Blair loyalist quits with parting shot at public-sector plans

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Clive Soley disclosed last night that he is to stand down as chairman of the Parliamentary Labour Party, firing a parting shot at Tony Blair over plans to increase the private sector's role in public services.

Mr Soley, a Blair loyalist, warned that the Government's plans for reform would not work if the changes "demoralised" the people working in the public sector. He said Labour MPs were "worried" by the proposals and urged the Prime Minister to make a statement spelling them out.

Mr Soley has resisted pressure from Blair allies to stand again for the post as the "shop steward" of Labour MPs, deciding there should be a "clean break" after the election. Labour MPs will elect a new PLP chairman on Tuesday. A close contest is expected between Tony Lloyd, a former Foreign Office minister who will attract the votes of MPs worried at the party's direction, and Jean Corston, a former aide to David Blunkett who will be backed by Blair loyalists.

The election of Mr Lloyd, who came within six votes of ousting Mr Soley last November, would be seen as a "slap in the face" for Mr Blair.

Mr Soley told The Independent: "People are very uncertain about the various statements made by the Government. It is very important the Prime Minister clarifies the direction and boundaries of the changes soon." He added: "We need to be acutely aware of the morale of people working in the public sector. We have to carry them with us. We must not repeat the mistake of our first term, when our criticism of teachers meant they did not support some of the changes."

Minister launched a drive to reassure MPs and trade unions that their plans would not amount to privatisation. Alan Milburn, the Secretary of State for Health, told NHS managers in Manchester there should be a "new relationship" between the NHS and the private sector, which would not amount to a "takeover".

Mr Milburn said talks with GPs over a new contract would be led by the NHS Confederation, the employers' group, rather than Department of Health officials. GP leaders, who have threatened a mass walkout from the NHS over the contract negotiations, welcomed the announcement.