Unions vow to protect national pay deals

Trade unions told Gordon Brown yesterday that he will have a fight on his hands if he tries to dismantle the long-standing system of national pay bargaining in the public sector.

In a surprise move in Wednesday's Budget, the Chancellor called for pay review bodies to have "a stronger local and regional dimension" and announced that the Office of National Statistics would start to publish regional inflation figures.

Dismantling national pay bargaining has always been in the Treasury's sights but successive ministers have ducked a battle with the unions. Problems in recruiting essential workers in London and the South-east have forced reform on to the Government's agenda.

Mr Brown insisted yesterday that national pay bargaining would continue. He said: "What I am looking at is how the North-east, the North-west, Scotland, Wales and Northern Ireland can all enjoy the benefits of the strong economy.

"That requires a strategy for full employment that depends on both flexibility and fairness. The fairness is guaranteed by the national minimum wage and national tax credits. But, of course, there is going to be flexibility in the way that the economies are going to develop in future years."

Senior figures at the TUC said the Chancellor retreated in private discussions yesterday from the idea that regional pay bargaining would be brought in.

Dave Prentis, leader of Unison, Britain's biggest union, said: "It's a stupid idea ... National arrangements have enough flexibility to allow employers to deal with local recruitment difficulties." He added: "People should be paid the rate for the job regardless of where they live."

Derek Simpson, joint general secretary of Amicus, said regional inflation figures would be useful where local negotiations already took place. He added: "We must guard against the danger, however, that it could be used to destroy national bargaining in the public service."

John Edmonds, general secretary of the GMB union, said: "If this is a first step towards breaking up national pay bargaining for public-sector workers, it could lead to major and unjust pay disparities."

Jack Dromey, a national official of the Transport and General Workers' Union, said any move by local government employers to end national pay bargaining would "inevitably" lead to a strike. Mr Dromey, a candidate to be elected the union's general secretary, said: "Local bargaining would be a recipe for chaos and confusion. Local bargaining would punish the low paid, with women workers the hardest hit."

But his comments got short shrift from Bill Morris, the union's current general secretary, who said he had received assurances on Mr Brown's commitment to national pay bargaining. "Our union has no plans for industrial action. The views expressed by Mr Dromey are his own and do not represent [union] policy," Mr Morris said.

* David Blunkett, the Home Secretary, said an early prison release scheme will be extended and a £138m building programme launched to try to stem the rise in the jail population, up to a record 73,230 inmates in England and Wales.