The damage wreaked by spending cuts can be mitigated if government learns from businesses, according to the Forum for Private Business.
Responding to the announcement of £6bn worth of spending cuts, the Forum has cited the examples of recession-hit businesses which have managed to cut costs without laying off employees or compromising service levels.
"The cuts announced by the government are regrettable and many smaller businesses will be affected in one way or another,” says the Forum’s head of policy Matthew Goodman.
"The £836m reduction earmarked for the Department for Business, Innovation and Skills could potentially mean that business support will be one of the worst casualties of the cutbacks. This, of course, is a cause for concern.
"However, the impact of the cuts can be mitigated by greater efficiency and use of resources at grassroots level, rather than traditional top-down approaches, such as indiscriminate redundancy programmes and blanket spending cuts in certain areas.
Smaller businesses are expert at doing more with less – many of our members have been put under a huge amount of pressure over the past two years or so, but their dedication and attention to detail ensured that their business survived
Matthew Goodman, Forum for Private Business
"We believe that smaller businesses are expert at doing more with less – many of our members have been put under a huge amount of pressure over the past two years or so, but their dedication and attention to detail ensured that their business survived. We believe the public sector can learn some valuable lessons from their experiences."
Labour, backed by many economists, wanted to delay reduction of the deficit until next year, claiming that the recovery was still too fragile and early cuts would risk a double-dip recession.
The Lib Dems apparently shared this view until joining the coalition, when they signed up to an early reduction in public spending. In a Newsnight interview with a characteristically incredulous Jeremy Paxman last night, Business Secretary Vince Cable pinpointed the eurozone crisis and fresh warnings from Mervyn King, the Governor of the Bank of England, as the reasons for his sudden volte face over the timing of cuts.
The Forum of Private Business appears to believe that the deficit can be tackled right away without substantially adding to employment and damaging consumer confidence.
Meanwhile, the Forum has welcomed the coalition agreement, whose measures are outlined in the Queen’s Speech today.
