THE long-running row over the use of private cash to build the new Durham City hospital re-ignited yesterday - on the day Tony Blair carried out the official opening ceremony.

The public service union, Unison, claims that its criticism of private funding for NHS hospitals has been vindicated by changes in Treasury rules.

Unison argues that under the new rules, the £97m University of Hospital of North Durham - built with fewer beds than the obsolete Dryburn Hospital it replaced - would not have met the Treasury's criteria for private finance initiative (PFI) schemes.

The union blames the bed shortage on the need to make the deal attractive to shareholders. Only last week, seven planned operations were cancelled because of a shortage of beds.

One of the reasons why the North Durham trust only got two stars instead of three this week was the number of operations cancelled.

But Government ministers maintain that PFI hospitals - which are built by the private sector in exchange for hefty annual service charges - represent good value.

Unison general secretary Dave Prentis said: "The changes proposed by the Treasury vindicate what Unison has been saying about PFI for years - that fudging the figures has made it look as though the private finance option is better value for money than the public sector alternative, when the rules have not provided an opportunity to prove otherwise."

Unison called on the Government to halt all new PFI projects while a detailed analysis is carried out on whether they are value for money.

Unruffled by the controversy, a beaming Tony Blair, accompanied by wife Cherie, toured the hospital, greeting patients and staff. The Prime Minister met Bill Gilmartin, 78, from Chester-le-Street, who was being cared for in the coronary unit after collapsing at home.

The Blairs also chatted to Clare Hunter, 25, from Consett, who had given birth to her first child, Chloe, six hours earlier.

Mr Blair joked that he was worried that Cherie was getting broody again when she cradled the baby.