The Labour Party and the Scottish unions averted a clash over the private finance initiative when the Scottish TUC voted to tone down its criticism of the PFI after a debate at its annual congress on Wednesday.

The congress voted to carry the general council’s compromise motion, which expressed serious concern over PFI as a funding mechanism, but recognised that it “may offer a way forward” if agreements securing jobs and terms and conditions could be reached.

The acceptance followed rumours of a secret deal between Labour and the unions at the weekend, and a speech by secretary of state for Scotland Donald Dewar at Monday’s annual conference, in which he promised more protection for the rights of staff who become private sector employees under PFI deals.