CBI angers Treasury with attack on 'cosmetic' staffing cuts

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A furious row erupted last night between Digby Jones, the director general of the CBI, and the Treasury over the Government's plans to save £20bn from public sector efficiency drives.

The savings were originally presented as a key part of this year's Budget by Gordon Brown, the Chancellor, and included a swathe of job cuts at high spending departments including Education and Health.

However, the CBI yesterday attacked the Chancellor's plans as "cosmetic" and little more than "moving deck chairs around". In a hard hitting statement that threatens to damage relations between the CBI and the Treasury, the employers' organisation said its pre-emptive strike against Mr Brown's plans reflected "deep-seated business scepticism" about government delivery of efficiency improvements.

The CBI said this had exacerbated its members' frustration about rises in the business tax burden. It also pointed to "woefully inadequate" official data on public sector performance further hampering the Government's ability to deliver on its promises. The CBI's attack was made as part of its submission to the Government's Efficiency Review being undertaken by Sir Peter Gershon.

"Despite all the headline grabbing stuff about how radical this is going to be, we are seriously sceptical about the Government's ability to deliver," Mr Jones said. "We don't doubt the intention but ... there is too much scope for simply moving deck chairs around rather than bringing real change. Ministers must decide if this is a cosmetic exercise or if they are really serious about reform."

However, a clearly angry Treasury hit back last night. A spokesman said: "It is easy for Digby Jones to make headlines with accusations of 'cosmetic exercises' and 'moving deck chairs around'. But had he ever raised these issues with the Chancellor in their many meetings over the last year, he would realise his accusations bear no relation to reality."

The spokesman said the Efficiency Review had been running for almost a year and was the most radical and comprehensive exercise of its kind for decades. "The results to date can hardly be described as 'cosmetic'. A 31 per cent reduction in staff at the Department of Education, a 38 per cent reduction in staff at the Department of Health, and a net 40,500 reduction in staff at the Department of Work and Pensions, HM Customs & Excise and the Inland Revenue."