Bosses were urged to show the way to public sector workers by exercising pay restraint.

The calls came after the CBI took a tough line on the fire fighters strike and it later emerged that its own director general had taken a 42.5 per cent wage rise - from £200,000 to £285,000.

Alan Milburn admitted that a lack of Whitehall experience in dealing with huge private sector contracts was a "problem".

Addressing the CBI, the health secretary declared that nothing would stand in the way of hospital PFIs.

"I do want to get a lot of hospitals built quickly," he said.

DTI minister Alan Johnson boosted the euro-sceptic camp by claiming that the single currency was less of an issue for manufacturers than two years ago.