New CBI president leads calls for major public sector reforms

The Government must "grasp the nettle" of major reform of the public sector, the new head of the CBI said last night.

The Government must "grasp the nettle" of major reform of the public sector, the new head of the CBI said last night.

John Sunderland, the president of the employers group, said job cuts alone would deliver only a fraction of the Government's target of £20bn savings. He said there was growing scepticism the £160bn already pumped in public services had delivered real improvements.

His comments came as official figures showed productivity had fallen and a political row broke out over revisions that showed a sudden increase in output from the NHS.

Mr Sunderland used his first policy speech as the CBI's figurehead to warn that radical reform could be blocked by trade unions and middle managers in the public sector. "Resistance to change is a pressure firms face and one that the permanent secretaries and other civil servants must tackle if they want to achieve real improvement," he told a CBI dinner in Birmingham. "Change is difficult and the challenge is enormous. Senior civil service managers, as well as their political masters, must grasp the nettle of reform."

Mr Sunderland said promised job cuts of up to 100,000 civil servants would deliver a maximum £5bn of the £20bn target, leaving 75 per cent of the savings to come from changes in working practices, procurement and regulation. He said business had so far accepted the recent surge in numbers of public sector employees, but the increases should not continue. He said: "For too long the value for money question appears to have been a second-order priority. There has been a massive increase in public sector recruitment but have we stopped to think whether we have the right people with the right skills doing the right jobs to affect change?"

His comments came as the Conservatives criticised a revision by the Government's statistics body that raised estimates of NHS output by about 60 per cent.

The Office for National Statistics said work aimed at capturing the true value of NHS care showed output rose more than 4 per cent a year between 2001 and 2003 compared with early estimates of 1.9 to 2.6 per cent.