Comprehensive Spending Review: reactions from the business world

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

 

 

We use cookies to create the most secure and effective website possible for our customers. Full details can be found here