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Hands off NHS, say UK company finance managers


6 July, 2010  

Spending cuts need to concentrate on Central Government departments, Quangos and Defence, and leave not just the NHS, but also Police, Local Government and Education largely alone, say Britain’s private sector finance managers, in a new research report from business analysts Lindsell Marketing. Conducted amongst over 1,000 UK company finance professionals, who themselves are having to manage the private sector’s austerity measures, this research contradicts significant aspects of the Chancellor’s budget cutting policies.

Measures to reduce the current public sector deficit will have to be of a scale and significance to make an appreciable dent in this figure, in a bid to put Britain back in the black. In order to obtain an expert view on the issue, business analysts Lindsell Marketing canvassed the views of the private sector professionals who have to make such hard financial decisions every day of the week. Over 1,000 UK company finance managers were surveyed during May and June 2010.  The sample of respondents provided representation of the national business community in terms of region, size and sector.

While 48% of respondents focused the need to make spending cuts on central government departments and quangos, only 9% thought that NHS spending should be cut, and just 4% thought policing budgets should be reduced.  Even local government was largely designated a ‘no go’ area by company finance managers, with just 13% of respondents pinpointed this sector for cuts. Education was also earmarked as a relatively low priority, with just 15% of respondents wanting priority cuts in this area. In contrast, however, Defence was highlighted by 33% of UK company finance managers for spending cuts.

Paul Lindsell, Managing Director of Lindsell Marketing, notes, “In terms of spending cuts, finance professionals are advising the government to leave the Police, NHS, Local Government and education largely alone, and instead focus on cutting waste in Central Government departments and Quangos, and the Defence budget. This key finding may suggest that finance managers believe health, law & order and local government to be ‘leaner’ than central government departments and quasi-autonomous non-governmental organisations, and that therefore these two categories hold the highest potential for cost savings. An alternative interpretation may be that law & order, health service and local government spending should be retained for reasons of social responsibility, stability and cohesion.

“This clear indication to steer clear of law & order, healthcare and local administration when implementing budget cuts only partly endorses Government policy. NHS spending has been ring-fenced, although the shadow health secretary is now saying this policy will drive reductions in local and community services.  Policing budgets, in contrast, are facing cuts, with Scotland Yard’s head of counter-terrorism warning of adverse affects on his part of the service and the president of the Association of Chief Police Officers (ACPO) stating that reductions in police numbers would be inevitable. Local government has been told to find £1.165bn in savings in the Chancellor’s emergency budget, representing the largest single contributor to the Government’s cuts programme. Yesterday’s survey from the Local Government Association gives corroborative support from voters for cuts to steer clear of front-line local services.”

“This study gives the clearest possible indication that private sector professionals consider cuts in socially important areas such as health, policing and local services as a very dangerous game indeed. Moreover, the emergency budget largely ignored the need, pointed out in previous recent studies from Lindsell Marketing, to substantially raise income tax for earners below the newly introduced upper rate threshold of £150,000 per year. The coalition government has a honeymoon period in which to really address the public sector deficit, but it may well turn out that fudging the politically sensitive area of income tax is a critical mistake.”

Lindsell Marketing