The CBI has called on the UK Government to cut its spending plans.

The Confederation of British Industry (CBI) has called on the UK Government to cut its spending plans by an extra £120 billion in order to balance public finances by 2015-2016.

In a letter to Chancellor Alistair Darling, the CBI said he should ensure his Pre-Budget Report delivers a credible plan for balancing the public finances by 2015-16, two years earlier than planned, in order to boost investor confidence and get the UK on the path to recovery.

In order to “balance the books” however, the business group said £50bn will need to be found between now and 2013 to allow for a slower economic recovery than the government is predicting and a further £70bn after 2013.

John Cridland, CBI Deputy-Director General, said: “We are facing the biggest peacetime deficit in our history, and it is not simply going to disappear with the economic recovery. That is why we need a fully credible plan to convince financial markets and taxpayers alike that the public finances will be restored to health.

“Our calculations suggest that an extra £120bn will need to be taken out of current spending to achieve budget balance by 2015-16. Such savings cannot be achieved by tinkering at the edges, but will require radical public sector reform.”

The CBI’s proposals are outlined in detail in its Public Services Strategy Board paper, ‘Doing more with less: a credible strategy for restoring the public finances.’ Two of the key proposals are to freeze public sector pay and contract out some public services to private companies.

Ian McCafferty, CBI Chief Economic Adviser, said: “The skills and experience necessary to achieve reform in the delivery of public sector services, such as change management, process re-engineering, culture change and communication, are specialised and rare throughout the economy, but can be found to a greater extent in the private sector. The public and private sectors will need to work closely together if these much-needed reforms are to be delivered.”

Mr Cridland added: “Just as families and businesses are tightening their belts up and down the country, the government must decide what it can afford to deliver, and focus on must-haves, rather than nice-to-haves.”

For more information, and to read the report, click here. ^[1]