Meet the revitalised unions. They can vet bidders for PFI projects, they can influence the Treasury on ownership of hospitals, they can change government policy on staff transferral. Can the PFI survive?
Last week, Central Manchester Healthcare Trust told bidders for its £260m private finance initiative hospital to submit two bids each. In one, ancillary staff such as porters and cleaners would transfer to the winning consortium; in the other, staff would stay on the public sector payroll.

When the bids are received, the trust will decide which one offers the best value for money. Unison, the ancillary workers’ union, hopes that the winning bid will keep staff in public employment, whereas PFI contractors are convinced that transferring the staff to the private sector would give the better value for money. However, they also point out that the process of providing two bids and then justifying them is itself likely to bump up bid costs.

Unison has its own objection to the double bidding, which will be judged on qualitative criteria. As one Unison representative says: “It is very difficult to judge the value placed on wage cost savings compared with damaged morale.”

Whatever the outcome of the Manchester deal, the shift towards “variant bids” represents a victory for the unions in their battle against the PFI. And they are unlikely to stop there. Unions, with the exception of a few of the more right-wing organisations, have pledged to fight the PFI until it is abolished. And although their victories so far have been few, they have been significant.

This year, unions have managed to change the Treasury’s views on several key issues. Most significantly, the Treasury has given way on the question of the “residual value” of hospitals – in other words, who owns them at the end of the PFI period. In May, Gordon Brown pledged that hospitals would return to state ownership at the end of the deal, if that was what the trust in question wanted. This headed off union accusations that the government was selling off the family jewels to the private sector and conveniently blunted the challenge of the anti-PFI Scottish Nationalist Party in the Scottish parliamentary election.

We told the party that we might have to block the entire health policy document

Union member, on why labour made its u-turn on staff transfers

A second important victory for the unions was winning the right to vet contractors. All unions representing public sector employees now have the right to interview bidders on their employment practices and make recommendations to the client on whether they should be awarded the contract.

Unison national policy officer Steve Weeks says the trusts take great note of what the union recommends. “I can think of only one or two occasions where the trusts have ignored our advice and chosen someone we don’t want.”

The right to recommend bidders means that Unison has a huge lever on staff transfer – a fact that contractors recognise. One PFI bidder says: “If we don’t recommend that staff stay in the public sector, it is unlikely that they will recommend us.”

How did the unions get into such a powerful position? Although they do not have the kind of control over Labour Party policy that they once did, their lobbyists are active, and their views are listened to. The government’s U-turn on transferral of staff came about because of clever political manoeuvring at July’s Labour Party National Policy Forum. One union representative who was present says: “It was obvious there was going to be a big row about PFI at the meeting. We told the party that if there was no response to our concerns, we might have to block the entire health policy document, even though we agreed with most of the policies. Just before the meeting, the government changed the rules.”

The tide is turning. The government accepts that PFI is not necessarily best value for the patients

Steve Weeks, Unison

The unions have also found a new ally in their battle against health PFI – community health councils. These are local healthcare watchdogs, and they are using briefings from the unions to fight PFI projects. HealthWatch, central Manchester’s community healthcare council, is a vehement critic of the city’s £260m hospital scheme and is making its opposition clear by lobbying to health secretary Frank Dobson and writing to the local papers.

The situation is much worse in Birmingham, where the South Birmingham Community Health Council has managed to delay the University Hospital Birmingham NHS Trust’s plans for a £200m PFI hospital by more than a year.

One trust out of the seven affected by the recent changes in transferability of ancillary staff has come up with a suggestion. This is South Derbyshire Healthcare Trust, which, according to Unison’s Weeks, has decided to keep the ancillary staff on the public payroll and transfer ancillary staff managers to the PFI consortium. Weeks is happy with this option, but it is understood that the bidders view it as unworkable. An impasse has been reached for now, but, with unions in the ascendancy, the Derbyshire PFI bidders may have to settle for whatever deal they can get.