Spending Round Positive Overall, But More Radical Re-shaping of State Needed

27th June 2013

Commenting on the Spending Round for 2015/16, set out by the Chancellor of the Exchequer in the House of Commons today (Wednesday), John Longworth, Director General of the British Chambers of Commerce (BCC), said: -In many respects, businesses will be encouraged by what they have heard from the Chancellor.

He and his team have signalled important investments in areas like transport, science, education, innovation and defence procurement, which are of great importance to companies of all sizes. Business will also be pleased to see an end to automatic increases in public sector pay, and will support moves to begin to tame welfare spending. -Yet more must be done. For our economic future to be great, rather than just acceptable, Britain needs a more radical shift in public expenditure to underpin a truly enterprise-friendly environment. Infrastructure, exports, and access to finance must be top priorities not just for the next few years, but for decades to come. -The Chancellor has done his best to set out a prudent fiscal position and re-prioritise resources in favour of growth, given the constraints he was under. But we have only just started to reshape public spending to support growth and business will want to see more action. Westminster as a whole, together with the mandarins of the civil service, must recognise that from 2016 onwards Britain needs a fresh approach to public spending to ensure its future competitiveness even if the economy is improving. On the infrastructure announcements to be made by Chief Secretary to the Treasury Danny Alexander tomorrow (Thursday): -Companies tell me that improved infrastructure would enable them to invest and to grow. We are encouraged that the Treasury will set out more detailed infrastructure spending plans, and support any effort to bring forward infrastructure spending at a time when resources are constrained. -However, the government's record on infrastructure announcements and spending commitments remains far better than its record on delivery. Major road, rail and energy infrastructure projects must get the green light and proceed without further delay. On export support: -We agree with the Chancellor's extension of trade and investment funding for an additional year. This will help many small- and medium-sized companies who want to sell into new markets. However, as a country, we need to do far more to support our global traders in the years to come. Spending just 0.05% of our GDP to support British businesses overseas compared to 0.7% on overseas aid just isn't good enough in a globalised world. On the Single Local Growth Fund, recommended by Lord Heseltine: -Business communities across England strongly support the concept of greater local control over funding for local growth. Yet we are not surprised to see that the Single Local Growth Fund has fallen far short of initial expectations. As long as the Whitehall civil service retains its iron grip over the public finances, radical devolution to our cities, towns and counties will be little more than a constant mirage on the horizon.

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