Union fury at CBI outsourcing call

The CBI triggered a furious response from trade unions yesterday when it claimed taxpayers could save more than £22bn by introducing more private competition into public services without hitting quality.

The business lobby group said Whitehall "inertia" was stopping more state-funded programmes being run by the private sector, and told ministers that shunning reform would be a "recipe for disaster". But Unison called the CBI's findings "fundamentally flawed" and warned that more private sector involvement risked repeats of the Olympics fiasco, when the army had to step in because the security firm G4S was unable to find enough security guards.

The CBI's Open Access report, based on a study carried out by Oxford Economics, found that improved productivity from bringing in businesses and independent organisations would lead to an 11 per cent cut in costs.

The study of 20 separate public services found average costs savings of £2bn through private sector competition. Applying the same calculations across an estimated £278bn of public services would deliver savings of £22.6bn, the CBI claims.

John Cridland, CBI director general, said: "Most public services are still largely state monopolised, and it's time to open some of them to competition. That is the way to maintain quality and achieve billions of pounds worth of savings.

"That isn't to say the private sector should do everything – but take school dinners: is it really necessary for three-quarters of all our schools to be worrying about catering?"

Dave Prentis, left, general secretary of Unison, said there was no proof that 11 per cent savings can be achieved by privatising public services. He said: "The CBI has plucked this figure from the air. All the evidence shows that privatisation is a costly failure that the taxpayer can ill afford. Only last week MPs felt it necessary to call for a blacklist of firms that have failed to deliver on their contracts.

"Privatisation failures carry heavy human costs: ask an elderly resident of an ex-Southern Cross home. And, as the Olympic fiasco clearly shows, when the private sector fails, the public sector has to pick up the pieces."