Doctors, teachers and council staff should look to UK central bankers to view best practice in the public sector, UK Chancellor Gordon Brown has said.

Speaking in a keynote address to City chiefs, Mr Brown braced public sector workers for more changes on top of the shake-ups introduced during Labour's first five years in government.

The modernisation of public service delivery is crucial

Gordon Brown

"Public sector reform has only just begun," Mr Brown said in his annual Mansion House speech.

The Bank of England, which was in 1997 given independence and control over setting interest rates, was a paragon for other services to follow.

"I believe there are lessons to be learned from the widely acclaimed success of Bank of England independence," he said.

The comment came as Mr Brown restated "cautious optimism" over the future of the UK economy, and signalled he would stand by the Bank if it raised interest rates amid the country's consumer boom.

'Crucial modernisation'

Mr Brown praised the clarity of the Bank's objectives and the "clear separation" of responsibilities between those who undertook tasks, and those who monitored them, "with maximum devolution of responsibility".

The transparency of the Bank's operations was an example to the rest of the public sector of the benefits of independent inspection, and public access to information.

The government would later this year propose ways of rewarding "success" in the public sector, he said.

"The modernisation of public service delivery is crucial," Mr Brown added.

The comments are likely to raise concerns among union chiefs concerned already at the progress of reforms in the public sector.

Famous tests

Some observers interpreted Mr Brown's championing of the Bank of England as a sign of his wariness of ditching its control over interest rates, as would be needed of Britain adopted the euro.

But Mr Brown restated the importance of the Treasury's famous five economic tests for deciding whether it would be in Britain's interests to scrap the pound.

"If the tests are met, then I believe we should join," he said.

"If the tests are not met, we should not. The tests are decisive."

The tests, devised in 1997, are due to be completed within the year.

"The work underway will ensure that the assessment will be the most robust, rigorous and comprehensive work the Treasury has ever done," Mr Brown said.

'Radical' reforms

Mr Brown also paved the way for encouraging immigration of skilled workers, following comments from Home Secretary David Blunkett of the benefits of economic migrants.

The Treasury's forthcoming spending review would "provide resources to expand work permits to encourage into Britain the key employees and entrepreneurs we need", he said.

The government was also committed to pumping extra cash into the UK's transport network, and revising planning laws to tackle the soaring demand for housing.

"Wider reforms in planning, transport, housing and immigration policy are needed in the competitive environment to meet our goal of higher growth in every region."

While the reforms would offer hope to northern parts of Britain, the booming south east would be targeted for "radical" planning, housing and transport reforms to ensure the area could "continue to grow at a sustainable level".