THE CBI welcomed Chancellor Gordon Brown’s intention to target public spending more effectively and the announcement of a "radical and courageous" efficiency programme.

In the Chancellor’s public spending review he announced the cutting of 84,150 civil service posts in England by 2008 to free up resources for "front line" investment.

According to Mr Brown the job cuts, plus other efficiency measures, would help save £21.5bn a year.

Nigel Bourne, CBI’s South East regional director said: "The Chancellor has taken a big step in the right direction.

“Companies will breathe a sigh of relief that growth in public sector investment is not going to become profligate pre-election spending. Business applauds a radical and courageous efficiency plan that will involve implementing decisions that have been ducked for far too long.

“However, while this is encouraging, we have heard big promises before. Business will adopt a ‘we'll-believe-it-when-we-see-it’ attitude.

“Mr Brown still has to face down vested interests in the trade unions and civil service. He must introduce a credible system for measuring efficiency transparently if business confidence is to be maintained.

"We should remember that most of the benefit of civil service efficiency savings will not come through until the latter part of the spending period, although much of the saving will be spent up front. This means efficiency savings must be delivered in full, as well as sustained growth in the economy."