PM accused of reneging on deal to end two-tier workforce

Tony Blair was under siege over employers' rights in public services last night after the leader of Britain's biggest union accused him of reneging on an explicit agreement to end the "two-tier" workforce.

The Prime Minister was expected to announce tomorrow at the conference that private companies will be prevented from undercutting existing wage conditions when they took over publicly funded services. But the Department of Health last week insisted that the deal could not apply to the National Health Service, in particular to foundation hospitals and the private diagnostic centres envisaged by the Government.

Dave Prentis, general secretary of the public service union Unison, accused ministerial advisers of "throwing a spanner in the works" and the Government for failing to honour an agreement that was endorsed by Mr Blair during the conference two years ago.

He said the Government's approach to the agreement was "immoral and unjustified". He said of the Prime Minister: "We are his friends, if he doesn't listen to his friends, God help him." Mr Prentis said that the whole spirit of social partnership between ministers and employees' leaders had recently been abandoned.

After 18 months of negotiations, the ban on the two-tier workforce was introduced earlier this year in Local Government, but unions thought they had also secured an agreement for other public services such as education and defence.

But, last Thursday, there was an inter-departmental meeting in Whitehall at which Paul Corrigan, special adviser to John Reid, Secretary of State for Health, let it be known that his department would veto any attempt to extend the arrangement to the NHS.

Mr Prentis said: "To hear the commitment will be dishonoured on the advice of an unelected political adviser is shameful." Unless there is a last-minute deal, the concept of foundation hospitals will be rubbished by the conference in a debate on Wednesday. Unison and other unions believe the new independent NHS Trusts, which would not be under the direction of the Health Secretary, could lead to the break-up of the health service.

Under the agreement to end a two-tier workforce, unions believed private firms could no longer take on a contract from the public sector and pay newly enlisted workers less than the employees transferred from the state sector.

Mr Prentis said: "Private companies bidding for work in local government have to abide by the deal reached. Why should those same companies, when bidding for work in the health service, be allowed to carry on exploiting low-paid health workers.

Tony Woodley, general secretary elect of the Transport and General Workers' Union, said the plan for foundation hospitals had not come out of the normal policy-making process of the party. "This policy has come from the planet Zog."