Gillian Shephard, shadow Environment Secretary, called on John Prescott, the Deputy Prime Minister, to investigate after a senior Labour councillor in Walsall claimed that he had been asked by Unison officials to find jobs for Labour party members threatened with redundancy.
Graham Walker, who has since quit the party, said union officials made clear there was a long-standing agreement that Labour supporters' jobs would be saved in budget cuts.
"They were saying co-operate in finding jobs for these people or all hell will break loose," he said.
Two Unison officials were allegedly caught on tape asking the councillor to spare five staff facing redundancy because they had campaigned for Labour at the general election.
Mrs Shephard said the controversy proved the folly of the Government's decision to scrap compulsory competitive tendering (CCT), which had ended union monopolies over service delivery. "One of the reasons we introduced CCT was because unions had a lock over council workforces and there was too much hand-in-glove working."
Bernard Jenkin, Tory MP for Essex North, raised the Walsall claims in the Commons yesterday during the second reading debate on the Local Government Bill. It replaces the CCT regime with a system of "best value", which removes the need to tender to the private sector but requires town halls to meet high standards of service on everything from dustbin collection to meals on wheels.
Councils will have to meet performance targets and subject plans to scrutiny by the local electorate. They will be inspected by the Audit Commission to ensure they are providing value for money compared with similar authorities.
Hilary Armstrong, the Local Government minister, said the Bill would ensure competition between the public and private sector. Councils would be obliged to strive for continuous improvement in services, a contrast to the Tory regime, which led to "minimum quality at minimum cost by minimalist providers", she said.
Mr Jenkin, a Tory environment spokesman, said: "This Bill is an invitation to cronyism of the worst kind that we see endemic in so many Labour councils."Reuse content