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Comprehensive Spending Review

Author: Ian Sykes
20 October 2010

"The South East has pockets of high dependency on the public sector; for instance, it employs 43% of workers in the Hastings area. The fortunes of the region's economy will largely be dependent upon where the cuts fall and the ability of the private sector to take up the slack caused by the reduction in public sector job.

From an owner-managed business perspective, it is concerning that HM Revenue & Customs is to have its budget cut by 15%, specifically in terms of whether this will have a direct impact on the Business Payment Support Service or Time-to-Pay scheme. If there are to be fewer staff, this will inevitably impact how many applications can be vetted at any one time, potentially creating a queue of troubled businesses that could fail before they can even join the scheme.

It will also be interesting to see how the £400m cut to administration cofsts at the Business, Innovations & Skills department impacts on other frontline business support services as more details emerge over the coming weeks.

Our biggest concern is how these cuts will impact on consumer and business confidence. Consumer confidence had fallen to a 12-month low in September, according to research by Nationwide earlier this month, and could drop further in the face of public sector job losses. Most small firms are reporting static revenues and employment numbers, with the most recent Federation of Small Businesses' "Voice of Small Business" index highlighting muted confidence and cautious expectations around the economic recovery.

We will see, over the coming weeks, whether some certainty around what these cuts now are brings a boost to confidence, or whether fears around job security and the slow climb out of recession continue to hamper business growth expectations and consumer spending."

For further information, please contact Ian Sykes using the online form below.