From the TUC

The cuts are hitting business confidence and turnover

14 Mar 2011, by in Economics, Labour market

Yesterday’s Times (£) reports on concerning new survey evidence from the Institute of Chartered Accountants: 20 per cent of employers they surveyed reported that spending cuts have already affected their turnover and 45 per cent believe that turnover will face negative impacts from cuts over the next 12 months. As a result of these fears 47 per cent of those reporting turnover reductions have already reduced staff. The Chief Executive of the ICAEW, Michael Izza, said:

What has been forgotten, though, is the extent to which the private sector is a supplier to the public sector. Whether it is services, materials or equipment firms of all sizes and from all sectors have had work either directly or indirectly from Government organisations…These relationships are either under threat or have already been terminated.

The affects of cuts for the private sector may be an impact that the Government and much of the business lobby is conveniently forgetting to mention, but it’s not an issue that the TUC has been unaware of.

Last September, we highlighted that 38p in the pound of public spending goes directly to private sector firms – and with 25p of spending going on pay it will also be private business who suffer as public servants face wage freezes and real terms pay cuts. Government may choose to believe that the scale and speed of its spending reduction programme can be offset by private sector job creation, but the evidence suggests that both public and private sector organisations are set to feel the pain over 2011.

5 Responses to The cuts are hitting business confidence and turnover

  1. Tacitus
    Mar 14th 2011, 6:48 pm

    Without a doubt the Tories and their ‘austerity measures’ are having a profound effect on the private sector. I work in the Welfare to Work sector and today alone I heard of 700 redundancies becaue the government have decided to close all Pathways to Work and NDDP programmes. The new scheme will open on 1st April and because it will be completely new, staff have been advised they will not be subject to TUPE arrangements. Thir thanks for helping thousands of people back into work? Redundancy. Meanwhile, the bosses within these organisations continue to draw huge salaries. Emma Harrison, founder of A4e and buddy to Citizen Dave, the people’s toff is reputed to be worth £40m.

    I suppose that will give a lot of comfort to those workers consigned to the dole queue.

  2. Strategist
    Mar 15th 2011, 1:18 am

    The Chief Executive of the ICAEW, Michael Izza, said: “What has been forgotten, though, is the extent to which the private sector is a supplier to the private sector.” I think he means public sector. It’s a bit confusing as it is.

  3. Nicola Smith

    Nicola Smith
    Mar 15th 2011, 9:29 am

    Strategist – apologies, a typo as a result of speed typing. Fixed now.

    Tacticus – thanks for your comment – very concerning.

  4. Tax Research UK » The ICAEW wakes up and realises the pubic and private sector are connected
    Mar 15th 2011, 9:34 am

    […] Nicola Smith at the TUC noted a report in the Times yesterday (I usually ignore the Times – it’s not worth the payment, unlike the FT) which referred to survey findings by the Institute of Chartered Accountants in England and Wales. These reported: […]

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