Unions and Government cross swords over PFI

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The Government's privately backed hospital building programme has been thrown into disarray by the refusal of businesses to allow staff to remain employees of the National Health Service, union leaders disclosed yesterday.

Agreements to press ahead with three pilot projects worth £500m are being held up, delaying the construction of 26 other hospitals to be built under the Government's private finance initiative (PFI).

On the eve of the TUC assembly in Brighton, Dave Prentis, general secretary of Unison, said the union would resist attempts to develop the PFI schemes at Roehampton, south-west London, Aylesbury, Buckinghamshire, and Havering in east London if his members' interests were not protected. He warned ministers his members would strike if the Government reneged on its deal to keep employees on NHS terms and conditions.

Hospital building is a main part of the Prime Minister's pledge to improve public services. He is speaking tomorrow at the annual TUC conference where senior union leaders are demanding assurances that state employees will continue to deliver public services. Mr Prentis said that companies were rejecting the proposed deal because profits would be slashed if they were not allowed to cut wages. He pointed out that more than 80 Labour MPs were members of Unison, which is proposing a motion to the TUC the day after Mr Blair's appearance that criticises the Government's policy of "creeping privatisation".

Sir Ken Jackson, general secretary of the Amalgamated Engineering and Electrical Union, was a lone union voice in support of more private- sector involvement. He said that tens of thousands of jobs were at risk without an investment from business. "We have had to put up with 50 years of underinvestment. Now there is a chance of securing £32bn worth of investment we all know we won't get through increased taxes or borrowing. It's time unions decided whether they want to become Her Majesty's Opposition.'"

He added that the public was looking to unions to deal with problems constructively. "I don't think that patients in hospital are unduly worried whether public or private money has gone into it, as long as they receive a high standard of treatment."

But Johns Edmonds, leader of the GMB general union, disagreed. He said Labour Party members believed in the public service ethos and that the new "deeply damaging and risky" strategy would fail to deliver before the next election. The GMB leader said that in three months the Government would compromise and guarantee the wages and conditions of public servants.

John Monks, TUC general secretary, said delegates to the annual conference being held in Brighton this week wanted to hear detailed proposals from the Prime Minister. "Warm words will not be enough. We want straight talking and we want to know where the Prime Minister stands."