Brown tells unions: no big pay rises

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Chancellor Gordon Brown pledged today not to yield to any inflationary pressures such as unaffordable pay demands that would "squander" the UK's hard won economic stability.

Mr Brown's tough message to the TUC Conference received a very cool response from delegates and only brief, desultory applause.

He said that the Government had managed the fastest improvement on spending on health and education since the war and managed to keep inflation low by making tough, long-term decisions on the economy.

The Chancellor told delegates in Brighton that half of Europe was now in recession, including Germany, Italy and Holland, which was putting pressure on the UK economy.

But he said the UK economy had continued to grow and had enjoyed the longest period of continuous and sustained recession-free growth for 50 years.

"Despite continuing global difficulties, Britain is today on track for stronger growth with low inflation.

"We will not yield to any inflationary pressures, any unaffordable demands or any short-term quick fixes or soft options that would risk or squander the huge economic opportunities that our new won and hard won stability offers the British people."

The Chancellor only won loud applause from delegates when he confirmed the national minimum wage will increase to £4.50 an hour from next month, £4.85 next year, subject to economic conditions, and would then rise above £5.

Mr Brown also revealed the Government would soon be reporting on some other "unfinished business", such as giving new rights at work for 16 and 17-year-olds.

He pointed out that three million jobs had been lost in the United States in the last three years and 1.4 million in Germany and Japan but in Britain an extra 1.6 million jobs had been created since Labour came to power in 1997.

Mr Brown, calling the union delegates "friends", said the Government had had the strength to take tough long-term decisions and not be diverted by the short-term.

He told the conference that Britain now had the lowest long time unemployment since 1976, more lone parents in work than ever before and more people in work than at any time in the country's history.

"We have increased jobs, not just with thousands more in the private sector, but in the teeth of Conservative opposition we have done so in our public services, tackling decades of chronic under-staffing in our health and social services, schools and colleges and caring services."

But the Chancellor said the Government would not tolerate "waste" and said the thousands of public servants now being employed were not pen pushers but included 50,000 more nurses, 10,000 more doctors, 25,000 more teachers and 7,000 more police officers.

"We will not rest or slow our efforts until we have ensured a Britain of greater opportunities and greater security not just for some but for all."

On the vexed question of private firms running public services, Mr Brown made it clear that the Government wanted to use the "expertise" of private companies to help on the biggest construction programme in history for new hospitals, schools and transport.

Mr Brown said "more dramatic" challenges lay ahead and the Government would have to demonstrate the same strength to take tough long-term decisions in the face of opposition and "testing times".

"My goal is that Britain can lead in the new global era as the first economy to combine a full employment enterprise economy with a fair society, founded on free public services based on need not ability to pay."

The Chancellor admitted there were real issues which divided the Government and unions about the reform of public services but he appealed for all sides to work together to settle the problems.

"Six years into this government I am more confident than ever that building on the strong economic foundations we have been creating together we can, with continued discipline, not only create full employment but eradicate child poverty, extend educational opportunity for all, ensure all pensioners dignity in retirement, meet our responsibilities to the poor of the world and build prosperity, not for some but for all."