Private-finance initiative faces double challenge

The Government's flagship private-finance initiative is facing a twin challenge from the GMB union and the Liberal Democrats that could threaten plans to use more private money to build NHS hospitals.

The union is planning to exploit an obscure clause in the Local Government Act, which will allow it to consult local people publicly about whether to bring in commercial companies to build and run NHS hospitals in their area.

It is planning to consult left-wing Labour and Liberal Democrat councils about holding local referendums on plans to build PFI hospitals this week.

Union leaders are convinced local people will vote against handing NHS building contracts to the private sector and that the move will put pressure on health ministers to scrap the plans.

Tony Blair's flagship policy of bringing in more private money to fund improvements in education and the NHS will also be sharply attacked at the Liberal Democrat conference.

The Government's intention to form more partnerships with private firms to improve services will be a key theme of the Liberal Democrat conference where Charles Kennedy will seek to consolidate his policy of effective opposition.

An amendment tabled by Lord Clement-Jones, the party's health spokesman in the House of Lords, will call for a freeze on the use of private money in NHS hospitals.

Liberal Democrats will vote for an amendment that "deplores the fact that no proper evaluation of PFI schemes in the NHS has been conducted despite evidence of a lack of financial benefit, reduced capacity and diminished access".

It says that "no further PFI schemes should be approved in the NHS" until a number of conditions, including a full evaluation of their benefit to the NHS, has been established.

The Liberal Democrats are also expected to pass a critical motion, attacking government plans to part-privatise the London Underground and air traffic control system.

The motion says that further PFI projects should not be introduced unless they pass four tests: value for money, quality, accountability and flexibility.

The motion says: "Conference notes that the current government plans for London Underground and National Air Traffic Services fail these tests and that there is insufficient evidence that PFI in the NHS has passed them."

If the motion is passed, as expected, it will scupper any Labour hopes of Liberal Democrat support in the House of Lords for its PFI plans. In the House of Lords, unlike the Commons, the Government does not have a majority and relies on opposition and cross-bench support to defeat the Tories.

The GMB will this week make contact with Liberal Democrat councils as well as Labour councils to introduce referendums on the building of PFI hospitals.