NEWS

Prime minister Tony Blair is set for further meetings with union leaders, following a week of sustained pressure against the government's policy on publicprivate partnerships Meanwhile, a report from the Audit Commission has warned that the private finance initiative is 'not an easy option'.

Despite a 'clear the air' summit at Downing Street last week, the unions have maintained their onslaught, with TGWU leader Bill Morris attacking the government's 'cocktail of confusion' over the role of the private sector in public services.

Unison general secretary Dave Prentis - who described the Downing Street summit as 'constructive' - warned that he had£8.5m on hand to fund industrial action if necessary.

'We will defend members facing privatisation, and if that means industrial action, then so be it.'

Mr Prentis is seeking meetings with health secretary Alan Milburn and other ministers to 'press our case and go into the detail of the arguments', a Unison spokesperson said. The government 'needed to take the workforce with them in order to achieve reforms', she stressed.

The prime minister's spokesman said last week's summit had been 'a good meeting'. Mr Blair wanted to work with the unions, but 'no one had a veto over the reform process'.

The mood of confrontation is set to continue as the Trades Union Congress and Labour Party conferences approach. The TGWU's conference this week is set to debate the future of its funding for Labour, a move that follows Unison's decision to review its donations to the party.

And former Labour leader Neil Kinnock stepped into the debate about funding the NHS with a call for 'a specific national health and community care tax'.

Against this backdrop, the Audit Commission this week launched Building for the Future, a paper on managing procurement under PFI. The report 'neither endorses the PFI nor questions the fundamental assumptions underlying it', but it warns: 'It is too early to say whether PFI contracts generally offer the public sector longterm value for money in terms of service delivery.'

Audit Commission controller Sir Andrew Foster said: 'PFI is not an easy option. The procurement process is a long and complex one demanding a great deal of senior management time. Schemes may also attract opposition from staff and local people and may fail on grounds of affordability or poor value for money.'

But 'many public sector bodies have successfully negotiated PFI deals', he added.

The Audit Commission found that PFI 'can offer significant predicted savings over conventional procurement' but 'purchasers should not be surprised to see predicted savings in the order of 3-5 per cent', particularly in smaller schemes.

The report details the impact of PFI's unpopularity. Staff interests are 'particularly critical' and 'the threat of industrial action is a risk that organisations must manage'.

Management quality and motivation were 'key determinants' of a scheme's success, but purchasers 'consistently underestimate the client-side resources' needed to manage the procurement process.

The report also highlights the cost of outside advisers. In projects reviewed by the commission, the minimum cost of external advisers was 'about£150,000' while one scheme ran up a£2m bill.

An analysis of 'first-wave' NHS PFI schemes showed external advisers reaching up to 8.7 per cent of the capital costs of the scheme, with an average of 4.2 per cent.