Tories in secret talks with unions as threat of autumn strikes looms

Senior Conservatives have held secret talks with trade union leaders to pave the way for a highly symbolic meeting between David Cameron and the TUC general secretary Brendan Barber.

Despite the threat of industrial strife over the Government's planned spending cuts, both sides believe Mr Barber is likely to be welcomed into Downing Street in the autumn.

Relations between union leaders and Conservative prime ministers were positively glacial during the 1980s and 1990s. But senior Tories are increasingly hopeful that they have achieved at least a mild thaw. Both sides privately report a willingness to do business with each other.

Tory sources said the party had been successfully "building bridges" with senior trade unionists in recent months and pointed out that several ministers, including Oliver Letwin, Philip Hammond and Francis Maude, have either met trade union leaders or addressed TUC events. They said they were "highly optimistic" that a meeting could be arranged between the Prime Minister and Mr Barber towards the end of the year.

The encounter would be far from the "beer and sandwiches" sessions enjoyed by Harold Wilson and trade unionists at Downing Street, but it would mark a change of tone in dealings between the Conservative Party and the TUC. Both Lady Thatcher and Sir John Major are thought to have met the union top brass just once during their spell in office.

A Conservative source said: "We are never going to be flavour of the month with them, given their Labour links, but we want to get back to where we were before Thatcher. Although obviously we differ, there is a recognition that it is better for everyone if we spoke." He added: "I am sure something will be set up. It's in both sides' interests."

The contacts have been taking place "beneath the radar" because of the extreme sensitivity of the attempted rapprochement. The lead for the Tories has been taken by Richard Balfe, a former Labour Euro-MP who defected to the party in 2002. Mr Cameron appointed him as his trade union envoy two years ago with a brief for rebuilding relations.

The stumbling blocks ahead were underlined last month, when the TUC suddenly cancelled an invitation to Liberal Democrat Vince Cable, the Business Secretary, to address its annual conference in Manchester. It would have been the first time union delegates had listened to a Cabinet minister from any party other than Labour.

The offer was rescinded because of fears that some delegates would heckle Mr Cable or walk out of the conference hall. However, TUC leaders say they are keen to deal with the Coalition rather than confront it. Before the election Mr Barber, who twice met Mr Cameron when he was leader of the Opposition, said: "It's a major part of my job to make sure that all the parties understand trade union concerns."

The TUC briefly contemplated inviting Mr Cameron on stage, but the Prime Minister turned down the invitation as it coincided with his planned paternity leave. The TUC confirmed that there had been "informal contact" with Downing Street. Despite his rebuff, Mr Cable has already addressed the annual conference of Unionlearn, its learning and skills arm.

It was also addressed by the Further Education minister, John Hayes, the first Conservative minister to appear at any TUC event since the mid-1990s. A spokesman for the union said: "We would always welcome further opportunities to meet with Ministers and press the TUC's case on a range of policy areas."

Tory ministers say they want to draw a line under their past practice of ignoring, or taking on, the union movement. Union membership has halved in the last 35 years to between five and six million. But much of the public sector, which is braced for substantial job losses over the next four years, remains heavily unionised.

TUC invites Bank governor to congress

Mervyn King, the Governor of the Bank of England, appears to be the only establishment figure permitted to attend the TUC congress this autumn. The appearance of a Governor at the TUC is unprecedented in itself – decades ago the Bank was seen as part of the old City establishment, a "shop steward" for financial interests.

In those days, the Governor was drawn from well-established banking families, such as the Barings. But Mr King, a distinguished economist, makes little secret of his irritation with City habits. He sees the Bank's role as protecting the wider "real" economy from the dangers the bankers generate.

Mr King's message is likely to be uncompromising. The Governor has in the past praised workforces for pay restraint and for working with employers to minimise the impact of the downturn on employment.

The failure of the jobless total to rise as fast as the fall in national output was a pleasant surprises during the crisis; while it is still up by around 1 million to 2.5 million, economists expected it to go much higher.

But many union members and their leaders may feel that they have gone too long without a wage increase, especially at a time when tax hikes and cuts in tax credits, benefits and public spending will be hitting hard.

On the other hand, the Governor's views on the need to re-balance the economy away from consumption, easy credit and the City and towards manufacturing, exports and investment is much more in line with TUC thinking. Mr King also shares the frustration of senior trade unionists about the size of bankers' bonuses.

Trade unionists dislike the inequalities they represent, while Mr King wants banks to retain their earnings and stop rewarding irresponsible risktaking. The brothers may also agree with Mr King's view that the big banks should be broken up and those with taxpayer guarantee forbidden from engaging in "casino" trading activities.

Sean O'Grady

Union flashpoints

Unite

Joint leaders: Tony Woodley and Derek Simpson

Membership: Britain's biggest union, with more than 2 million members

What it's angry about: Public spending cuts

Flashpoint rating: 3/5

Public and Commercial Services Union (PCS)

Leader: Mark Serwotka

Membership: 300,000 workers, mainly in civil service and parts of public sector that have been privatised

What it's angry about: Job cuts in Whitehall and government agencies; also opposing curbs on redundancy pay and pensions

Flashpoint rating: 4/5

Unison

Leader: Dave Prentis

Membership: Biggest public sector union with 1.3m members

What it's angry about: Job and pension cuts hitting low-paid workers including those employed by NHS and local authorities

Flashpoint rating: 3/5

Rail Maritime and Transport Workers Union (RMT)

Leader: Bob Crow

Membership: 80,000 transport workers

What it's angry about: Seeking co-ordinated industrial action over spending cuts; opposing changes to employment laws to make it harder to call strikes

Flashpoint rating: 5/5

Union of Communication Workers

Leader: Billy Hayes

Membership: 215,000 postal and telecommunications workers

What it's angry about: Government is considering plan to privatise Royal Mail

Flashpoint rating: 4/5

Andrew Grice