Speech: Alistair Darling

Alistair Darling and Gordon Brown today urged the trade unions to back away from a winter of pay disputes, saying it could undermine economic recovery.

In a keynote speech to the Trades Union Congress, the Chancellor said pay must be tightly under control to avoid further damaging the economy.

'We should not forget what together we have achieved over the past 11 years,' Mr Darling said in a passage of his speech circulated in advance.

'And that is why I am determined that we should not put those achievements at risk by taking unnecessary risks with economic stability.'

But he and Mr Brown, who together are due to hold informal talks with union leaders at an annual TUC dinner tonight, are in for a cool - even frosty - reception from union activists angry at Labour's two per cent pay cap on the public sector.

Mark Serwotka, leader of the Public and Commercial Services union, said Mr Darling will have to face a lot of 'angry' people.

Mr Serwotka said: 'There is a possibility he will be met with stony silence from many delegates.'

He said anger was graphically illustrated yesterday when Congress unanimously agreed a major rolling campaign against public sector pay restraint.

Mr Serwotka said: 'The Government must start listening and acting. That is the message Mr Darling will be forced to take away from Congress. There are a lot of angry people here.'

Anger: TUC general secretary Brendan Barber yesterday

Labour's leaders do not dare defy the TUC chiefs altogether because they are heavily dependent on union money for £9 out of every £10 received by Labour.

They could give ground by hinting at a windfall tax on energy firms to fund help for families unable to afford heating bills.

Keith Sonnet, deputy general secretary of 1.3million-member Unison, said Mr Darling had to be 'flexible'.

'We will be looking for content in his speech,' he said.

'We want more flexibility over public sector pay and what he is going to do about the economy-for instance a windfall tax on the private utility companies which are making such huge profits.

Protests: Unison local government workers demonstrate the cost of inflation during the TUC conference

' We want him to set out what he intends to do about the housing situation which is causing so many people such worries. But I am not optimistic. In fact I am pessimistic.'

Mr Sonnet warned that if the Chancellor came empty-handed 'then I don't think he will be received very well'.

Gerry Doherty, general secretary of transport union TSSA, said: 'Darling will get a tough time from the public sector unions. There is bound to be some sort of demonstration.'

A spokesman for the GMB union said: 'Our delegates are fully aware that we will be speaking to the monkey and not the organ grinder.'