Comprehensive Spending Review: effect on business support
Given that the Department of Business is facing annual cuts in its budget of 7.1 per cent, broad business support has inevitably been diminished.
In all, 40 per cent of the savings are to be made by reductions in public funding of universities to the tune of £2.9 billion (down from £7.1 billion to £4.2 billion), with increases in student fees intended to take up some or all of the slack; 25 per cent will come from cuts in the further education budget (down from £4.3 billion to £3.2 billion); 25 per cent from efficiencies; and 10 per cent from reductions in business support and grants.
The flagship Train to Gain scheme is to be dropped. Although the Department of Business did promise to replace it with a lower key training programme aimed at smaller firms.
Regional Development Agencies in England will disappear in 2012, their place taken by a series of Local Enterprise Partnerships.
However, a further £250 million a year will be spent creating 75,000 extra places on apprenticeship courses.
There was some better news, too, on business loans and capital financing projects.
A minimum of £150 million is to be made available to businesses as a way of enabling them to access loans and equity investments during the next four years.
The extra input of public funds should vouchsafe the Enterprise Finance Guarantee, which targets firms that struggle to attract capital by offering government backing for loans agreed by private financial institutions.
Public money may yet be injected into the planned Business Growth Fund, which will be run by the high street banks, and the Regional Growth Fund will receive £1.4 billion (up from £1 billion) to support development projects put forward by the Local Enterprise Partnerships.
Some £200 million a year will be used to nurture a network of research, development and innovation centres.
Despite the severe cuts in higher education spending, the government will continue to fund teaching in the STEM subjects: science, technology, engineering and mathematics.
The research science budget has also been safeguarded and will remain at £4.6 billion annually for the next four years (although the freeze in the allocation will effectively mean a 10 per cent cut once inflation is taken into account).
But the Higher Education Innovation Fund, which promotes the transfer of knowledge from the universities to the business community, is to be reformed.
The Technology Strategy Board, which handles funds designed to turn scientific research into commercially viable products and projects, looks likely still to have a part in the post-review business support landscape.
No mention was made on whether the Treasury is considering an overhaul of the research and development tax credit system.
Vince Cable, the Business Secretary, said: “The threat to our national economy is the large financial deficit which if left unchecked will damage our capacity to grow and rebalance our economy.
“I am not going to say that any of these cuts are going to be easy and many people are going to feel the consequences, but without action all of us, for years to come, would pay the price. These decisions have been hard but they are necessary.”