Edmonds condemns public sector deal as a ?joke?

A detailed package of concessions was unveiled yesterday as the Government moved to defuse a bitter dispute with the unions over plans to increase private-sector involvement in public services.

A review of contracting out by local authorities will put public and private organisations on an equal footing, and ministers will act to stop public-private partnerships creating a "two-tier" workforce.

Legislation to allow councils to borrow money on the open market will also be introduced, Stephen Byers, the Secretary of State for Transport, Local Government and the Regions, told Labour delegates yesterday. The peace deal, agreed late on Sunday night, defused a row that had threatened defeat for Tony Blair on the conference floor. But it split union leaders.

Unison, Britain's largest union, backed a compromise motion welcoming "genuine dialogue" between the Government and the unions on the future of public services and backing reform.

But John Edmonds, the general secretary of the GMB general union described the idea of a review as "a joke."

Mr Byers announced the concessions to union concerns during a question-and-answer session on public services on the conference floor. He said: "The time is right to look at how best value regime has operated in practice. There are real concerns about the consequences of it and I think we should look at it again."

The review of the "best value" regulations, whichgovern contracting out local authority services to private companies, will be completed bythe end of the year.

Mr Byers promised action to prevent contracting out creating a two-tier workplace. He said: "If you have people working alongside each other on different pay, different conditions and different pensions, it leads to conflict and division and it doesn't provide the standard of services that we want."

But Mr Byers warned delegates: "We only have one chance. If we fail to deliver these high-quality public services, they'll go for the Tory way, which is to sell them off and tear them down."

Dave Prentis, the Unison general secretary, proposed the compromise motion. He said the union was in favour of reform but added that he wanted only "the kind that works and the kind that will deliver the improvements our communities need and deserve.

"Reform based on the real needs of our public services, not on an ideological preference for the private sector. Reform based on a clear-eyed assessment of what really works to deliver high quality, value-for- money services".

The deal, which was accepted by the Labour's national executive committee, was thrashed out during six hours of horse-trading on Sunday night at the conference hotel.

Mr Prentis told the private meeting he was prepared to dilute his union's policy by calling for "reform" rather than abolition of the private finance initiative (PFI). Mr Edmonds, however, argued it would be better to postpone the argument than concede the principle.

He said that the promise of a review was "not worth the paper it wasn't written on". He added: "A review is a joke among ministers who are in trouble. It's a device to alleviate the Government's policy problems rather than address the problems of Britain's public services."

Mr Edmonds tabled a motion denouncing the PFI as a means of "picking the pockets" of taxpayers but it was not debated.

Earlier, Estelle Morris, the Secretary of State for Education and Skills, and Alan Milburn, the Secretary of State for Health, defended the Government's plans for reform.