Comprehensive Spending Review to put small businesses at risk

The government today announced its Comprehensive Spending Review, carving out nearly one fifth of many departmental budgets and abolishing the Train to Gain scheme.

The cuts are expected to lead to nearly half a million redundancies in the public sector over the four-year plan, while the retirement age for both men and women will rise to 66 by 2020.

Small businesses rely heavily on public sector work and Steven Law, president of insolvency trade body R3 said that nearly 150,000 small businesses will be put at risk of failure as a result of the changes, with insolvencies for 2011 expected to be north of 27,000.

"Our members predict that 2011 will be a difficult year for small businesses and factors such as loss of public sector work will see company insolvency numbers start to rise," he said.

However, the Forum of Private Business's Jane Bennett said that some good news lay in the tax changes will remove loopholes that larger businesses take advantage of, creating a more level playing field.

The reforms are also likely to put council inplants under pressure to prove their worth, according to APCOM president Anthony Evans, who said that cuts are already impacting print rooms up and down the country.

"Although print rooms were set up as a means to save money, the temptation to outsource can be quite attractive," he said.

Evans said that councils will be looking to make savings by choosing black and white over colour, or by delivering the information through digital means - although he added that they have a mandate to make key information accessible to all, which will mean in print.

But he said that with the amount of council print work likely to fall, inplants might look externally to commercial work. "If you've got the capacity, you'll want to fill it," he said.

Changes to the budget for further education will mean that employers are more liable for the cost of training. The Train to Gain scheme will be abolished, and free training up to level 2 qualifications for over 25s will no longer be available, while those aged 24 and older will be expected to contribute to the cost of level 3 (A-level equivalent) qualifications.

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