Blair seeks to cool privatisation row

Tony Blair wants more private sector involvement

The government has sought to cool the row over its plans to give a greater role to private firms in delivering key public services, insisting the government was not looking for "a punch-up" with trade unions.

Prime Minister Tony Blair's spokesman said some people were trying to misrepresent ministers' views as privatisation of public services.

The idea that the government wants to have a punch-up with the public sector unions is not the case

Prime minister's official spokesman

Downing Street's bid to damp down the growing controversy followed a report from an influential, New Labour-friendly think tank warning ministers they must radically change their approach to expanding partnerships with private companies.

The policy, formally unveiled in Labour's election manifesto and aimed at meeting Mr Blair's ambition for "world class public services", has already caused disquiet among Labour MPs and come under open fire from senior party figures and trade unionists.

Misrepresented

Mr Blair's spokesman insisted that while ministers certainly intended to change public services, there were no privatisation plans.

"Closer links with the private sector are only one part of the reforms," he said.

Everyone agrees we need to see improvements in our public services but only a fool could believe that will be achieved by running our schools and hospitals in the same way the private sector has been running Railtrack and Marks & Spencer.

John Edmonds, GMB general secretary

"But the idea in no way undermines the central principle that the health service should be available to all on the basis of need and irrespective of the ability to pay.

"The idea that the government wants to have a punch-up with the public sector unions is not the case."

The latest episode in what is seen as a defining theme of Mr Blair's second term came when the Institute for Public Policy Research (IPPR) published a detailed report from a high-powered commission on public-private partnerships.

Record 'unimpressive'

Launching the study, which took two years to complete, IPPR director Matthew Taylor - a former Labour policy director - said a wider role for the private sector could be important in the reform of public services.

But, he told BBC News, the record of public private partnerships (PPPs) so far was "not that impressive".

The IPPR criticised plans to part-privatise London's Tube network and the equally controversial scheme for National Air Traffic Services (Nats).

Mr Taylor said he wanted the government to "demonstrate that the private sector is being used for pragmatic rather than dogmatic reasons".

'Panic'

Health Secretary Alan Milburn insisted that the government's plans did not mean core NHS principles were "up for sale".

Alan Milburn: NHS must be reformed from within

He said that successful health service managers would take charge of "a handful of consistently failing hospitals".

"Because we have such good people in the NHS, the NHS has to be reformed from within," he said.

"The reason we have to do that is that we want to preserve the ethos and the principles of the NHS."

Shadow health secretary Liam Fox accused him of "panicking" over the report and of "trying desperately to soothe Labour nerves" over the government's plans for the NHS.

Mr Fox said there was "no doubt whatever" that the government's concordat with the private health sector goes "much further" than Mr Milburn was prepared to admit.

Labour disquiet

On Labour's own side, alarm at the policy has been expressed in several quarters. Frank Dobson, Mr Milburn's immediate predecessor as health secretary, has warned of "considerable unease" among the party's backbenchers over the plans.

Former Labour deputy leader Lord Hattersley cited the issue as one of the triggers for his attack at the weekend on the direction Mr Blair was taking the Labour Party.

And Ann Black, a member of Labour's national executive committee, warned of "widespread alarm and unease throughout the Labour Party as well as outside it".

Union anger

Meanwhile, trade unions have made clear their own deep concern at the policy.

Dave Prentis, general secretary of the public sector union Unison, said: "We have argued all along that the government has it wrong on PFI [private finance initiatives] and this report agrees with us.

"It is a complete endorsement of Unison's criticisms of PFI. Where the commission has looked at the evidence, it has come to similar conclusions to Unison."

Leader of the GMB union John Edmonds said that while everyone agreed public services needed to be improved, "only a fool could believe that will be achieved by running our schools and hospitals in the same way the private sector has been running Railtrack and Marks & Spencer".