Speaking at the CBI's South East annual dinner in Epsom last night the CBI's deputy director-general Neil Bentley questioned the coalition's commitment to reform and warned failure to embrace competition could lead to deficit-reduction plans faltering.
He said: "In most areas, we're 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've 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 £20 billion savings needed to help balance the NHS books will surely hit services.
"Health's not alone. In local government, policing, probation and elsewhere, reforms are losing momentum."
He added: "Today, the coalition gives the impression of having lost its way, uneasy about reforms and unsure how to present them."
Launching a new report, One Year On - Progress towards transformed public services, Bentley hightlighted some positive steps the Government has taken. For example, in making efficiency savings, centralising procurement and moving towards sharing back office functions.
Progress has also been made on bringing in specialist providers to tackle worklessness and expanding the academies programme. But Bentley questioned the Government's commitment to reform and argued it must promote competition to ensure we get better public services at the right price.
"Before last year's general election, we heard plenty from both opposition parties about the need for change. That's why it's so disappointing that we're one year on with a coalition government but no further forward, with reforms stalling and the path ahead unclear," he said.
"In January, the Prime Minister said: 'We cannot put this off any longer.' 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.
Commenting on the threat of public sector strikes, he added: "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.
"We've heard business secretary Vince Cable say legislation will be considered if strikes happen. But by then it'll 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."
