Government accused of bowing to vested interests and allowing 'forces of inertia' to derail changes
David Cameron has been accused by business leaders of retreating in the face of Liberal Democrat and union opposition to his radical plans for public service reform.
In a scathing speech, the CBI's deputy director general, Neil Bentley, warned that the government had allowed urgently needed reform to be derailed by "forces of inertia", adding that the coalition gave the impression of "having lost its way, uneasy about reforms and unsure about how to present them".
The CBI's criticisms follow attacks on the prime minister from rightwing thinktanks and from former Blairite ministers for failing to hold his ground on NHS reform this week.
The former Labour health secretary Alan Milburn described the compromise reached between Conservatives and Lib Dems on the NHS as a train crash that would cost billions.
A long-planned public services reform white paper has been mired inside Whitehall for months as its original radical vision is gutted. The white paper may now not appear until the autumn.
Bentley warned that the failure to embrace competition could lead to deficit reduction plans faltering.
He said: "In most areas, we are seeing public services cling on to existing ways of doing things, with vested interests fighting modernisation at every turn and campaigning against change.
"Just this week, we have seen the forces of inertia in the NHS unions triumph on health reform. This is a missed opportunity for the government, and with profound consequences.
"Patient services will only be improved if the NHS is opened up to far greater competition and dependence on hospital care is reduced. Without reform, the �20bn savings needed to help balance the NHS books will surely hit services."
He added: "Health is not alone. In local government, policing, probation and elsewhere, reforms are losing momentum."
In words that will disturb Cameron, and find echoes on the Tory right, he said: "The coalition gives the impression of having lost its way, uneasy about reforms and unsure how to present them."
Bentley was launching a new CBI report called The Coalition Government One Year On: The Business Perspective.
He conceded progress had been made in achieving efficiency savings, centralising procurement and moving towards sharing back-office functions. He also praised the introduction of specialist providers to tackle worklessness introduced by the work and pensions secretary, Iain Duncan Smith, and the expansion of the academies programme championed by the education secretary, Michael Gove.
However, the CBI is disappointed that Gove has ruled out the introduction of for-profit schools.
Bentley warned: "Before last year's general election, we heard plenty from both opposition parties about the need for change.
"That is why it is so disappointing that we are one year on with a coalition government but no further forward, with reforms stalling and the path ahead unclear."
He reminded his audience that in January the prime minister, discussing public service reform, said: "We cannot put this off any longer."
Bentley said: "In early February, he promised a white paper. Now we're in mid-June, we're told we might get something next month.
"After all this time, this ongoing uncertainty ? combined with the debacle over NHS reform ? clearly calls into question the coalition's commitment to reform."
Bentley blamed fear of a union and electoral backlash for the government's hesitation and urged ministers to hold their nerve on public sector pensions.
"If the fear is that the unions will derail reforms, then the best answer is to be open, and to discuss with staff any plans for meeting the shared challenges we face," he said.
"Though on pensions this isn't working ? even after all the consultation by the government. Slap-bang in the middle of talks we're seeing some unions sabre rattling and calling everybody out.
The government has to hold its nerve and push through Lord Hutton's pensions reforms. Otherwise the public sector pensions deficit ? which is already more than �1trn ? will get even more unaffordable.
"The private sector has bitten the bullet on this. Now the government as an employer needs to do the same."
It should also press ahead with modernising the law around industrial action ? and before strikes occur, he said. "We've heard business secretary Vince Cable say legislation will be considered if strikes happen.
"But by then it will be too late, and no barn-door-closure strategy will make amends for the horse having long since bolted. I say do it now, before the damage is done."
Source: http://www.guardian.co.uk/politics/2011/jun/17/cbi-criticises-david-cameron-public-services
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