Budget deficit consultation welcomed by business groups and trade unions

Business groups and trade unions have welcomed the government’s commitment to consult widely before making decisions on how to tackle the budget deficit.

On Tuesday, chancellor George Osborne announced the government will ask for views from the public and across the business world to help it tackle the £156bn debt.

The public consultation process – inspired by town-hall meetings held in Canada that turned around an enormous budget deficit in the mid 1990s – will kick off with a series of public meetings over the summer.

Osborne said: “What we want to do is make sure that all political parties, that the brightest and best brains across Whitehall and the public sector, that voluntary groups, think-tanks, trade unions and members of the public are all engaged in the debate and discussion about how collectively we deal with the problem – after all, it is our collective national debt.”

Charles Cotton, reward adviser at the Chartered Institute of Personnel and Development – which today will predict public sector job losses could reach 725,000 over the next five years – said the commitment shows the government is taking a wide approach.

“What we need is an idea of how much is being spent on what and why. Once we have the answer to why, we can see whether it could be spent more effectively. It can’t be economical if it isn’t effective,” he told Personnel Today. “We want more of a debate about protecting the front-line and to make sure the government recognises the dangers and tries to avoid them. You can’t have a load of front-line staff with no back-room support.”

Ian Brinkley, associate director at The Work Foundation, said the principle of the move was good, adding it was not without precedent. “In 1997, Labour undertook a similar exercise and gave people three options about public spending,” he said. “Most big groups at the time were ambivalent because there had been such a landslide victory.”

The Work Foundation will advise the government to concentrate on driving growth instead of focusing on cutting public spending, Brinkley added.

John Cridland, CBI deputy director-general, agreed with this message. “Some areas of public spending are vital to promoting future economic growth and should be a priority,” he said.

Cridland also urged the government to use the Budget to “reinforce the UK’s fiscal credibility by announcing a faster reduction in the structural deficit, based on more rigorous economic assumptions and backed by more detail on spending plans”.

TUC general secretary Brendan Barber said unions welcomed the offer to engage, but added they will “press hard against cuts that threaten higher unemployment or the services on which millions of ordinary people depend” .

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