Public Sector Suppliers Must “Up their game”
Small firms that supply the public sector should prepare for the impending spending cuts by ensuring that their work is relevant and offers good value, the Institute of Directors (IoD) has advised.
The IoD maintained that the Government’s Comprehensive Spending Review, the results of which are due to be announced on 20 October, will ultimately be positive for small firms, but said that the business environment would become more competitive.
“Small businesses need to make sure services aimed at the public sector are extremely relevant and well delivered, as trading will become increasingly competitive,”
said IoD spokesman, Alistair Tebbit.
Research this month from accountancy firm PricewaterhouseCoopers showed that almost half a million private sector jobs could be lost as a result of the upcoming spending cuts due to the impact on suppliers. The report predicted that business services and construction would be the worst hit sectors.
However, Tebbit explained that some firms would benefit from the cuts.
“The public sector will increasingly look to outsource work that has been done internally until now. Firms that have a good proposition which offers value for money are well placed. If not, they need to up their game.”
Tebbit also pointed out that the forthcoming cuts should improve conditions for all small businesses in the long term.
“The Spending Review as a whole will be in the broader interests of businesses in the private sector. By sorting out the deficit and preventing what might otherwise be pressure on interest rates, business investment will improve.”
Many small businesses are concerned about the effects of the spending review. Founder of gift and card company Candlelight Creations, John Lakey, said that he expected to see a fall in sales following the cuts.
“People will have less spending power and will hold on to their money due to uncertainty about the future. We sell high-end products, so we have already experienced a drop in orders. As a result, we’ve launched a new product that is very different to our original offering, and we have become more environmentally friendly as we realised we needed to develop a leading edge.”