Businesses back two-year public sector pay freeze

Public sector pay should be immediately frozen for two years to help get public finances under control, according to the CBI.

It says that that average pay in the public sector grew by 2.8% in 2009 yet fell by 0.9% in the private sector.

The CBI argues in its document Time for action: reforming public services and balancing the budget that re-engineering health and social care to treat patients in their homes and in the community could save £8 billion by 2015/16.

It also calls for greater competition in public services to lower costs.

Richard Lambert, CBI director-general, said: ‘We have a new government with a determination to get a grip on the public finances and the political will to do it. We need to see a detailed plan for achieving this in the Budget.

‘Experience suggests that the best way of bringing down a substantial deficit without damaging growth is through spending restraint rather than raising taxes.'

The emergency Budget will take place on 22 June.

Editor's blog: What the NHS will be like in our new Con-Dem nation

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