Spending cuts

The Chancellor of the Exchequer, George Osborne

The Chancellor of the Exchequer, George Osborne has outlined a further £11.5bn of spending cuts.

Due to take place in the election year of 2015/16, this will be the sixth year of reductions since the coalition took power in May 2010, though Mr Osborne also outlined capital infrastructure spending for the coming five years.

Christian Spence, Head of Business Intelligence at Greater Manchester Chamber of Commerce, said: "Whilst there are some things that businesses will welcome in today’s statement, the truth is most of the detail is more of what we have seen since the coalition came to power.

Restraint on public sector pay levels has the potential to cause some weakening of local demand though many in the private sector will be pleased to note that the pain of constrained salaries is being felt evenly. Additional support to UKTI and the Foreign Office to help businesses seek new markets and export for the first time, as well as investigate regulatory improvements is welcome and vital if we are to achieve an improvement in our trade position.

"Maintenance of school and science budgets may help to improve the skills position in our labour market, but many of the issues below school leaving age are to do with the attitude of pupils and teachers as much as capital investment requirements. Funding for additional schools, University Technical Colleges and apprenticeships will undoubtedly support the skills system with greater competition between institutions driving up quality.

"Government procurement improvements are important beyond just saving money for central government but also for improving access to government contracts for SMEs across the UK. The single local pot suggested by Heseltine is much smaller than he anticipated and requiring LEPs to bid for this £2bn per year may direct the recent investment into these bodies to be spent simply acquiring the expertise to administrate the bid process rather than driving enterprise.

"Much of the detail the Chamber is looking for from this statement will be included in tomorrow’s infrastructure announcements, and we hope that there will, at last, be a recognition that the current approach of placing the overwhelming majority of investment into London and the South East is misguided. We have concerns that the only specific announcement today was about scoping Crossrail 2, essentially preparing for another multi-billion pound project in our capital city. The regions are poised ready to deliver the growth that this government yearns for, but they must provide us with the tools to achieve it."

Details of exactly which schemes will be taken forward will be announced by Danny Alexander, Chief Secretary to the Treasury, tomorrow in Investing in Britain’s Future. The upgrade of the A14 from Felixstowe and the Mersey Gateway bridge between Runcorn and Widnes are expected to be included, as well as the go-ahead for High Speed 2.

The Chancellor said his plans focused around three principles: reform, growth and fairness.