THE GROUP representing small and medium businesses has called on the Government to introduce an immediate 10 per cent cut in the cost of providing State services.
The Irish Small and Medium Enterprises Association (Isme) said the Government should implement what it described as massive savings identified in the report on local authority reform last year before approaching companies in its sector for price cuts.
It proposed cuts in commercial rates, water or waste charges for small businesses.
Isme’s comments came after it emerged that the Government is to demand significant cuts in prices from the 30 largest companies supplying goods and services to departments and State organisations, to try and cut 10 per cent from an annual bill of €16 billion.
Minister of State for Public Service Reform Brian Hayes made the announcement on Thursday following a meeting in London with British cabinet office minister Francis Maude, who has forced £800 million (€908 million) in savings since last year from firms supplying the British government.
Multinationals supplying IT and other services would be included in the first round, but Mr Hayes said smaller contracts would be affected in time.
He said he intended to contact “the 20 or 30 largest suppliers” – many of them multinationals – to new arrangements in place by autumn.
He refused to put a figure on the targeted savings, but he noted approvingly Mr Maude’s target of 10 per cent savings
Isme described the Minister’s call as premature, divisive and churlish. It said €500 million in potential local authority savings set out were being ignored.
Isme chief executive Mark Fielding said yesterday: “It would be more beneficial for the junior minister to address the half a billion savings within the local government operations than to be issuing ‘gung-ho’ statements after a day trip to London.
“The Minister needs to understand and appreciate the current difficult trading environment for small business and maybe reduce the commercial rates, water and waste charges, which are among the highest in Europe, rather than going for a quick headline-grabbing statement, which only serves to alienate small business and undermine his own position.”
The Government and State agencies have been seeking to cut the cost of supplies over the last year or so.
Last year, the Health Service Executive, which has a procurement budget of more than €2 billion, said it wanted to cut €170 million in payments to suppliers in the next year. It said that figure should translate into €200 million from 2012.
Last December, the Government reached a deal with the pharmaceutical industry aimed at saving €155 million this year. A separate deal with manufacturers of generic products was expected to produce savings of €25 million.
