Paul Gosling sees trouble looming for New Labour at next month's TUC as Unison prepares to attack the Private Finance Initiative
The Government faces strong union criticism over its commitment to put private money into public services. The programme for the TUC's annual congress, in Brighton next month, was published today, and it reveals that Unison, the largest public service union, has tabled a resolution urging Labour to move away from the Private Finance Initiative (PFI). Unison believes the PFI will lead to a loss of jobs and lower pay in health and education.

A report commissioned by Unison from the Public Services Privatisation Research Unit, Dangers, Realities, Alternatives, concluded that the PFI was a less efficient means of paying for assets than simply borrowing money.

"It is buy now, pay later," says Malcolm Wing, deputy head of health at Unison, who is leading a Unison project examining the PFI. "The most serious impact of the PFI is on health, which it will damage in the long term, and have an impact on the workforce. It is more about reducing the public sector borrowing requirement than macro-economic policy.

"The last government was ideologically committed to PFI, and failed to deliver new hospital projects. It is being driven by Labour a lot harder, which may result in more schemes coming through."

Mr Wing believes that this is bad news for NHS workers and teachers. "The private sector claims that they can deliver value-for-money schemes, despite their cost of borrowing being much higher, by services being cheaper."

Although government ministers have said that PFI projects will not have responsibility for managing clinical staff, or for clinical support services such as pathology and radiology, the fear amongst these workers is that the private sector can only deliver savings if it cuts their wages and service conditions.

"Labour is very nervous about including these staff, but the alternative is that extra efficiency must be extracted from a small section of the workforce, from catering, domestic and portering staff," says Mr Wing. "These services have been subjected to market testing for the last 10 or 12 years. There were significant savings in the early years from cuts in wages and conditions, but more recently these have dried up, to the point where, in the most recent market tests, some of the bids have exceeded the current budgets."

Even if PFI projects do not lead to private sector employment of nurses and doctors, the higher cost of the schemes will lead to fewer staff being employed and to reduced service standards, argues Unison. "All the PFI schemes involve fewer bed numbers, and that means less staff," says Mr Wing. "There will be reductions in many clinical workforces. Re-engineering of hospitals will fall on the clinical staff."

The other risk, believes Unison, is that patients will find themselves charged for meals and higher-quality ward accommodation. "Financing roads through the PFI is fine, if you want to charge the public," argues Mr Wing. "There will be a softening up process on the public to introduce user charges in the NHS. I don't think it is on Labour's agenda, but the PFI will inevitably lead to pressure to introduce user charges. There is no consensus that there should not be charging."

The General and Municipal Union, the GMB, which also represents many public service workers, does not fully endorse Unison's criticisms of the Government. "We take a pragmatic view of this," says a GMB spokesman. "We would prefer public services to be financed from the public purse, but if we want to maintain quality services and have employees properly protected then we would welcome amendments to the PFI to cut bureaucracy.

"There should be proper democratic controls, and it should be fair and equitable. It must not be just about cherry picking. There are dangers, but we are being more pragmatic [than Unison]. We have got to look at where the money is otherwise going to come from."

The GMB is unlikely to support Unison's resolution to the TUC, which says that "privatisation and the PFI are not the solution" to cuts to funding of the public sector. The resolution goes on to argue that: "The PFI costs more in the long term than conventional procurement and in its current form poses a serious threat to the future of publicly run services. It also undermines the accountability of services to users."

Unison's resolution opposes new hospital building being accomplished through the PFI, and says that: "Private finance should not be relied upon to underpin the renewal of infrastructure and the delivery of public services in the future."

The days when Labour governments quivered when trade unions shouted has long since gone. But the irritation felt by Unison at the close relationship between the Labour Party and the commercial sector is another sign that the links between Labour and the unions are growing weakern