Here's the round-up of what the main business
organisations and spokespeople think of the Comprehensive Spending
Review, and its implications for small business.
Jane Bennett, head of campaigns at the Forum of Private
Business:
"Some of today's announcements on taxation were welcome, but for
too long large companies have been able to exploit tax loopholes -
such as Channel Islands VAT 'low value consignment relief' - and
otherwise avoid paying tax at the expense of small firms. This
simply has to stop if SME growth and job creation is to drive
sustained economic recovery. The Government should clarify that, in
addition to tackling tax evasion, clamping down on tax avoidance by
large companies as well as financial institutions will be in its
sights.
"At the very least we want to see the lower rate of corporation
tax reduced at the same level as the big business rate. But even if
combined with a shake up of other cost barriers such as red tape
and late payment this will not be enough to significantly stimulate
small business growth and create the private sector jobs required
following the 490,000 lost in the public sector. Bolder, more
radical policies on tax and other barriers to small businesses must
be introduced alongside these efficiency measures."
John Walker, national chairman of the Federation of Small
Businesses:
"We all know we are living in an age of austerity and that these
cuts will affect us all. But our members understand that to reduce
the public sector deficit, these cuts had to be made. The small
business community continues to have a vital part to play in
driving a credible recovery and taking on new members of staff to
help tackle unemployment, so it is now vital the government puts a
small business programme for growth into action immediately.
"As our research shows, small firms are at tipping point and
lack the confidence to take on the 500,000 people that will be made
redundant as a result of these cuts. So it is up to the government
to incentivise the small business community - through extending the
National Insurance Contribution holiday to existing firms and
cutting VAT to 5% in the construction sector - to promote growth
and help small firms take on new staff."
Richard Lambert, director-general of the Confederation of
British Industry:
"The Chancellor has got the strategic direction of this spending
review right. He has stayed the course outlined in the June Budget,
with economic growth a top priority. We particularly welcome the
extra £2bn a year on capital spending, and the focus on areas that
support growth. These include transport and other infrastructure,
education and science, and the low-carbon economy.
"The spending cuts, though painful, are essential to balance the
UK's books and build its future prosperity. Now the Government must
deliver its promised savings by re-engineering public
services."
David Frost, director general of the British Chambers of
Commerce:
"Business has been clear: the deficit must be tackled, no matter
what. The spending review does the job of setting out how this will
be done. Overall, the Spending Review could have been worse for
business. While we were disappointed that the Government succumbed
to political ring-fencing of some spending areas, cuts to
productive infrastructure investment were not as bad as many had
feared.
"Now that the Spending Review is complete, our message to
government is that it is now time for a clear strategy for growth -
which in turn will give companies, and especially small and
medium-sized enterprises, the confidence to invest. Perceptions
matter. Businesses and government must work together to deliver a
real year for growth in 2011. This is the only way that the private
sector will be able to take up the slack."
On training and education: "Employers
understand that Government subsidies for in-work training will be
cut back, and accepts the tough decision to axe Train to Gain.
However, they say unequivocally that remaining funding must be
focused on providing people with the skills needed to get into
work. Too many businesses still tell me that job candidates lack
the basic skills needed to make them employable. Until we sort
this, Britain's companies will continue to highlight skills
shortages as a barrier to growth."
On business support: "There are still a number
of unanswered questions around the business budget - notably around
support for exporters and schemes that help both new and existing
businesses to grow. Further clarity is still required."
On support for exports: "It is disappointing
that the budget for export promotion has taken such a substantial
hit when politicians say they want a rebalanced UK economy. This
should be one of the Government's top investment priorities, yet
the 25% cut in funding for UKTI programmes that deliver direct
export support to businesses on the ground is not good news.
British companies will be left in a weaker position compared to
their competitors from other major trading nations. It is also
imperative that more resources are dedicated to promoting British
business overseas through embassies and representations - as the
Foreign Secretary suggested last week."
Miles Templeman, director-general of the Institute of
Directors:
"We strongly support the government's determination to stick to
its overall plan of reducing public spending quickly. The only way
we get a private sector recovery underway is through macro-economic
stability, and this will only be achieved with sustainable public
finances. Opponents of today's spending reductions need to wake up
to that fact. The alternative is a tax hike which would damage the
economy in both the short and long term.
"If today's spending review is to succeed the government will
have to deliver fundamental root and branch reform which transforms
the productivity of the public sector. We need to remember that if
the public sector had matched the private sector's productivity
growth over the last decade, the deficit would now be £60bn less
than it is. Less can be more."
Glen Babcock, advisory partner at PwC:
"As we predicted, these cuts will present tough challenges for
the private sector. Those who will suffer most will be the small
businesses that rely on public sector contracts as their key
revenue source, but the impacts will be felt by all businesses as
they prepare for a tougher climate for public procurement. There
will now be even more sensitivity on new projects and yet more
pressure to renegotiate existing contracts. Therefore, it is key
that businesses continue to look at their forecasts and communicate
with their key stakeholders as we await the detail from the
individual government department business plans in November.
"On the positive side, this review offers opportunities for
private sector companies to work with the public sector in new and
innovative ways. This is the chance for the private sector to share
its wealth of experience and skills in back office rationalisation
and outsourcing to help the public sector achieve savings and
improve services."
Andy Tait, executive director at specialist business finance
provider Bibby Financial Services:
"George Osborne and Vince Cable's discussion on the issue of
access to finance for small businesses in August, and the
subsequent Green Paper, provided a shining beacon of hope for firms
struggling with accessing finance. Yet we now see Osborne cutting
the budget for the Department for Business, Innovation and Skills
by 7.1%, at a time when investment in private sector businesses is
imperative for economic growth. Hopefully the issues raised within
the paper will still be addressed rather than being subjected to
Osborne's next round of cuts. […]
"The logic behind the proposal to invest £1bn into a green
investment bank is sound - placing Britain at the top of the world
stage in the green sector and generating economic growth through
green investment - yet in a climate of frugality every pound of
additional expenditure should be accounted for, and we can't help
but feel this money could have been better spent elsewhere such as
providing support for small and medium-sized businesses. […]
"The timescale of the review means that many of the cuts will
not be immediate, giving small businesses time to prepare for the
potential impact on their supply chains. These businesses will also
have the opportunity to pitch for outsourced projects in the public
sector, providing an additional revenue stream for private sector
firms."
Read our
round-up of the Comprehensive Spending Review
Find out
what entrepreneurs are saying about the cuts