CBI chief slates lack of public sector reforms

The President of the CBI, Sir John Egan, will tonight attack the Government over the "snail's pace" at which it is implementing public sector reforms.

Sir John will use his speech to the CBI's annual dinner which is also being attended by Gordon Brown, to argue that despite a £6bn increase in business taxes since Labour came to power there is still very little to show for it in terms of improved public services.

The leader of Britain's employers will blame the Government's poor record on a combination of its inability to spend money efficiently and the "paralysis" caused by political dogma among public sector trade unions.

According to the CBI, government figures show that public sector output increased by only 2 per cent last year - the same amount by which employment rose - despite a 7 per cent increase in spending.

"Business recognises that years of under-investment in public services have to be overcome before we can really make progress," Sir John will say. "Nonetheless, our assessment so far is that there hasn't been enough to show for the funds being spent on our behalf. From transport to health services and local government, we are not getting bang for our hard-earned bucks. There is little sign of change on the ground."

Productivity growth was negligible, said Sir John, while rising costs were absorbing the extra money being pumped into public services.

Sir John will also mount a defence of private sector involvement in public services such as schools, hospitals and the railways arguing that the profit motive is a "potent force" for raising standards.

"I say this to opponents of change: remember why we are doing this," Sir John will say. "It is because standards of service delivery vary greatly across the country and are often poor. It is because the tax-paying, voting public are saying the status quo is not good enough."