>> Why not take a look at some of Anita’s other exclusive columns for FMWF or visit our Ask An Expert section or our Business Tips pages for a host of useful advice and information from leaders in their fields.
Anita Brook is founder of Accounts Assist a growing firm of Chartered Accountants. She’s been advising small business, sole traders and consultants for 12 years.
HOW WILL THE CUTS AFFECT YOUR BUSINESS?
We all knew the cuts were coming, and now they have, it might seem like a minefield working out how they will actually change your life.
In the main it’s the public sector that’s been hit hardest, with 490,000 jobs likely to be lost. But the cuts will also be felt by the private sector, so here’s an overview of how the cuts (and in some cases funding) may pinch (or please) the business community.
Travel: With a 3% rise above inflation for regulated rail fares, from 2012 for three years, the UK’s commuters are going to feel the pinch. News this week states that from 2011 many fares will raise by 5%, with some routes as much as 10%, so 2012’s additional rise will be all the more unwelcome. (read FMWF’s story here)
On the flip-side £30bn has been set aside for capital spending, including £500m for Tyne and Wear Metro and the Tees Valley bus network, the Crossrail project will also go ahead in London.
Training: One of the key areas of cuts is government quangos, which many feel is a positive move. This means that the Train to Gain programme is being axed, removing a way for employers and workers to get free basic training for their staff.
The University teaching budget is being cut by 40% and Further Education’s by 25%. This may or may not affect the quality of graduates leaving University in the future – as tuition fees increase, some of this shortfall could be covered, however these extra fees may put people off going to University in the first place, meaning less people educated to degree level in the job market.
On a positive note funding for a further 75,000 adult apprenticeships has been released. (Click here to read all the latest news and advice about Apprenticeships)
New business opportunities: The construction sector will be affected by public sector projects suffering. Social Housing funding has been cut by 60%, but the government hopes these changes will free up cash to build 150,000 new affordable homes.
Renewable industries should be relatively positive, while there has been a 20% cut to this sector overall, a further £200m has been released for wind power development, plus £1bn for the green investment bank.
More generally, the Government has pledged to invest £200m by 2014 in support of manufacturing and business development, focusing specifically on ‘high-growth’ businesses.
The export market will also be developed and the inward investment from overseas encouraged.
Pensions: We’ll all be working longer, men until they’re 66 from 2018 and women also to 66 by 2020. Public sector pensions have been reformed, with employees likely to contribute more.
The proposed changes to the state pension may also see employers having to stump up more cash. Small businesses have reacted badly to this week’s announcement which sees a vast national pension scheme forcing firms to pay an extra £3.2billion a year. (Read FMWF’s story Small firms’ outcry: Businesses with just two staff forced to fund new pension schemes here) Companies will be required to enrol their staff into a retirement fund from 2012.
The maximum savings award in pension credit to be frozen for four years.
Unpopular and frightening for many people, unfortunately these cuts are a necessary evil if the deficit is to be reduced.
Let’s just hope that UK business can survive these changes and come out the other end stronger, without sinking back into the dreaded double-dip recession.
Tags: Anita Brook, Business Advice, spending cuts, Spending Review
No Comments on this post