Credit, Collections & Insolvency News
Chancellor Rachel Reeves has delivered her Spending Review, setting out budgets for government departments.
Responding to the announcement, Tina McKenzie, Policy Chair of the Federation of Small Businesses (FSB), said “Small businesses will be wondering when they will feel the benefits of today’s Spending Review. It was not the business-focused day they had hoped for.
“As spending allocations were announced, decisions over how that money would support small businesses were not included. Increased Statutory Sick Pay came without help for small businesses to afford it; extra money for housing and defence came without a commitment to include small firms in the supply chain; new energy efficiency funding for households came without equivalent help for small business premises.
“The one major bright spot for small firms today was the significant increase in resources to the British Business Bank, which FSB campaigned for in advance of today’s statement and which we welcome. This should see far more finance flowing to local businesses up and down the country.
“With headline departmental funding allocated, the challenge now passes to each and every government department to be strategic with their spending over the next three years – using every taxpayer pound to get the most value, stimulate the economy, and spread jobs and growth. SMEs should get a far greater share of public contracts, and big businesses which treat their smaller suppliers poorly should be banned from winning them.
“Small business confidence is already languishing at levels comparable to the energy bills crisis, while job numbers in small businesses are falling fast, so bold, concerted action is needed. You can’t grow the economy and tax revenues without growing small businesses.
“Small firms were not the focus today, but the second half of 2025 now becomes a crunch period for SME-focused growth reforms. Ministers must buckle down on this over the summer and through to the autumn, putting small businesses at the heart of the Industrial, Trade and Small Business Strategies. This includes addressing business rates, Employment Allowance expansion and Statutory Sick Pay in the autumn Budget, and proper legislative reform in the King’s Speech.
“The benefits will only come if the Government takes these challenges seriously through to the autumn.”
Anna Leach, Chief Economist at the Institute of Directors, said “Security, health and defence rightly take centre stage in this Spending Review. Security and stability are fundamental pillars for growth. IoD members were also keen to see a focus on addressing waste and inefficiency. So, it was good to see confirmation of a minimum 16% real terms reduction in administrative budgets by 2029-30 and 5% efficiencies targets for 2028-29. Given the pressures on public services, it makes sense for these savings initially to be earmarked for delivery. We would expect over time for savings to be used to bring down the tax burden from its post-war record.
“Infrastructure investment has been rightly prioritised. The allocations to regional transport, nuclear energy and R&D from the capital spending budget are sensible and largely aligned with the priorities of business leaders. But public sector net capital investment is set to fall by 0.6% per year in real terms over the Spending Review period. If the private sector is to be ultimately responsible for delivering the renewal of the UK economy, a strong and coherent plan to drive business investment is needed. Increasing the capacity of the British Business Bank to lend is an important step. And the forthcoming Infrastructure and Industrial strategies will enhance policy stability and enable businesses to plan. However, the broader business environment needs addressing: the tax and regulatory system, employment regulations, energy cost competitiveness, and our connections with global markets are all fundamental to creating the conditions for investment.”
