British manufacturers urge health budget cuts to fund growth

Reuters News
Posted: Jun 02, 2013 7:02 PM

LONDON (Reuters) - British manufacturers urged the government on Monday to cut the healthcare budget and put money into growth-generating areas such as infrastructure and technology when it unveils its latest spending review next month.

The criticism of Prime Minister David Cameron's decision to exempt healthcare from budget cuts highlights growing concerns that efforts to reduce Britain's fiscal deficit could endanger its economic recovery.

"The government is making the shift towards growth-enhancing spending unnecessarily difficult by protecting large areas of spending," said Terry Scuoler, chief executive of the EEF, a manufacturing group which represents over 6,000 companies.

The government aims to cut 11.5 billion pounds ($17.50 billion) off the 2015/16 budget at its June 26 spending review.

So far the finance ministry says it has agreed around 20 percent of the cuts it needs but there have been growing signs of resistance, particularly from within the defense and interior ministries.

Danny Alexander, Britain's second-in-command at the finance ministry, told Reuters that tough spending decisions will need to be made in the coming weeks, but that he will deliver a new round of cuts without resorting to higher taxes.

The EEF called for science and innovation spending to be ringfenced, with more money spent on roads and developing export and trade links. The group said this, along with steps to tackle rising energy prices, should be funded by healthcare cuts.

"The time is now ripe to abandon the ring-fence for health spending," Scuoler said.

(Reporting by William James; editing by Ron Askew)