Companies which have contracts with the public sector are being advised to prepare for cuts in government spending.

Companies which have contracts with the public sector are being advised to prepare for cuts in government spending.

Clive Lewis, head of enterprise at the ICAEW, an accountacy body, says, ‘These cuts are inevitable and businesses will have to accept them. There are actions that can be taken though which can soften the blow and ensure that it will not mean that a company will go out of business.’

Lewis adds that businesses should consider renegotiating contracts, diversifying their offerings to the public sector, and demonstrating that they provide government departments with value for money.

The warning comes following the announcement of a planned £6.2 billion of cuts in government spending this year. The department for business, innovation and skills will have to find £836 million of this sum, while regional development agencies will lose £270 million from their annual budgets.

Paul King, owner of Newcastle-based software company 1DayLater, says his business may be affected by government cuts. He adds, ‘We’ve also had a lot of support from our regional development agency, so it would be a
shame to see it go.’