UNIONS have welcomed an announcement by the Prime Minister aimed at ending the so-called two-tier workforce.

Staff such as cleaners, cooks and porters will be paid the same rate for the same work if their jobs are transferred from the public sector to private firms.

Tony Blair said a code to outlaw different rates of pay and employment conditions will be extended from local government to the NHS, civil service and other parts of the public sector.

David Miliband, Minister for the Cabinet Office, said:

"By building on the successful introduction of the code in local government, we are ensuring that all new entrants taken on by contractors in new or re-tendered service contracts will benefit from terms that are no less favourable than those of transferred public sector employees.

"They will also be offered a reasonable pension."

Dave Prentis, general secretary of Unison said: "Ending the two-tier workforce has always been a defining issue for me with this Government and I am delighted that the Prime Minister's promise to Unison has finally been honoured.

"This decision will also result in many public services being taken back in-house as contractors struggle to win new contracts.

TUC general secretary Brendan Barber said:

"No longer will private companies be able to win work from the public sector purely by cutting the terms and conditions of staff.

"It builds on the agreement in local government that has worked well."