Union hails victory on private finance deals

Leaders of Britain's biggest union are celebrating what they see as a huge victory in the long battle over the use of private firms to run services and carry out work normally done by local councils.

The victory for Unison, the main public sector union, comes in a week when relations between the Labour Party and its traditional union backers seem to have hit rock bottom, with the normally loyal general union, GMB, refusing to put any more money into party headquarters.

Tomorrow, the local government minister, Nick Raynsford, will announce changes to the rules for private finance initiative (PFI) contracts, which are designed to protect employees from having their wages cut or working conditions worsened.

The announcement follows weeks of negotiations behind the scenes by Unison's leader, Dave Prentis.

The new rules will mean that when a council is deciding whether a bid for work from a private firm is value for money, it will not be allowed to count any undercutting of wages or work conditions as a point in the firm's favour. Unison is hoping this will mean that employees working on such contracts will get the same pay and conditions as full-time council staff.

Mr Raynsford will also announce the end of a system under which a council received more financial support from the Government if it put work out to a PFI contract than if the same job was done by council staff.

Mr Prentis called the decision a "breakthrough", which would "go a long way" towards allowing council workers to compete on equal terms with outside contractors.