With only days to go until the emergency Budget on June 22, the eyes of business are on what the Government is planning to do to rein in spending and make inroads into Britain’s record £156bn deficit.

Many businesses in the North have had to make painful decisions during the recession, with some feeling that the public sector has been allowed to escape unscathed.

In a recent national television report about the latest Monetary Policy Committee decision, bosses in the North East were advocating that stiff new curbs on Government spending would be better for the economy than raising interest rates.

One of those interviewed was Michael O’Connell, chairman of EOS, in Newton Aycliffe, which manufactures light gauge steel frame systems for the social housing, care homes, and educational and healthcare sectors.

He believed there was a lot of waste within Government departments and that measures needed to be taken in the public sector to reflect what had been happening in the private sector during the last 18 months to two years.

It is understandable that those in the private sector, who often have to take tough decisions to survive in a competitive environment or a downturn in the market, feel this way.

Private sector employers have a reputation for keeping a close eye on the bottom line and for taking action to control wage inflation, to cut back on spending or to steamline their operations and workforce in order to safeguard and see their business through turbulent times.

For example, a number of large well-known names such as JCB, Toyota and Honda have cut salaries by up to 15 per cent to reduce overheads and limit redundancies.

A good start has been made with the announcement that Civil Service recruitment is to be frozen to reduce overstaffing within the public sector. But more needs to be done.

However, getting the right balance will be crucial. While, undoubtedly, there is waste and profligacy that can be curtailed, equally, there are public sector services and jobs that play a key part in driving regeneration and business growth and it is essential that financial support for them continues.

The Government needs to hold its nerve and have the courage to take the tough decisions that are needed to restore confidence in the economy and kick start a recovery.


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