Delegates demand limit on use of PFI in public services

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A freeze on the use of private money to fund public health care was demanded yesterday at the Liberal Democrat conference in Bournemouth.

Delegates passed a motion calling for the private finance initiative (PFI) to be halted unless tough tests, determining value for money, quality and fair treatment of employees, were met. In a fierce debate senior figures had warned that the party could be seen as a mouthpiece for the unions and public services workers if it opposed public-private co-operation.

Earl Russell, the social security spokesman in the House of Lords, urged delegates not to dismiss outright private-sector expertise.

"The public and private sector both have got excellences but they are not good at the same things," he said.

"Competition is an excellence of the private sector. But where there can't be competition, that is where the private sector does not belong; the railways, the Underground and NHS are three government howlers."

Andrew Sangar, a councillor from Sheffield, urged the party to "avoid being caricatured as one of producer interests", saying that local government should "have all available tools to drive up service quality".

Mark Oaten, the chairman of the party, said the Liberal Democrats should not reject contracting out more services, including the provision of wheelchairs and inessential NHS services.

"There's an enormous prize for getting this right for the next election," he said. "The objective is to improve these services but not always necessarily through tax revenue."

Matthew Taylor, the party's Treasury spokesman, papered over the division in the party, calling for the pragmatic use of private finance while rejecting schemes that did not save money or boost standards, such as the London Underground.

He said: "Most PFI contracts replace unaccountable and over-centralised publicly run services with more unaccountable and over-centralised privately run services."

* Digby Jones, the director general of the Confederation of British Industry, told delegates at the conference that talk of a recession after the attacks on America was premature.

"The mood in the business community is anxious rather than gloomy. With certain obvious exceptions ... companies are reporting the direct impact on activity has so far been very limited," he said. "However, they remain anxious about the future, the uncertainties surrounding the timing and scale of US retaliation and the possibility of further attacks."