Brown 'caves in' to trade unions on pay deal for public sector workers

NHS workers, local government staff and 100,000 civil servants working in job centres have been offered more money in recent days in an attempt to stave off threatened strikes.

The biggest change is the offer made to council staff. It breaks the Government's target of two per cent rises this year, designed to curb public spending.

Now 2.48 per cent will be added to their pay packets. The lowest paid will receive 3.4 per cent, taking them to at least £6 an hour.

But the Conservatives accused the Prime Minister of a U-turn, following threats from public sector unions to organise strikes across Whitehall, town halls, schools and hospitals.

Chris Grayling, Tory work and pensions spokesman, said: "It looks like Gordon Brown is talking tough, but acting soft. He has been preaching pay restraint, but now we start to see the small print, it's clear that the moment his union paymasters begin to rattle their sabres, he caves in without much of a fight.

"It shows the unions are back calling the shots in the Labour Party.

"Gordon Brown needs them to bail out Labour's finances, so just can't afford a confrontation with them."

Business leaders also expressed dismay. Richard Lambert, director-general of the CBI, said: "Gordon Brown was forceful in making the case for public sector pay restraint in his latter time as Chancellor.

"He must not recant now as the unions seek to put the squeeze on him."

The unions, many of whom helped pay for Mr Brown's leadership campaign, have been planning to ambush the Prime Minister when he speaks to the TUC next month.

They were angry at below-inflation pay deals for nurses, doctors, civil servants, prison officers and other public sector staff, announced earlier this year.

The Treasury said the deal "struck the right balance between fairness and discipline in the fight against inflation".

It was widely interpreted as a signal that Mr Brown was prepared to risk confrontation with the public sector unions.

In the past, the Government has been accused of craven surrender when threatened with strikes - most notably over reform of goldplated pensions for existing public sector workers in 2005.

Ministers dropped plans to raise the retirement age from 60 to 65 for existing NHS staff, teachers and civil servants. The change was applied only to new staff.

Ahead of the TUC meeting, unions tabled a motion demanding co-ordinated strike action to fight Mr Brown's policy of pay restraint. But in recent days, three pay deals have been revisited. On top of the increases for local government workers, the lowest-paid health workers are to be offered £400 a year more.

The Scottish Executive has offered further increases, taking the overall NHS pay settlement to 2.08 per cent.

Meanwhile, Peter Hain, the Work and Pensions Secretary, has upped the offer to the lowest-paid civil servants at job centres from two per cent to three per cent.

Heather Wakefield, head of local government at Unison, said: "This is a welcome breakthrough for the lowest paid."

The Treasury denied that there had been a U-turn. It said: "We are committed to ensuring we control public sector pay. Restraint is essential to deliver value for money and keep inflationary pressures in check.

"Our objective still is to stick to a target of two per cent across the public sector.

"It's up to local government employers to reach agreement with the unions, though we give overall guidance on what to aim for."