Oliver Letwin

Gordon Brown's public sector efficiency drive has come under fire from the Conservatives and the CBI.

The business organisation warned on Monday that the chancellor will struggle to achieve the £21.5 billion of efficiency savings set out in his comprehensive spending review.

Meanwhile shadow chancellor Oliver Letwin also questioned Brown's targets.

The Conservative spokesman said that 13,000 of the 84,000 "job cuts" announced by the government are posts to be reallocated elsewhere.

Delivering a speech on government plans to cuts waste in the public sector he argued that Labour's track record has been one of employing more bureaucrats.

Most of the 500,000 new public sector jobs created since 1997 have been back office staff, Letwin said, suggesting that this trend will continue.

"This government should not be able to hoodwink the British public into believing that it is thinning down government when it is not," he told the BBC.

"Because what it is doing is not subtracting but adding bureaucrats. I'm not talking about front line workers."

However Treasury minister Ruth Kelly said the Conservatives had chosen to save money by cutting the delivery of services.

"These are real improvements in the quality of service that the public expects," she told the same programme.

"There is a big argument here about whether we want to have that investment and see the government delivery better front line services or whether, as I think Oliver is now proposing, you want to scale back government."

Poor procurement

In a separate study, the CBI said that poor public sector procurement systems have been blamed by the business organisation for wasting much of the £120 billion a year spent buying good and services.

"Too often government dithers about what exactly it wants to buy, or makes an order then changes its mind," said director general Digby Jones.

According to the CBI, a radical overhaul of public sector procurement is needed to improve efficiency.

The call came as a MORI survey of 83 CBI member firms found widespread experiences of the public sector changing contracts mid-way through the procurement process.

"Business is positive about its relationship with the public sector but poor procurement practices are getting in the way," said Jones.

"The impression we're getting is that existing systems aren't delivering and that the costs of procurement are actually going up.

"Repeatedly changing specifications means the taxpayer ends up paying more than if the government got it right first time."

Job cuts

The CBI also warned that the civil service job cuts will only deliver £5 billion of the £21.5 billion government efficiency target.

The vast bulk of the savings will have to come from improved procurement practices, it noted.

"Making efficiencies doesn't just mean reducing headcount. The government must do things differently and introduce better working practices," Jones warned.

"If it doesn't think more about this when it goes shopping, then it's difficult to see how the chancellor will be able to meet his targets.

"Intelligent public procurement can make such a contribution to productivity gains in the private sector.

"Measured, predictable purchase plans enable companies to invest in kit and people more effectively - just look at France and Germany."