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Employer organisation Confederation of British Industry (CBI) has called for an immediate freeze in the public sector pay bill for two years and re-engineering of public services to help get the public finances under control. This needs to go hand-in-hand with measures to allow businesses to foster economic growth and job creation, the CBI said.
After a decade in which the economy has been driven forward by government spending and unsustainable growth in the financial sector, the CBI argues that the growth engine for the future has to be powered by private sector investment and trade.
Spelling out its priorities for the new government in a Time for action: Reforming public services and balancing the budget, the UK's leading business group highlighted the areas where immediate cost-savings could be made, while maintaining frontline services. For example, freezing the total public sector pay bill from 2010-11 for two years through selected pay and recruitment freezes could save 18 billion Pounds.
The CBI emphasised that far bigger savings could be achieved through a fundamental re-shaping of public service provision, including using the private and third-sector to deliver better outcomes more efficiently. For example, by re-engineering health and social care to treat patients in their homes and in the community more than 8 billion Pounds could be saved by 2015-16.
Public sector reform must also be accompanied by policies that allow the private sector to deliver growth, investment and jobs.
Richard Lambert, CBI Director-General, said "we have a new Government with a determination to get a grip on the public finances and the political will to do it. We need to see a detailed plan for achieving this in the Budget. Experience suggests that the best way of bringing down a substantial deficit without damaging growth is through spending restraint rather than raising taxes."
"With a public-sector squeeze looming, the new government must also do everything it can to create the right conditions for the private sector to sustain and create new jobs."
"That means providing certainty around taxation and energy policy, sustaining capital investment, and strengthening our skills base. Above all, we need to send a strong message to the world that the UK is open for business."
Tom Hadley, Director of External Relations at the Recruitment and Employment Confederation, has recently argued for sustainable reform rather than indiscriminate cuts to staffing and agency budgets. Hadley said "the need to reduce public expenditure is a given but knee-jerk cuts would result in an unravelling of front line services and put more stress on our fragile jobs market. Agency budgets will come under pressure but the reality is that temporary and contract workers are not brought in on a whim, they perform crucial frontline roles."
"Challenging pre-conceived ideas and off-the-peg solutions will play a key role in achieving sustainable reform as well as lasting improvements in productivity and innovation."
To read the full CBI report please click here