A new age of austerity: The entrepreneurs' reaction to the CSR

There are a number of points from the Comprehensive Spending Review that are causing a stir among entrepreneurs. The increased investment in apprenticeship schemes is proving popular, while the VAT rise next year is a real cause for concern. The axe is poised to fall on the QUANGOs, usually a real bugbear among business owners, but you only know what you've got when it's gone: schemes like Train To Gain will be missed. Overall, however, the response has been positive. Most entrepreneurs unequivocally state: we are ready to get our hands dirty to get the UK economy back on track.

Here's a round-up of the comments:


David Hathiramani, co-founder of online tailors A Suit That Fits.com:

"Unfortunately, the government is reducing the number of QUANGOs - including one called Train to Gain. However, they are introducing more apprenticeship schemes. We have had some fantastic employees who have come to us through the apprenticeship system so it's great to see them encouraging this.

"With the public sector employment cuts, there will be less people earning and, in the short term, fewer people employed. This will mean that we may find it tougher to generate new business. However, the majority of our customers come to us through great word of mouth or by re-ordering and we hope that this will continue."


Dominic Monkhouse, UK managing director of managed hosting firm PEER 1:

"The rise in VAT in the new year will be a cost many SMBs that sell directly to consumers will struggle to absorb. There is a clear need to cut the deficit but I think the methodology could cause irreparable damage to the small business and entrepreneurial sectors.

"With the announcement of nearly 500,000 job cuts in the public sector, small businesses need the support, confidence and investment to take on this extra level of unemployment. Ultimately supporting the private sector will help to minimise the issues surrounding the public sector cuts.

"Technology based SMBs will, however, benefit from the £530m put in place for superfast broadband pilots, and I would like to think the investment into adult apprenticeships could unlock a new workforce that could support the economy. I do fear however this money would be better served invested into the entrepreneurial and small business sector to see real growth and development in this floundering economy."


Brad Burton, managing director of breakfast networking group 4Networking:

"There were some tough decisions to be made, but somebody had to make them. We had no plan B. George Osborne's policies on benefits are fair - they ought to be available as a safety net and not as a way of life.

"I am pleased about the bank levy and looking forward to picking the bones out of it on Tuesday. Big business has got us into this mess, now it's up to the small businesses to get us out."


Katie Hopkins, former Apprentice contestant and business consultant:

"The great thing about the Comprehensive Spending Review is that, unlike many politicians themselves, it does exactly what it says it is going to do. We are going to cut and tax our way to just over £80bn worth of damage limitation. And somehow in the collective body that is the Great British Public - we know it is the right thing to do.

"Unfortunately, just like the NIMBYism of the eighties, we would prefer if it didn't happen in our own back yard. If we are young we agree that pensions should be later, child benefits should be cut and the welfare state knocked back into place. If we are middle-aged, we have lost child benefits when we least expected it. One thing is for sure, if we are old - you had better not touch my bus pass."


Leon Heywood, MD of Vulpine Events and organiser of the E2 Live Expo

"The coalition has announced some of the most severe spending cuts for a generation. While we all understand that cutting waste is necessary and that there is little need to pay the head of a quango a six-figure salary, we need to understand how the government is going to nurture the private sector and especially the SMEs. We all know that lending is nonexistent, and that the continued rhetoric from the state about getting the banks back on side is nothing more than that, rhetoric.

"So if it is down to the private sector to fill the public sector employment deficit, it cannot also be left to the SME sector to nurture its own growth. There must be continued support and REAL support from the state, there needs to be access to credit, access to advice and the ability to work with the state when it comes to regulations. We all understand that this is a new government that they have a myriad of problems inherited from the previous government, including the biggest post war budget deficits. But they must also realise they have also inherited one of the world's most innovative and energetic small business sectors. The coalition are now at a cross roads, investing in the SME sector is a hard choice but one they must risk.

"Cutting away the dead wood is great, but if we continue to cut and forget to nurture, instead of green shoots of recovery, we will be left with little more than a stump. The UK now has a chance to show the world how to nurture innovation, we can only do this if the coalition works with the SMEs, not just the heads of high profile PLCs, to ensure that we are opening doors, not closing them, on our wonderfully innovative entrepreneurs."


Roger Taylor, managing director of financial advisors Cambrian Associates

"While they've announced how much is going to be taken from each governmental department, it's up to each department to decide where those cuts will apply, so there's still a great deal to be determined.

"Nobody doubts that it's important that we get out of the hole we're in, but this year, the amount we'll spend on debt repayments is more than is being spent on education, so the sooner we pay off the debt the better.

"We would like to hear a commitment from the Chancellor that if they succeed in reducing borrowing by £83b then there will be a success dividend in the form of increased public spending. It is expected that up to half a million public sector jobs will disappear. PWC has estimated that this figure will actually be closer to a million. So an extra million people taking benefits, not paying tax and not spending, is bad news. The Chancellor is relying upon the private sector to pick up the slack."

If he succeeds, and the business community is optimistic, then he will have done away with £83b worth of debt and moved employment away from the private sector, which can only be a good thing. But if he fails, we'll have a double dip recession. This is his gamble. But the stockmarkets seem to think it will be ok.

For the corporate viewpoint on the CSR, click here

Or, for a full list of all the proposed cuts, check out our Comprehesive Soending Review round-up

Picture: Source


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