Blair tells unions he will not flinch from change

Tony Blair provoked the anger of trade unions yesterday with an uncompromising speech expressing his determination to make increasing use of the private sector to improve public services.

Mr Blair warned the union movement he would not "flinch from the decisions and changes to deliver better public services, no matter how much opposition". He said "it is reform or bust" and warned that "no vested interests can have a veto on reform".

Unions reacted angrily, challenging the Prime Minister to put his proposals to a vote at the Labour Party conference in October. A national advertising campaign opposing the plans will continue as planned.

The Prime Minister spelt out the full extent of his public- sector reforms in a document showing how the private sector could be brought in to run "failing schools", prisons, to monitor prisoners released on electronic tags and run treatment for drug addicts.

John Edmonds, the general secretary of the GMB, predicted a showdown at a meeting of the Labour Party's National Executive Committee next Tuesday. "We were afraid Tony Blair would attempt to sneak privatisation in through the tradesmen's entrance but here he is delivering it directly through the front door," he said.

In his speech at the Royal Free Hospital in north London, Mr Blair said reform of hospitals, schools and policing was the "yardstick" by which his Government wished to be judged at the end of this parliament.

"There can be no greater crusade for a modern centre-left government than to invest in and reform our public services," he said. "We should embrace it with every bit as much zeal and commitment as the Attlee government built the welfare state.

"Private companies can in many cases be more responsive to the immediate needs of demanding consumers," he said. "It would be surprising if the public sector could not learn something from that responsiveness to consumers."

Dave Prentice, general secretary of Unison, representing 1.3 million public sector workers, has warned that he is reviewing the union's affiliation to the Labour Party.

"The Government has a mandate to improve public services, but it has no mandate whatsoever to privatise them."

Mr Blair claimed "the public are not ideologues, they are realists. Where it make sense to use private or voluntary sectors better to deliver public services, we will," he said, adding that the reforms would not be completed in the lifetime of the present parliament.

The electricians' union reacted positively to the speech. But John Monks, the TUC general secretary, said Mr Blair's words had not eased trade union concerns. "The absence of any examples of public-sector improvement and dismissal of examples of private-sector failure such as Railtrack will compound these fears," he said.