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Spending Review 2010: The Axe descends

HAVING unveiled the biggest UK spending cuts for decades, George Osborne’s Spending Review yesterday provoked wide concern amongst the region’s business leaders.

With welfare, councils and police budgets all hit by the spending axe, the Chancellor defended his decisions by claiming savings were lass than the 20% cuts Labour had planned ahead of the general election.

Commenting on the Spending Review Paul Thomson, head of Deloitte’s public sector practice in the North East, said: “Under the headlines of the spending cuts lies probably the most significant set of changes yet to the business of delivering public services.

“Today’s announcement will see a fundamental change in the way public services are delivered. This will impact public sector workers, private sector suppliers and the public.

“We are past the point of doing more with less and firmly in the territory of doing less with less.”

Martyn Pellew, president of the North East Chamber of Commerce (NECC), said the organisation is worried about the level of capital spending cuts.

“As the details of these cuts at programme and project level become clear, we need to see a robust understanding at all levels of Government of the potential knock-on effect on the private sector in the North East,” said Mr Pellew.

“Businesses have to be enabled to grow to fill the void that will be left in the region by these cuts.”

“Capital spending cuts of some 29% over four years in real terms, equivalent to £11.4bn plus inflation – will undoubtedly have an adverse knock-on effect on the construction sector and its wider supply chain.

“We urgently need clarity on which capital projects will go ahead.”

Meanwhile, Mark Burke, partner and regional head of Grant Thornton’s Government Infrastructure Advisory team in the North East believes the economy now hangs on a knife edge.

He said: “The Coalition Government continued their commitment to slash the huge budget deficit by announcing £83 billion of cuts in government spending, with the brunt of the cuts focused on welfare savings.

“Today’s Spending Review is without doubt an economic and political gamble of huge proportions.

“The Government has risen to the challenge but whether the austerity plan will work and bring back economic prosperity is far from certain.”

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This was posted in Bdaily's Members' News section by Ruth Mitchell .