At last we’re hearing the trugt about the ‘cuts’ to the UK public spending budget.
I’m afraid my sympathies don’t lie with the army of quangocrats who will hopefully be the first ones affected, because it’s about time the public sector faced what has been normal in the private sector for the last eleventy years.
Historically the civil service played a supporting role, facilitating rather than creating, back in the dim and distant past when we were told apout it in careers guidance it was pointed out that taking a job meant a lifetime of never really being in the limelight, settling for a salary around 10% lower than you could get in the private sector, but in return you would face no commercial risk, guaranteed job security, and retirement on 40% of your income, inflation proofed.
Sadly the last decade has seen the politicisation of the Civil Service and large swathes of it replaced by quangoes who have no heritage, no tradition, often very ill-defined objectives, and none of the checks and balances so beloved of Sir Humphrey.
What they have had is buckets of public sector money – usually authorised by one or other of the Ministers for Political Correctness. Like many of my clients, I struggle to name a single one of the 850-odd quangoes whose work we would miss if it were not here.
Although many in the public sector would point to the banking collapse as the cause of today’s cuts, the reality is that it was just the catalyst that caused the reaction – the underlying factors were already present, and had been for a long time.
When Lehmann hit the wall and the press started revealing just how bad the country’s finances were, one of our clients saw its entire quarter’s worth of orders dry up in a single day – that was following three years of steady growth, during which they had grown from one man and a dog to 12 employees.
They held on for six months – every one of which cost the owner £50k, of which about £8k went to HMRC in PAYE and NIC for the staff.
In April 2009 his bank refused any further lending – he was near to losing his house – so he had to close the business. We had to write off over £40k for unpaid bills, and for a small business that hurts, but it’s nowhere near as painful as losing your home.
It’s a fallacy that ‘the rich’ or ‘companies’ can afford to take the hit. In reality it’s the middle classes and the small businesses that are getting squeezed, but they don’t have any more money than the government does.
What few of the general public understand is that businesses are hit by a mass of red tape, and ‘hidden costs’ – 12% of the payroll on NIC, 50%.of your office rentals in Business Rates, premium costs for energy, £3.00 a bag to have waste paper removed, and so on.
We now know the truth about the disgusting state of this country’s finances – brushed over, no, let me be honest – frankly, lied about – by Gordon Brown, and that we’re in this mess because of incompetence, self-serving politicians who put dogma before common sense, and a ‘spend every penny in case we don’t get it next year’ culture that has become endemic in the public sector.
Just yesterday I got an email from an advertising agency in the midlands telling me they can access a BusinessLink fund that will contribute 50% to any advertising I want to do in the next four months. This is exactly the kind of thing the government should be stopping – the money hasn’t been spent, doesn’t need to be spent and will do the square root of s*d all to benefit anyone.
The cuts are long overdue – but unfortunately they are hitting small business far worse than any other sector, because unlike large corporations – who can decide to bring their call centres back to the UK and create some jobs – or set up manufacturing here rather than in Eastern Europe, we depend on demand created by others for our income.
The private sector needs encouragement from the government to help take up the slack, and we’ll gladly do it. But that means we need a favourable environment for enterprise, not subsidies for worthless, politically correct ventures.
Hopefully the government will see that and put in place the infrastructure to support growth, not just cut the state.
As any businessman knows, you can keep cutting costs as long as you like, but unless you increase revenue, your business is doomed.