CBI urges public sector pay ceiling

THE CONFEDERATION of British Industry yesterday urged the Government to impose a ceiling on the overall public sector pay bill next year, a move that in effect would introduce a performance-related element into wage negotiations.

This year the Government has opted to limit public sector pay rises to 1.5 per cent. But, in an attempt to persuade ministers to move away from the concept of pay norms, the CBI wants the overall pay bill limited or frozen.

Such a move would allow employees in some areas of the public sector to receive higher pay rises linked to productivity, at the expense of others who would receive nothing or face cuts in pay or staffing levels.

Speaking after the employers' organisation's monthly council meeting, Howard Davies, the CBI director-general, said the proposal was something 'the Government should consider before it starts conceding IOUs which it cannot fund'.

Meanwhile, the CBI and the Department of Trade and Industry have released a report warning that British business must 'innovate or liquidate'.

The report says that only one in 10 British companies is a world- class innovator and that the competitive outlook is bleak.

No British company ranks in the top 25 in terms of technological strength, while Britain is 13th in the OECD's league of competitiveness and has failed to keep up with the world's best in investment in research and development.

UK companies also tend to pay more in dividends than ones in principal competitor countries.

Michael Heseltine, President of the Board of Trade, said: 'Contrary to popular myth, it is not just about spending large sums of money on research and development. Innovation begins with people.'