Prime minister Tony Blair this week warned contractors that take on public sector contracts not to offer existing staff poorer pay and conditions.
Blair told delegates on Tuesday: "When the private sector is used, it should not make profit simply by cutting the wages and conditions of staff."

UCATT general secretary George Brumwell welcomed Blair's speech, saying it would go some way to meeting objections to the PFI.

He said: "It's a very significant move. It will create a level playing field between the public and private sector." Brumwell emphasised that the government had to put mechanisms in place to ensure equality of pay and conditions.

Blair's conciliatory statement came as the Labour government moved to patch up its dispute with the unions over terms and conditions in the PFI sector.

Stephen Byers, head of the DTLR also announced a three-month review of the best-value local government procurement regime, which permits local authorities to take into account factors other than price when selecting a contractor.

Byers said the review would examine whether the best-value regime, introduced in April last year, was raising standards. He said it would also look at whether it was creating a "two-tier" workforce consisting of staff employed directly by the local authority and those working for the private sector, who endure poorer employment conditions.

Byers said contractors taking over local authority services might have to equalise pay and conditions.

There are still real differences between us and the government

David Prentice, Unison leader

He also said the government was committed to allowing local authorities to borrow money to invest in services so councils could compete with contractors from outside.

The review could lead to a swing away from outsourcing contracts if councils are able to compete more effectively.

The two announcements persuaded public sector union Unison to pull back from a public row with the government at the conference.

However, Unison general secretary David Prentice said the union would continue to oppose the PFI and public-private partnerships. Speaking at a fringe meeting on Monday night, he said: "There are still real differences between us and the government."

  • Also at the conference this week, the government announced plans to attract about 6000 skilled immigrants to the UK to work in construction.

    Home secretary David Blunkett said the Highly Skilled Migrants Programme would look at attracting the immigrants to specific areas in the UK, such as London and the South-east.

    Speaking at the Labour Party conference on Wednesday, Blunkett said: "I want to look at managed opportunities for economic migrants who … could obtain a legitimate job and contribute to our country as well as their own wellbeing."