CBI challenges government to be bolder on cost savings

CBI Scotland is calling on ministers to strengthen business support measures while pursuing “a bolder approach to reducing the costs of government” in the coming budget and three-year spending review.

In an 11-page submission to Finance Secretary John Swinney, the business lobby group says the election of a single-party majority at Holyrood “provides a unique once-in-a-generation opportunity” to do things differently and to “challenge sacred cows”.

CBI Scotland director Iain McMillan said: “The Scottish Government should put economic growth at the very heart of its upcoming spending plans. A bolder approach to making savings and promoting competition is needed in order to keep business taxes down and protect important GDP-enhancing investments in infrastructure, skills development and export support.”

Among the cost-saving measures suggested by the CBI are some form of privatisation of Scottish Water, extending the public sector pay freeze until at least 2013-14, and considering making compulsory redundancies.

It also advocates outsourcing more public-sector functions to private companies, particularly within the NHS. It said aggregating contracts for catering, infection control and cleaning services at Scotland’s hospitals and putting them out to competitive tender could save the taxpayer money. Other candidates for deregulation and outsourcing are ferries, GP services and building standards verification.

The lobby group’s proposals for supporting the economy include a quick introduction of enterprise zones, “pump-prime funding” for new air routes to key business destinations and a guarantee not to raise taxes on businesses.

It also says the Scottish Government should do all it can to support the creation of a high-speed rail link to London, while attacking cuts to the budget of the training organisation Skills Development Scotland. McMillan said: “Despite the fiscal stringency that will be required over the next decade, there remains a pressing need for the devolved government to sustain investment in, and support for, the economy.”

Meanwhile, small firms will soon get the chance to have their say on how to build a sustainable recovery at Scotland’s first national business convention.

The event, on 1 October at Murrayfield stadium, is being run by the Federation of Small Businesses (FSB) and the Scottish Council for Development and Industry. It will bring together business leaders, financiers, corporates and enterprise agencies to discuss how to grow the private sector economy in the face of government cuts.

FSB Scottish policy convener Andy Willox said: “We all want a sustainable recovery built on the strong, broad foundation of more businesses, doing more business, providing more quality jobs in a wider range of sectors. But times ahead are tough and we need to face up to difficult questions about how we manage the coming reductions in public spending.”

Meanwhile, speakers at a conference hosted by Scottish Enterprise and Co-operative Development Scotland have called on business leaders to work more closely together.

Raymond O’Hare, chairman of the Institute of Directors in Scotland, said firms could generate benefits by trading expertise and creating informal collaborative agreements or joint ventures.

The former head of Microsoft in Scotland said collaboration was “an untapped part of our economic potential” of increasing importance in accessing global markets.