The government was thrown onto the defensive over public-private partnerships this week, following publication of a report by the Institute for Public Policy Research.

Prime minister Tony Blair was set to meet union leaders at 10 Downing Street on Wednesday, in an attempt to allay their fears and, in the words of the prime minister's spokesman, avoid 'a punch-up'.

Union unease was expressed last week in the decision of the Unison conference to review donations to the Labour Party.

In the wake of the IPPR report, health secretary Alan Milburn has at last clarified the four areas in which the private sector is expected to have a role in health services - providing elective surgery, running treatment and diagnostic centres, managing NHS IT systems, and improving GP, mental health and social services premises through private finance.

The report from the IPPR - a think-tank seen as close to the government - criticised the way PPPs have operated in practice, particularly the private finance initiative in the NHS, and calls for future arrangements to be comprehensively piloted.

PFI is not 'offering significant gains' in hospitals, the report says, while the argument that it allows more capital projects to go ahead is 'spurious'.

It warns: 'The use of new forms of partnership needs to be carefully piloted and evaluated before they are used more widely. '

NHS Confederation chief executive Stephen Thornton end-orsed the emphasis on piloting.

'If the government wants to experiment with the idea of the private sector running not just ancillary services but also clinical staff, that sort of operation would need to be closely evaluated before rolling out across the NHS. '

He pointed out that former Conservative health secretary Kenneth Clarke had famously declared there would be 'no pilots' of the internal market reforms.

This had 'a little lesson for us' as the market had since been scrapped, he said.

Unison general secretary Dave Prentis said the report reinforced the union's view that 'the value-formoney case does not stack up'.

But he added: 'There is clearly a reality gap between the evidence and the theory, and the evidence in this report is very thin.

'It provides no proof that PFI is working, and yet perversely concludes with a recommendation that there should be more PPPs covering more services and more jobs. '

Mr Prentis was looking forward to 'a constructive dialogue'with the prime minister because of the 'common goal' of delivering worldclass public services. But he said:

'We want the government to deliver the investment needed to allow our members to get on with the job without the threat of privatisation constantly hanging over their heads. '

Norman Rose, director general of outsourcing companies' policy group Business Services Association, welcomed the report, 'particularly the message that PPPs have to be more rigorous'.

The private sector should not be used 'just because We are there or because of dogma', he stressed. 'The last thing I would ever support is this gung-ho 'if it doesn't move, PPP it or PFI it' attitude. '

The sector did not have the capacity to 'deal with everything' but wanted to work in partnerships where it was appropriate, he said.

King's Fund chief executive Rabbi Julia Neuberger said the report showed PPPs 'should never be undertaken in a way that undermines staff conditions or morale' and should not be seen as 'a panacea for all the problems public services face'.