A warning letter to key government ministers - signed by Digby Jones, the head of the CBI and 17 big contracting firms - says Labour's public services programme will not be achievable without private contractors.

They claim that "legalistic" or "rule book" protection of workers "would slow down reform, strangle innovation and drive leading edge providers to leave the market".

Forum Response: Unison

Dave Prentis, the general secretary of Unison, told ePolitix.com: "Digby Jones says the private sector isn't about driving down everybody's wages. Try telling that to the hospital cleaner who has just had her wages cut, or the school meals worker whose pension has just gone down the drain, or the home carer who has lost her holiday entitlement. Is it any wonder they are suspicious?

"Innovation by the private sector has been hard to find and efficiencies have been mostly at the expense of low paid women workers. Unison shares the government's objective of world class services, and it is our members in the public sector who will deliver those reforms.

"Unison wants newly recruited employees working for private contractors in the public sector to be paid the same as any workers transferred from the public sector. But businesses want a voluntary code of conduct and promise to be exemplary employers, recruiting new staff on rates that are fair and reasonable."

Forum Response: Institute of Directors

A spokesman for the Institute of Directors told ePolitix.com: "No one can deny that the UK's public services are under great strain and more investment is required. However, not all the problems of the public services relate to finance. Morale is poor and there is far too much political interference.

"Root and branch reform is needed to truly turn the situation around. Businesses are becoming particularly frustrated with the worsening transport problems. Radical solutions are needed. Private sector involvement in public service reform is, in our view, essential."