Former Conservative chancellor Kenneth Clarke has accused the government of ruining the PFI by giving in to the trade unions
Clarke said that Labour had capitulated to union demands by preventing contractors from setting their own conditions of employment, which stopped them from building in efficiency. He said: "Your readers are constantly having the management of their contracts interfered with for political reasons."

Clarke also accused his successor, Gordon Brown, of using the PFI to conceal public sector borrowing. He said: "He just wants vast amounts of public spending that he does not have to declare on the balance sheet."

Clarke said that contractors initially opposed the introduction of the PFI because traditional public sector procurement was an easy source of profit.

He said: "Most contractors regarded the public sector as a soft touch, where you had a splendid opportunity to make lots of money on cost-plus contracts with very little risk."

Unison national officer Margie Jaffe said the government had ignored union opposition to the PFI rather than giving in to it. She said: "If only that were true. It's a bit rich coming from a government that didn't get a single PFI off the ground."

Clarke himself blamed the Tories for their lacklustre PFI record.

He said some bankers and lawyers had adopted a half-hearted approach because they "were waiting to see what would happen if Labour came in, because we were obviously going to be defeated".

Clarke revealed that the origins of PFI, introduced in the 1992 budget, lay in a row between top cabinet ministers when he was home secretary, Norman Lamont was chancellor and Michael Heseltine was deputy prime minister.

He said Lamont "stormed out of a meeting of the relevant cabinet committee" because he and Heseltine were pressing him to be more generous in the 1992 public spending round.

They eventually reached a compromise where Lamont agreed to introduce PFI in the budget later that year.