Blair in union talks to quell civil service jobs action

Tony Blair and senior ministers are holding confidential talks with trade union leaders in an attempt to quell a rebellion which has grown after the Government's decision to axe more than 100,000 civil service jobs.

Tony Blair and senior ministers are holding confidential talks with trade union leaders in an attempt to quell a rebellion which has grown after the Government's decision to axe more than 100,000 civil service jobs.

Union leaders have already met the Chancellor, Gordon Brown, the Trade and Industry Secretary, Patricia Hewitt, and the Work and Pensions Secretary, Andrew Smith, and will meet other senior figures in the run-up to a critical session of Labour's national policy forum on 23-24 July.

With a general election expected next May, ministers are keen to avoid a conflict with the party's main financial backers. Labour officials are seriously concerned about the party's finances following the decision by the GMB general union to withhold £744,000 from the election campaign fund. The Transport & General Workers' Union (T&G), another major benefactor, is expected to follow suit.

Already tense relations between the Government and the unions have worsened after Mr Brown's announcement on Monday that 104,000 civil service jobs will be lost under his three-year spending programme.

Unions are demanding concessions on public services so that there is less reliance on private investment and on the "two-tier work force''. These would deter businesses undercutting public servants by paying employees less. Unions also want employers to be forced to provide pensions for staff and enhanced rights to protect workers from unfair dismissal from "day one'' of employment.

If ministers refuse to give way, unions will table a series of amendments at Labour's annual conference in Brighton in September, which would mean damaging public rows.

The unions are being represented in the meetings with Mr Blair and his ministers by a "contact group'' of seven union leaders - Dave Prentis of Unison, Derek Simpson of Amicus, Tony Woodley of the T&G, Kevin Curran of the GMB, John Hannett of the shop workers' union Usdaw and Billy Hayes of the Education Workers' Union.

The Opposition's attack on the cuts was undermined when Michael Howard was unable to commit the Tories to matching Labour's spending on defence, traditionally a strong area for Conservatives. The party has pledged to freeze other budgets so that it can outspend Labour on health and education.

Mr Brown said the Tories were "in complete disarray". He added: "By 2007-08 we will be spending £33.4bn on defence. Freezing defence spending for two years as the Tories are committed to doing means it will remain at £30.8bn and means that they will cut defence spending by £2.6bn."