Blair to face wrath of donors at congress

The Prime Minister will come face-to-face with the anger of the Labour Party's biggest donors over his "privatisation'' policy when he addresses the TUC annual congress in September.

The party's biggest affiliates reject Tony Blair's attempts to placate them over the future of public services in a series of strongly worded motions to the annual congress published today.

Mr Blair's approach is described as a "recipe for chaos'', "inefficiency,'' a "charter for privatisation'' and a means of driving down the ages of low-paid public sector employees.

The issue is expected to dominate the party conference season and the open hostility shown to Mr Blair at the TUC will almost certainly form a dress rehearsal for the Labour conference two weeks later. Mr Blair's speech to the TUC will have to reassure unions or he could face defeat on the issue at the party conference, which has only happened once since Labour first attained power in 1997.

In its TUC motion on the subject, the biggest public sector union, Unison, declares that the kind of strategy espoused by Mr Blair will lead to reduced services at a lower quality. Unison urges the TUC leadership to expose "the shortcomings and inefficiencies'' of the Private Finance Initiative and public-private partnership schemes and demands that Treasury restrictions on state expenditure be removed.

Several large unions demand a "fair wages'' regulation, which would mean private sector workers could not be paid less than their state-employed colleagues for performing similar jobs.

The Transport and General Workers Union rejects the idea that "efficient public services can only be provided entirely by, or in partnership with, the private sector''.

The motion calls for "the Government's public sector reforms to be based on the principle that Britain's public services should be publicly owned and publicly accountable''.

Only one TUC union offers the Government support, but its proposition will almost certainly be defeated. The right-led Amalgamated Engineering and Electrical Union says: "Both public and private sectors should work together in partnership to deliver public services that we can be proud of. All stakeholders in public services has much to learn from each other and we should use the best practice and expertise wherever it lies.''

Mr Blair will also face demands from the TUC conference for fresh employment legislation, giving unions the right to stage strikes on political issues and in support of other workers.

Other resolutions call for employment rights from "day one'' and the right to automatic reinstatement for all employees unlawfully dismissed for taking part in industrial disputes.

Unison expresses regret that in the Prime Minister's own words, British law remains "the most restrictive on trade unions in the western world''.

More welcome to the Prime Minister will be a declaration by the TUC that there should be a referendum on the euro as soon as possible. Gordon Brown, the Chancellor of the Exchequer, rejects Mr Blair's relative enthusiasm for the European single currency.