Businesses have today called on Chancellor George Osborne to put public sector pensions reform at the heart of the Comprehensive Spending Review.
In its submission to the Treasury ahead of next month's review, the Confederation of British Industry urged government to target two key areas: increasing competition to drive down costs; and getting the public sector on a "sustainable footing" by tackling unfunded liabilities.
Reform of unfunded public sector pensions, responsible for an estimated £1trn of liabilities, will be a key focus for Treasury officials.
In a clear message to disgruntled union bosses, CBI deputy director-general John Cridland (pictured) said cutting spending meant "tough choices".
He added: "We think that the need for economic growth, not the noise of the loudest voice, should determine where cuts are made.
"The government must improve the efficiency of public services and focus the limited public money available on areas that do most to galvanise growth."
CBI chief economic adviser Ian McCafferty said the government needed to use its "limited resources" to support private sector recovery.
"At the same time, the efficiency of government must be improved across the board," he said. "This twin approach to prioritising public spending will help smooth the path to budget balance, helping the public finances return to a more sustainable footing."
Lord John Hutton's independent Public Service Pensions Commission will produce its interim report in October, with an initial focus on possible short-term savings within the spending review period.
The commission will then produce a final report in time for the 2011 budget.
