CBI calls for freeze in public sector pay and recruitment

18 May 10
Business leaders have told the government it could save £18bn by freezing the total public sector pay bill for two years
By David Williams

19 May 2010

Business leaders have told the government it could save £18bn by freezing the total public sector pay bill for two years.

The advice comes after Chancellor George Osborne announced that he would detail £6bn worth of spending cuts, to be made in the current financial year, next week.

A CBI paper released today sets out a range of measures that business lobbyists believe would be required to save money and reduce the public deficit.

Time for action: reforming public services and rebalancing the budget recommends a combination of pay and recruitment freezes that could hold the overall payroll bill down to 2010/11 levels for two years. Such a measure would still allow for modest pay rises for the lowest-paid workers and frontline staff.

Even bigger savings could be made through a fundamental redesign of public services, the CBI says. It recommends treating more patients in their own homes, which could save more than £8bn on its own by 2015/16. Further savings are possible through reducing absence through sickness rates, sharing human resources and IT functions, and using new technologies in health care.

The paper also recommends opening up public services to the private sector and charities, but warns that fiscal action must be combined with new measures to encourage business growth.

 A new, more ‘competitive’ business tax regime will be needed, the CBI says, as will investing in infrastructure, prioritising energy security and strengthening apprenticeships.

CBI’s director-general Richard Lambert said: ‘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… above all, we need to send a strong message to the world that the UK is open for business.’

He added: ‘Experience suggests that the best way of bringing down a substantial deficit without damaging growth is through spending restraint rather than raising taxes.’

But Trades Union Congress general secretary Brendan Barber said: ‘This is special pleading from the CBI who is calling for the full brunt of spending cuts to fall on public sector staff rather than the billions of pounds spent by government on private sector goods and services, such as consultants.

Even cuts to the public sector pay bill will hit the private sector as public servants will have less to spend.’

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