Brown 'tries to scrap deal on public-sector retirement age'

Gordon Brown is prepared for a confrontation with the unions over plans to scrap a deal for public-sector workers allowing them to retire at age 60.

The Chancellor has held secret talks about bringing private and public-sector retirement ages into line if, as expected, Adair Turner says the retirement age should rise to 67 in his report on pensions this week. Mr Brown is concerned that a two-tier workforce could be created with public-sector workers retiring at 60, but people in the private sector working until 67.

An aide to Mr Brown said last night that the Chancellor, Tony Blair and John Hutton, the Secretary of State for Work and Pensions, were agreed that in the next 15 to 20 years the issue of the retirement age, including for public-sector workers, may have to be revisited. But unions regard the deal, which allows new employees being allowed to work to 65 but existing staff allowed to retire at 60, as sealed in stone.

Lord Turner of Ecchinswell publishes his long-awaited report on Wednesday. He is angry about the deal struck with unions by Alan Johnson, the Trade and Industry Secretary, over public service pensions. Mr Blair has insisted that he will "welcome" a report already rejected by his Chancellor. Mr Brown was also warned yesterday that he does not have a veto on Lord Turner's proposals.

The report, particularly its proposal to link the state pension with average earnings, has become the latest battleground between No 10 and the Treasury. Mr Brown is accused of trying to sabotage proposals that he believes are unaffordable. A letter setting out his objections was leaked last week.

The simmering tensions boiled over at the Commonwealth heads of government summit in Malta yesterday when Mr Blair was challenged about the row. He said: "This idea that we've come to a view, that we are ruling things out, that we've made up our minds, before the debate has even started is not correct."

Treasury sources blame Mr Blair's "teenage Taliban" for stoking the row. Frank Field, the former social security minister, warned that the Chancellor was near to "blowing his top". In an interview with GMTV's Sunday programme broadcast today, Mr Field also claims Mr Blair's health could not cope with another bout of feuding with the Chancellor.

Lord Turner estimates that by 2020, the £60bn bill for state pensions could rise by £10bn ­ equal to 3p on tax.