Published: 03/10/2002 Volume II2, No.5825 Page 19

We knew the government must be in trouble over the private finance initiative when reporters were summoned to a hastily arranged Brown/Prescott press conference at the Commonwealth Institute in Kensington.

Kensington? Yes, the chancellor and deputy prime minister had to take a break from the Commonwealth finance ministers' meeting to issue their spine-chilling warning.

Patients would suffer and building workers return to the dole if the big unions insisted on a 12-week PFI moratorium at Labour's Blackpool conference, they said. A gross exaggeration.

Mr Brown was dour and Mr Prescott impassioned. On this occasion, incidentally, he was the more effective communicator as well as being the Labour politician who first tried to break out of the Treasury's straightjacket on capital spending, more than a decade ago.

I am a great fan of Mr Brown's focused highmindedness. But as Cabinet colleagues could tell you (if they were not so discreet), his idea of a debate is everyone sitting around agreeing with him. So I set about teasing him with a rant of a question that Unison's Dave Prentis would happily have seconded.

Why not have a review of PFI? Didn't he understand that the long-term strain on hospital revenues, paying off the PFI debts over 30 years, might strain the wonderful new services he had promised, not to mention undercut staff pay, conditions and pensions?

The one jibe I forgot to hurl was Wembley Stadium. If the private sector had all the answers, how come it was making such a hash of a relatively simple project?

Mr Brown was having none of it.Nor was Mr Blair on radio, TV, in print or on the conference floor, despite the unions' sensible offer of a PFI 'review' instead of a moratorium. It would be as disruptive as a royal commission, a defiant chancellor told Radio 4's To d a y hours before the inevitable Blackpool vote.

So where did all this leave Minister Milburn and his team? Loyally supporting his senior colleagues, of course. But the health secretary was at the centre of a sub-row over foundation hospitals and the degree of financial freedom they will be allowed.

When asked about this at Kensington by Nick Timmins, social policy pixie of the Financial Times, the chancellor snapped: 'We are not going to return to the old days when anybody could borrow, government-sanctioned borrowing by all sorts of organisations.'

I assume he was referring to the last Labour government when Tony Crosland famously declared 'the party's over'. To make himself even clearer, Mr Grumpy said that governments had ended up having to guarantee bills run up 'in an irresponsible manner... we can only proceed in a sensible and prudent way.

There cannot therefore be reckless borrowing'.

The position at Blackpool has been that Bill Morris, estimable and decent leader of the T&GWU, has been attacking the foundation hospital concept because he fears it will lead to a two-tier hospital service. I should add here that when I criticised the GMB's gabby, John Edmonds, to a sensible Labour MP he replied: 'Edmonds is not ahead of his members on the PFI issue, they're ahead of him.

They're hopping mad.'

So Mr Milburn is under fire from Bill as well as Gordon. Yet so far as I can tell he is calm and confident. Why so? It must be because he thinks he has Number 10 on his side in this row. Certainly he has Peter Mandelson, which is not the same thing, but not a bad substitute either.

Mr Mandelson was very flattering about Mr Milburn in my hearing the other day, saying how he had impressed an audience at a Mandelsonian seminar the other day, how he had matured as a politician and - more important - is heading in the right direction on the NHS reforms: 'Gordon is a moderniser, but not if it affects the Treasury's prerogatives, controls and powers. You can't restructure the public services without impacting on the treasury, ' one well-placed MP tells me.

Not so much Mr Grumpy as Mr Grown-Up.

There is a way out of the foundation hospital finance row - a tight set of rules which I'll bet will be found.

Far more worrying for Mr Grown-Up must be the constant fear, voiced pre-conference by the Office of Health Economics, that NHS productivity is falling as the cash pours in.

More worrying for Mr Grumpy are those dark circling clouds of recession and war.