The Government Spending Review – The Summary!

spending reviewSpending review, spending review, that is about all we have listened to over the past few days. We have George Osborne quoting figures which most of us are unsure how many 000’s they contain.

Bear in mind that the public are supposed to understand what is going on and then decide on the next government as a result. So what has the spending review done?

Keep It Simple Please…

  • The UK is now paying £6bn less EVERY YEAR in borrowing costs than had been budgeted for by the last government
  • A further £11.5bn of savings every year need to be found
  • Government borrowing is at £107bn against £157bn under the last government
  • The foreign office budget is down 8%, treasury 10% and cabinet office 10%, transport dept 9%, energy 8%, environment 10%

So, If The Government Were A Business…

Let’s forget hyperbole and ministerial uproar. If the government was a business then the facts would look something like –

  • Income (or turnover) has reduced

So, in business terms you would do the following –

  • Look at all expenditure
  • Renegotiate where you can and if it is essential
  • If not essential then cancel it, just cut the cost out
  • If suppliers have to work with you then tell them the terms
  • If your managers cannot adjust to the new budget then replace them

All in all, not particularly unreasonable. So why is it such big news for a government?

As a business, if your income is falling then is credit going to be easy? Answer is no. In this case you need to cut your cloth and keep trading.

Which is pretty much where we are.

In our opinion, the next time a minister complains about budget cuts then apply it to your own business. Suddenly the tough choices driven by the spending review seem to make more sense.

By David Farmer

 

Leave a Reply