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Business groups react to Spending Review announcements

Taxation reform worries remain high on agenda while outsourcing companies prepare for an onslaught - of new business from the public sector, that is

In the hours after the Comprehensive Spending Review was broadcast, the business, accountancy and financial consulting industries have been pumping out their reaction to the bits of the speech that affect their members – and so far, it appears that there is little resistance to what was unveiled.

The Forum of Private Business (FPB) hailed “positive developments” on export and inward investment from oversees, and was happy that science funding had been ringfenced. “High tech industries – and the people that work in them – are extremely important for a strong economy,” said Jane Bennett, FPB’s head of campaigns. It welcomed the deciison to cut HM Revenue & Customs’s budget by 15 percent as a route to enforcing eficiency through implementation of new technologies and said it thought the budget reduction would smooth the way for reform of the UK’s tax system.

But it added that “small business growth and job creation driving a private sector led recovery will also depend on further removing SMEs from taxation and reducing other costs altogether, wherever possible,” said FPB’s Bennett. “It is important that these spending cuts and efficiency measures do not exist in isolation, but are joined by further bold policies addressing issues such as red tape reform and late payment.”

The Chartered Institute of Internal Auditors said it was concerned government departments might, in the urgency to find most cost savings and amid losing staff, lose sight of emerging risk as business models changed.

The institute’s chief executive Ian Peters warned that sweeping spending cuts would “bring about change and new risks of many types for many organisations within the public sector, relating to staff changes, new processes, different suppliers, changes to data management as well as financial changes”. He called on boards, audit committees and managers to “draw maximum value from the internal audit profession to ensure risk management is monitored, reviewed and improved across the whole organisation”.

Meanwhile, the National Outsourcing Association wasted no time in plugging its industry and was positively smacking its lips at the prospect of a wave of large outsourcing contracts coming from understaffed government departments.

NAO chief executive Martyn Hart pointed at what he saw as a “real opportunity for job creation in the private sector as a direct result” of the review. “The chancellor’s decision to cut the Whitehall administrative budget by as much as a third is a key exampl…by cutting the budget to back-office functions, such as accounts and data-preparation by £6 billion, there could be a real opportunity for Business Process Outsourcing (BPO) suppliers in the private sector to benefit,” he said.

The graphic above, from HM Treasury, outlines which departments took the biggest and smallest hits.

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