PM and unions in 'privatisation' peace talks

Tony Blair will meet trade union leaders tomorrow in an attempt to head off a growing rebellion against his controversial plans to boost the involvement of business in the running of public services.

The talks at Downing Street will follow the publication yesterday of a report by the Institute of Public Policy Research (IPPR) think-tank, which cast doubt on whether public- private partnerships provided value for money in health education. It criticised the Government's record on the joint schemes that have been established so far.

But it said there should be no "ideological barriers" to the use of such schemes if the practical problems could be resolved.

The Government's proposal to give commercial firms a greater role in hospitals and schools has also angered many Labour MPs. Opponents claimed yesterday that more than 100 could rebel when legislation is brought forward this autumn, potentially enough to force a climbdown.

The Prime Minister's spokesman said yesterday that the Government was not looking for a "punch-up" with the unions. He insisted it was not planning for the privatisation of the NHS. "A lot of good work is going on in the public sector and we want to build on it to make sure there is real reform alongside the extra investment we are making," he said.

Although the Prime Minister will tell the unions his plans have been misrepresented, he will not signal a retreat. "No one has a veto over reform," said his spokesman.

John Monks, the general secretary of the TUC, who will lead the delegation of union bosses, said he feared that the Government was looking for a fight. He said last night: "There is a state of readiness and alert [in the unions], not for confrontation in an industrial sense, but in a sense that somebody might be coming for us. We are nervous, we are apprehensive and we are not sure what the agenda is."

Union leaders seized on the criticism by the IPPR's commission as justification for their doubts on greater private- sector involvement. Dave Prentis, general secretary of Unison, said: "We have argued all along that the Government has it wrong on PFI [the private finance initiative] and this report agrees with us."

Peter Kilfoyle, a former minister and the MP for Liverpool Walton, said: "I think the concern is very widespread. I think people realise we have gone down this road as far as we ought to and that perhaps it is time for a radical reassessment of the Government's position."

The IPPR hopes its report will help to breach the divide between the Government and its critics. "We are trying to get the champions of public- private partnerships to see the limitations of existing practice and get opponents to realise the potential if these issues are addressed," said Matthew Taylor, the IPPR's director.

Alan Milburn, the Health Secretary, sought to calm the unions' fears, insisting the changes would "preserve the ethos and the principle of the NHS". He said: "Most importantly, reform within the public services and certainly within the NHS has to come from within."

Mr Milburn raised the prospect of performance- related pay bonuses for successful NHS trusts but said a "handful of consistently failing hospitals" would be taken over by managers from successful hospitals.

Barbara Roche, a Cabinet Office minister, admitted the private sector was not a panacea for the problems in public services. She said: "When you are waiting on a trolley in a hospital corridor, you are not interested in ideologies."