The public service arbitrator, barrister Gerard Durkan . . .

who rules on disputes in the public sector . . . surprised Cullen when he sided with the Impact trade union and ruled that outside driver testers could not be hired.

Durkan agreed with the union that a clause in the Sustaining Progress national agreement meant the government could not contract out 'core' work of civil servants without prior agreement.

While there are fears that Durkan's controversial ruling could have wider implications and prevent the outsourcing of other key services to the public, finance minister Brian Cowen has moved to close off the loophole. It's expected the new partnership deal will give all departments more leeway in hiring outside contractors.

The Sustaining Progress agreement expires in June.

Talks on a new deal are currently underway.

In his ruling, Durkan said that all parties should immediately resume discussions with a view to clearing the 130,000 backlog of provisional licence holders which, he warned, "represents a potential threat to road safety".

Impact claims that its alternative temporary solution of employing more temporary driver testers would provide an extra 50,000 tests a year.