Blair challenged over public sector

Ministers want more private firms involved in the NHS

The leader of one of Britain's biggest unions challenged Prime Minister Tony Blair to produce evidence that his plans to give private firms a bigger role in public services would not drive down standards.

John Edmonds, general secretary of the GMB, told the Commons public administration select committee his union had produced "examples galore of disasters" resulting from the role already played by the private sector in the NHS and local authorities.

Ministers had failed to match that with examples of good practise by private companies involved in those services.

John Edmonds: Called for debate based on "evidence, not assertion"

So far, Mr Edmonds told the all-party committee, all the evidence showed that where private firms got involved in the public sector "the experience has been dire".

"The government is proceeding by assertion," Mr Edmonds complained of Mr Blair's plans for sweeping change to the public services.

And all evidence available elsewhere put the burden of proof clearly on those in favour of boosting the role of the private sector to prove it would not lead to worse services, he added.

Figures fudged

Asked why the government had not been moved by his arguments, Mr Edmonds said opinion polls plainly showed he had won the arguments with the public.

"Governments don't change their minds but they sometimes change their policies," he told the committee.

"We're not looking for some triumphant change here, but for a bit of circumspection."

He predicted that in time the government would come round closer to his point of view.

But at the root of the problem lay the government's accounting procedures, which provided the sole political imperative for its controversial Public Finance Initiative (PFI) - the scheme under which private sector investment in hospitals and schools is paid off by from public funds over many years.

Chancellor Gordon Brown was using the PFI to "fudge the figures" on public service investment, said Mr Edmonds.

But a simple change to the way the public sector borrowing requirement (PSBR) was calculated would end the need for PFI.

'We don't have to do stupid things'

"The advantage of PFI seems to be that, because this is so-called private money, it doesn't show up on the PSBR and therefore this is a way of fudging the figures and still producing extra public service investment," said the union leader.

Tony Blair insists his plans for the public services are essential

"It is justified as a way of squaring the PSBR, rather than a way of producing the best services.

"If the PSBR definition requires us to do stupid things, we might change the rules so we don't have to do stupid things."

Because PFI projects are paid for over a number of years, the initial investment does not appear as a large lump sum in the PSBR calculations. Critics point out however that this involves much more expenditure in the long term.

Mr Edmonds told the committee it was only because ministers were scared of the City thinking it was going soft on spending that stopped them from making that simple change to the PSBR calculation.

He forecast that if the government were to change this "foul-up in the way we present public spending and public sector borrowing in this country", it would meet a calm reaction from the City.