Union leaders have reacted warily to Prime Minister Tony Blair's confirmation that he intends to press on with his controversial plans to get the private sector more involved in public services.

Mr Blair used his speech to Labour's annual conference to confirm that he intends to press on with his controversial proposals to give the private sector more of a role in the public services.

The symbolic battle over Clause IV is set to be rerun, this time with the nation's public services as the battleground

John Edmonds

He warned against "dogmatic barriers" to the proposals - a reference to the heavy attack his proposals have come under from the unions.

Before the terrorist attacks on the US, the stage had been set for a serious conference clash between the two sides at the party's Brighton conference.

But the muted mood since the attacks meant that public sector union Unison - Britain's biggest union - pulled back from pushing their opposition all the way this week, backing a compromise conference motion rather than the more hostile one that had previously looked sure to be voted through.

Railways a 'disaster'

Mr Blair told the conference there were no plans to privatise the National Health Service or schools and that no one was saying the private sector was the best way forward.

He said there were good and bad examples in both the public services and the private sector - describing parts of the railways as a "disaster" when it came to the latter.

"But where the private sector can help lever in vital capital investment, where it helps raise standards, where it improves the public service as a public service, then to set up some dogmatic barrier to using it is to let down the very people who most need our public services to improve".

Labour had a huge programme of reform planned in the NHS, education, criminal justice and transport, the prime minister said.

'Battle over values'

Reform was not the enemy of public services and part of the programme was partnership with the private or voluntary sector, he told delegates.

John Edmonds: Blair's speech showed it was "full steam ahead" for the private sector

He raised the prospect of the Conservatives being in charge of the public services, warning that a different approach of cutting public spending was "waiting in the wings" which could lead to a "sink" public service.

"That would be a denial of social justice on a massive scale. This is a battle of values."

He urged his party to unite behind his plans, saying: "Let's have that battle but not amongst ourselves.

"The real fight is between those who believe in strong public services and those who don't."

'Apprehensive and uncertain' - Morris

Union leaders were not soothed by the speech, however.

Transport and General Workers Union general secretary Bill Morris saying he thought the conference felt "apprehensive and uncertain" about the direction of the domestic agenda, including public services.

John Edmonds, general secretary of the GMB union and a vocal critic of the government plans, said he believed the prime minister had signalled "full steam ahead" for greater involvement of private firms in the running of public services.

Mr Edmonds said it was also significant that Mr Blair had described the public services debate as being as important for the country as the scrapping of Clause IV had been for New Labour.

Symbolic battle re-run

"At least the prime minister showed greater honesty than some of his ministers by making it clear that privatisation of schools and hospitals is to proceed at full speed.

"The symbolic battle over Clause IV is set to be re-run, this time with the nation's public services as the battleground."

Unison leader Dave Prentis, who was privately criticised by some fellow union leaders for accepting the compromise deal offered by Labour managers, insisted that "it was right that the prime minister showed solidarity with America by concentrating on the appalling events of 11 September and the need for international social justice".

"We welcome his commitments to improve public services and not to allow the private sector to make profits by cutting wages and conditions of staff."