Despite a spate of union-bashing which dominated the headlines at the time of the party and TUC conferences, Tony Blair has decided that plans for what were seen as "no strike" deals were impractical.
The decision follows a brief consultation period in which the initiative was comprehensively rubbished from nearly every quarter, including the Labour leader's own colleagues in the Shadow Cabinet.
However, the continuing tensions between the two wings of the labour movement emerged again yesterday when a return to "beer and sandwiches" under a Blair government was ruled out by Stephen Byers, a Labour spokesman on employment.
Mr Byers rejected plans being drawn up by John Edmonds, leader of the GMB general union, disclosed in The Independent on Sunday, for the restoration of tripartite forum between unions, the Government and employers.
"We have no proposals to establish the sort of machinery that is referred to in John Edmonds's memorandum.
"We don't believe by setting up a whole machinery of government is the best way forward. It's far better to create the climate in which employers and trade unionists can work together to achieve mutual objectives," Mr Byers said on BBC radio.
Mr Edmonds is proposing the revival of a forum on the lines of the National Economic and Development Council (Neddy), abolished by Baroness Thatcher.
Meanwhile, in his New Year message the TUC general secretary, John Monks, urged the unions to make "big changes" to offer the fullest contribution to a future Labour government.
He said they would have to break the habit of being in opposition and move to being part of the solution to Britain's problems in the election year.
Mr Monks said Britain desperately needed a new government, but a Labour victory would only be the beginning of new challenges for unions.
"Unions need to make big changes if they are to make the fullest contribution - moving from a position where at best we have been ignored and at worst treated as the enemy within will not be easy. Habits of opposition will have to be broken."
And on BBC Radio 5 Live yesterday Mr Monks said a Labour government would not be involved in "backstairs dealings" with the unions, but he added: "There will be a climate in which the government of the day is not hostile."
However, he said the unions would not get "everything they want, it certainly won't be that".
The idea of that compulsory binding arbitration might be used to keep the lid on union unrest under a Labour government was floated last September by David Blunkett, the party's chief spokesman on education and employment.
Following a furious response from unions Mr Blunkett subsequently called for the greater use of voluntary arbitration agreements leading to a deal which would be binding on both sides.
Unions pointed out that such a policy could lead to a tidal wave of arbitration. Under such a system unions would have little incentive in submitting sensible claims if they felt that an arbitrator might split the difference between the two sides.Reuse content