he says.

"And by the way, anybody from Greenpeace who tells you that you can pull it off by covering the whole of the UK in windmills just ought to get real."

However, he points out that while nuclear power is seductive, in that it provides a solution to many of the issues relating to the reduction of carbon emissions and security of supply, the cost of disposal of radioactive waste is very high and has not yet been properly costed.

The European debate
Jones says that in 2000, when he took over as Director-General, the single European currency was the focus of much debate.

Six years on and Europe is still a hot topic, but rather than arguing over whether we should be in or out of the euro, Jones says that business is now much more focused on making international markets work and fighting against tying the hands of British businesses with excess regulation as they compete with their surging Chinese and Indian rivals.

"We’ve got the European Union with 450m people living in peace," says Jones, "and we’ve got the creation of the single market, which Brits love because it means that you can get out and sell your goods and services in a tariff-free environment to people that are getting richer, which is brilliant."

But Jones says that Europe is a source of threats as well as opportunities. "Just before Christmas, for example, I really did think something serious had to happen," he says.

"Back in December we saw cabinet ministers, civil servants, business lobbyists, Uncle Tom Cobley and all from Britain sitting in Brussels and virtually begging the EU not to introduce the Working Time Directive – making the case that if you want to, and only if you want to, you should be allowed to work more than 48 hours a week as long as it is not dangerous."

He says that instead of spending vast amounts of time and effort persuading a load of unelected bureaucrats in Brussels that we should be allowed to work for as long as we want to, Europe and the UK should be focusing on how to compete more effectively internationally.

"China and India must think it’s their birthday," he says. "Someone has got their priorities out of order here.

"The energy of the government, Brussels and all the lobbyists should be going into making sure that we are innovative, that we’ve got new systems and ways of working, that we do more research and development, and that the kids can read, write and count when they come out of school."

The three Rs
While Jones proclaims himself pleased with the government’s initiatives on education and training, he says that many of his members are obliged to give school-leavers remedial training in reading, writing and arithmetic.

And he finds it a bit rich that Chancellor Gordon Brown should be challenging business to raise its game and improve productivity at a time when the government is pouring funds into health and education with little improvement in productivity.

"I would just suggest that the Chancellor starts looking to his own before he starts telling global champion businesses in global sectors to enhance their productivity," Jones says.

"If you look at two big inhibitors to productivity enhancement in this country then you’ve got to look at the planning system and the delivery of a pool of skilled labour. And frankly the government has done nothing on either of these."

Bearing the brunt
As regards the forthcoming Budget, Jones is adamant that there must be no further burden placed on businesses. "There should be no more increases in business taxation," he says.

"Businesses pay the price of increased public expenditure, and we are at our wits end. If we have any more increases in taxation you are going to see companies relocating out of the country."

Jones refuses to be drawn on the prospect of Gordon Brown moving next door to become Prime Minister and what this would mean for business: "I don’t do that question," he says.

However, he fears that with all three political parties virtually certain to have different leaders at the next election than at the last, business could become a political football as they all scramble to occupy the crowded centre ground of British politics.

"All I would do is to try to caution them not to let business get caught in the crossfire in the political fighting that is going to go on," Jones says. "We are a very easy target, and in so many areas we are the one that gets a kicking."

He says that the view that businesses rip off their customers, shareholders and employees is believed by some people. "At some point, someone in the political process is going to start aiming for the middle ground and saying ‘right, let’s give business a kicking’.

"But they had better understand that if they do that then, in this globalised economy, businesses will again be tempted to move abroad."

The overall thrust of what Jones is saying is that unless British and European policy-makers really start focusing on reducing the costs of doing business then we are all at risk of losing out to the emerging economies of Asia.

"I haven’t got a single business in a single sector that hasn’t been saying to me over the past six months that the cost of doing business in Britain has increased enormously in a very short period of time," he says.

And the cost of occupying property is a key contributor to this increase in costs. "In terms of the taxes you pay on property, the cost of maintaining it, the cost of heating and lighting it, the whole establishment cost has increase enormously, and very rapidly," says Jones.

But how the UK and Europe cope with higher costs and the rise of countries like China and India are problems for Jones’s successor as Director-General. Looking back over the past six years he says that, as well as making the CBI an effective lobbying outfit in the UK, his great achievement is extending its reach to Brussels, Washington and Beijing.

But his personal high-point has been receiving a knighthood for his services to British industry. "I would by lying if I said that it wasn’t a wonderful personal thing to happen," Jones says.

"Every day of my life I wear these," he says, pointing to his union flag cuff links, "and I go around the world banging the drum for Britain. I am very grateful that the Queen wanted to recognise that."

And if he had his time in the post again, would he change anything? "This sounds trite but I can truly tell you that there is not one thing I wouldn’t do the same way again," he says. "And I really mean that."

This article appeared in RICS Business, March 2006.