Auditel Consultant:
Lee Freeman

Dear Prudence – one month in (or Xmas comes early)

21 Jul 2010 | Filed under: auditel, cost cutting, government, The Budget

It is now nearly a month since the emergency budget and the announcement of the austerity measures that the Chancellor intends using to reduce the public sector debt by £120bn by 2015. So what has happened in that month? Those of you who read by blogs regularly will know of the scepticism that I have as to whether the government will actually hit its targets, and it certainly seemed that my initial views were right as stories emerged of various government websites that cost millions to run and some that had been earmarked for closure over a year ago but were still running. However as the month has progressed it appears things are gradually moving in the right direction.

The action being taken though has obviously not come a moment too soon following the announcement yesterday that the public sector debt has hit record highs and now stands at a whopping £152bn, worsening by some £14.5bn in the month. To be fair to the new government this occurred during its first full month in power and so most of the measures announced have not started to take effect yet.

There have been announcements that certain government quango’s are to close:

http://www.channelregister.co.uk/2010/07/19/government_quango_cuts

Well if you knew what work they actually undertook then you are far more well-informed than me!! However that is supposedly £8.6m a year saved, as they say every little helps.

It is however the profit warning issued by Cable and Wireless that is maybe more revealing, although not yet really clear whether this is merely a means of hiding other bad news, but it appears not. It must be the first time in living memory that a quoted company has issued a profit warning blaming a reduction in government spending as its cause. As 12.5% of the CWW business comes from government contracts it is perhaps refreshing to see that certain government contracts are being delayed or indeed cancelled and that there is some action going with the words from the Chancellor. For some companies like Cable and Wireless the gravy train may be about to come to a stop.

From various articles I read it also appears that the Government is adopting a more robust approach to suppliers and using a model that it has borrowed from the private sector.:

http://www.telegraph.co.uk/finance/comment/damianreece/7901460/Spending-cuts-need-not-spell-disaster.html

All well and good so far, and it appears that all the right noises are being made. My concern comes as to what happens when the spending taps are loosened again. Will we go back to the bad old days or will central government manage its costs proactively from here and evermore. I certainly hope it is the latter.

One last item caught my eye this week with the announcement that Selfridges is to start selling Christmas goods on August 2^nd, a mere 4 months and 21 days before Xmas.

http://www.theregister.co.uk/2010/07/19/xmas_season

Oh dear what has the world come to!!!

Industry Tags: austerity measures, Cable and Wireless, cost cutting, profit warning, selfridges, xmas