Insider Media Limited

As the dust settles on the Chancellor’s Comprehensive Spending Review, the region’s businesses say they are supportive of the cuts made by the coalition government – but want more details of its plans. Stephanie Allen, head of public sector at PricewaterhouseCoopers (PwC) in the Midlands, told Insider: “Announcing the cuts is the easy part; now the government has to put it into practice and deliver.”

She added: “The challenge will be down to businesses, their employees and how flexible they can be – rather than being rigid in what you’re prepared to do in your job role, flexibility will be the key going forward."

Amidst departmental cuts, Osborne made the shock announcement that the Midland Metro tram route is to be extended from Birmingham Snow Hill station to New Street Station. The programme had been axed earlier this year, but Osborne said that the route was now back on the agenda, with a planned route to Birmingham New Street station.

The train station is also set for a revamp as part of the government’s £30bn, four year investment programme in transport projects.

However, Darren Walker, chair of Birmingham Future and associate at Cobbetts, said the city shhould make the most of the opportunities the Metro will bring.

He said: “While the Metro is not a Birmingham priority, we should be making the most of the opportunity it provides – reducing the strain on existing infrastructure and improving the connectivity across the city for all of Birmingham’s businesses. New visitors to the city can now stay on public transport to get from New Street to Snow Hill – hopefully, making it easier for those travelling to Colmore Business District via Snow Hill.”

Elsewhere, Osborne announced that the £1bn Regional Growth Fund, which will provide support for areas currently dependent on the public sector, will be increased by nearly 50 per cent. But substantial cuts were announced in many public sector areas. James Watkins, executive director of lobbying group Business Voice WM, said: "Business will need to be imaginative and innovative if it is to fight the supply chain problems that the spending cuts could herald.”

Graham Bushby, Birmingham-based partner at Baker Tilly Recovery and Restructuring, also suggested that companies will need to act quickly. “Few Midlands businesses will escape the ripple effect of the announced cuts to public sector spending. Taking billions of pounds of spending out of the UK economy will affect the supply chain, from the top down to the consumer and back up again. Those who anticipate and act quickly to address the implications of the cuts are likely to be the fittest in the battle for survival and longer term prosperity,” he said.

There was mixed news in the training area. The Train to Gain programme is to be abolished but the number of apprenticeships will increase by 75,000 by the end of the spending review period.

Lord Kumar Bhattacharyya, head of Warwick Manufacturing Group, said it was “good news” that the science budget was being maintained and he argued that the West Midlands could take the defence cutbacks in its stride. The cuts had been “inevitable” but the aerospace sector in the region was strong enough to cope, he suggested. “The defence sector has a huge dependency on government contracts and the cuts will have an effect because manufacturing is so important here," he said.

"But I don’t believe the West Midlands will be hit too hard. There are signs that the regional economy is picking up especially the automotive and green energy sectors. And industry is becoming more efficient.”

John Rider, chairman of the Institute of Directors in the West Midlands, said that the dramatic cuts were “a risk”, and stressed that with 850,000 people in the area defined as economically inactive the region needed jobs.

“We are in favour of these public sector cutbacks but at the same time the government needs to protect jobs where it can and provide an economic environment for job creation”, he said. “Let’s hope the private sector can come up trumps and fill the gap. But it is a risk and I am concerned by the timing.”