Blair braced for battle with unions

The leaders of the big unions today confront Tony Blair in Downing Street in what threatens to be their biggest row since New Labour came to power.

The Prime Minister will face a demand to back down over Government plans for self-ruling Foundation Hospitals.

The unions, led by Brendan Barber, General Secretary of the TUC, will warn of revolt, saying the system would create a two-tier NHS. And, widening their attack, they will demand a halt to further moves towards "privatisation or commercialisation" of Britain's public services.

The encounter comes a week ahead of the TUC annual conference in Brighton, already set to condemn and oppose a range of key Government policies.

The TUC gathering is seen by both sides as a dress rehearsal for Labour's own annual conference a month from now. Downing Street signalled in advance of today's meeting there would be no backing down.

A spokesman for No10 said the encounter would be "a forum for dialogue and discussion" but went on: "There will be no stepping back from the reform of the public services." Behind the scenes, however, attempts were under way to avert a major bust-up.

The unions, with the moderates saying some of their demands had already been met, were suggesting Mr Blair set up a "public services forum" chaired by a minister to allow them to air their grievances. And there were suggestions the Prime Minister would accept the plan.

The proposal, likely to be condemned by the Left as little more than a talking shop, will still leave serious divisions, over Foundation Hospitals, university top-up fees and a range of other issues.

The most dangerous threat for Mr Blair is that a large and still growing number of Labour MPs will line up alongside the unions and the Left once the new session of Parliament gets under way.

The unrest spread still wider yesterday when the TUC signalled that it is to launch a new wave of opposition to Britain's military presence in Iraq.

A resolution at next week's conference will call for the immediate withdrawal of allied troops and a handover of control to the Iraqi people.

The move, set to be voted through by an overwhelming majority, will be proposed by Tony Woodley, the new General Secretary of the Transport and General Workers' Union and seconded by Bob Crow, leader of the RMT rail union. Both are members of the new generation "awkward squad" of militant union leaders.

The TUC motion is seen by the Left as a launch pad for a similar anti-war criticism at Labour's conference which could become a serious test of Mr Blair's authority over his party.

Labour Party managers successfully fended off the anti-war sentiment at last year's conference, with a resolution declaring that any attack on Iraq should be "within the context of international law and with the authority of the United Nations". This year, however, the task of finding a compromise looks much tougher.

Mark Seddon, a Left-wing member of Labour's National Executive Committee, warned of conference revolts over Foundation Hospitals, university tuition fees, pensions and Iraq, saying: "I think it is quite possible that they could lose those votes."