Downing Street denied any rift between Mr Blair and his deputy, but Labour MPs saw Mr Prescott's ringing declaration of support for the public sector as a deliberate strike back at the Prime Minister. "You cannot slag off five million workers," one close ally of Mr Prescott said last night.
Relations between the two men have been strained by criticism from Mr Blair's aides of the Government's performance on transport. His advisers now believe the creation of Mr Prescott's giant Department of Environment, Transport and the Regions was a mistake and have floated the idea of "promoting" Mr Prescott to Home Secretary so that another minister could take over the transport brief.
However, Mr Prescott is expected to remain at the head of a beefed-up transport team when Mr Blair reshuffles his Cabinet shortly. There wasspeculation at Westminster last night that the changes could be announced next Monday after Mr Blair cancelled a visit to Poland. But aides insisted that he would work on the Irish peace process, suggesting the reshuffle would be announced just before the Commons summer recess starts on 27 July.
In a speech to the Local Government Association in Harrogate, Mr Prescott issued a thinly veiled warning to Mr Blair not to launch a debate on the relative merits of the public and private sectors. "Traditional values in a modern setting should be our guide, not an ideological argument about public or private ownership," he said. He insisted that the problem of securing change was not unique to the public sector. "It is precisely the same problem we get in certain sectors of the private sector," he said.
The Deputy Prime Minister declared that it was the public sector which had made possible universal education, developed public transport, provided affordable and good quality housing, parks and open spaces and care for the needy, and ensured safe supplies of drinking water.
Mr Prescott said local authorities would continue to civilise Britain into the next century. "Since the 19th century it has been local councillors and the public sector who have helped forge a modern society. When the private sector failed, the public sector stepped in locally and nationally," he said.
Mr Prescott, who has remained stoically loyal to Mr Blair through all the changes under New Labour, ended his speech by declaring: "I am glad to have got that off my chest."
Mr Blair's spokesman insisted he had "no regrets" about his speech on Tuesday, in which he said he bore "scars on my back" after two years trying to force change on the public sector. However, many Labour MPs believed he unintentionally went "over the top" in his unscripted remarks to a City audience.
Downing Street said the Prime Minister would continue to take on "vested interests" in the public sector. Mr Blair told the Commons: "I am not attacking the doctors or any other group of workers. But I am saying we need change in our public services. This Government, which is putting more money into the public services than ever before, is entitled to demand in return real change."
John Redwood, Mr Prescott's Tory shadow, said he was frustrated because Mr Blair had blocked his transport policies. "There is a flaming row at the top of Government about the attitude to public services and the trade unions. This has boiled over into a spectacular clash of titans - New Labour Prime Minister against his Old Labour deputy," he said.Reuse content