Business reacts to £6bn spending cut plans

25 May 2010

The new Government has set out details of the public spending cuts it intends to implement in the current financial year, in order to begin reducing the budget deficit.

Cuts to the tune of £6.2 billion will be made across Government departments, with the Department for Business, Innovation and Skills facing the most severe budget reduction of £836 million. There will also be a freeze on new civil service recruitment.

Child Trust Funds are to be phased out, with initial payments into the funds being significantly reduced with effect from 1 August, accompanied by a scrapping of top-ups for seven year olds. All payments into the funds, included additional payments for disabled children, will be stopped by 1 January 2011.

However, spending on schools, the Sure Start scheme and education for 16-19 year olds will be protected.

Chancellor George Osborne said, 'This is the first time the Government has announced difficult decisions on spending, it will not be the last'.

Business groups have given mixed reactions to the plans, with the Institute of Directors describing the cuts as 'only the beginning'.

Meanwhile, the British Chambers of Commerce welcomed the coalition's 'early and specific action' to reduce the deficit, but warned that it would be scrutinising the details of the cuts to ensure that they did not jeopardise support for business growth.

The Forum of Private Business described the cuts as 'regrettable' and called on the Government to follow the example set by smaller businesses when working with reduced budgets.