By Phil ScullionFollow @PhilScullion
Failure to embrace competition in reforms could lead to deficit reduction plans faltering, the CBI has warned.
Dr Neil Bentley, CBI deputy director general, called on the prime minister to avoid allowing "forces of inertia" to derail public service reforms he described as "urgent".
"In most areas, we're seeing public services cling onto existing ways of doing things, with vested interests fighting modernisation at every turn and campaigning against change," he said.
Dr Bentley went on to criticise the government over their recent U-turn on the NHS: "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 £20 billion savings needed to help balance the NHS books will surely hit services."
With numerous strikes planned in the coming months Dr Bentley spoke of the fear that industrial action and resultant electoral backlash could be causing the government's caution.
However he warned against abandoning reform and suggested that the government needed to stand up for itself, particularly over pensions: "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 £1 trillion - 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."
One possible means of combating strike fears was suggested a fortnight ago when business secretary Vince Cable told union members that legislation would be considered if strikes occurred.
This would not be soon enough though according to Dr Bentley, who said: "No barn-door-closure strategy will make amends for the horse having long-since bolted. Do it now, before the damage is done."
The strikes planned by teachers, police and tube workers over the next month are sure to increase pressure on the government over strike legislation, with many prominent Conservatives including London mayor Boris Johnson advocating a tougher approach.