Business warns ministers over rail cuts
The Telegraph: 07 Aug 2010 By Angela Monaghan
BCC tells Transport Secretary to avoid "hasty and ill-conceived cuts" or risk putting economic growth at risk.
In a letter to Philip Hammond and Vince Cable, the Business Secretary, the British Chambers of Commerce (BCC) and its local counterparts across the UK said that without investment in vital rail projects the private sector will not be able to deliver the economic growth the Coalition is hoping for.
The letter, from the BCC's director-general, David Frost, said: "In tackling the national deficit, the Government must be careful not to damage future growth and prosperity. Rail transport is essential for supporting the future of the UK economy.
The chambers of commerce said three schemes in particular should be protected from the cuts in the coalition's Comprehensive Spending Review on October 20: the Northern Hub rail project in the north of England; electrification; and additional rail carriages to increase capacity on the nation's rail network.
The letter stated that all three schemes would deliver environmental as well as economic benefits. It said clarity on future investment plans was particularly important in transport where long planning processes were involved.
"Business will pay its fair share – through fares, general taxation and investment – but it is up to the Government to ensure that the rail system supports strong labour markets and business growth," said Mr Frost.
The letter was also copied to Danny Alexander, the Chief Secretary to the Treasury, who is driving the spending cuts forward.
It comes as Begbies Traynor, the restructuring specialist, warned that the coalition's programme of sweeping spending cuts was already raising financial distress among UK companies.
It said that distress among companies in those sectors most likely to be affected by the cuts – including construction, IT, recruitment, business services and media – had increased by 3pc on an annual basis to 17,600 in July, the first month after the emergency Budget.
In June, however, the number had fallen on an annual basis by 9pc, and by 37pc in May.
"It seems that the impact on the private sector from public sector cuts is already being felt, with the fear that there is much more bad news to come once the spending review has been completed in October," said Nick Hood, partner at Begbies Traynor.
"With the deluge of daily announcements now beginning to provide details of the stark reality of the public sector cuts outlined in June's emergency Budget, the previous improvement in the health of UK companies has been thrown sharply into reverse."
The Government said in June that it would shave £83bn off public sector spending over the next five years.