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May 19, 2010    

CBI urges public sector pay cuts

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by Kay Murchie

The Confederation of British Industry (CBI) has said that in order to control public finances, a two-year pay freeze should be imposed on most public sector workers’ pay.

Selected public sector pay and recruitment freezes could save £18 billion in the next two years, the business group argued, and it highlighted that pay freezes were the norm in private firms during the recession.

According to the CBI, such pay freezes could save £18 billion in the next two years and the measures should be combined with moves to allow businesses to create jobs and drive economic growth.

In the meantime, the CBI is calling on the Government to review the business tax system. A move which has been suggested by the Engineering Employers’ Federation (EEF).

EEF Director of Policy Steve Radley said: “Rather than narrow tax cuts badged as simplification, the new government should make reforms that actively help manufacturing and encourage investment, innovation and job creation.”

Meanwhile, new Chancellor George Osborne is to give a speech to business leaders at the CBI’s annual dinner tonight and he has already outlined plans to cut £6 billion off public spending this financial year.

CBI deputy director general, John Cridland, comments: “The new Government needs to slam on the emergency brake now by introducing an immediate two-year pay bill freeze across the public sector, and sweating its assets to ensure that every pound is well spent.

“While spending cuts and efficiency savings are important, there is a much bigger prize to be had through fundamental re-engineering of public service delivery. Allowing the best provider to deliver public services will increase innovation, while keeping a lid on costs.

“We believe that this is the best way of ensuring that frontline services can be maintained without resorting to crude cuts,” he added.

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