Pension U-turn not enough, say unions

The Government faces a defeat over pensions at Labour's annual conference despite an offer by ministers to raise weekly payments to a minimum £100.

The Government faces a defeat over pensions at Labour's annual conference despite an offer by ministers to raise weekly payments to a minimum £100.

The party's biggest union affiliate rejected the compromise yesterday and decided to table an emergency motion calling for the restoration of the link between pensions and earnings. Ministers will also come under fire over pensions at next week's annual conference of the Trades Union Congress in Glasgow and at tomorrow's pensioners' rally preceding it.

The Chancellor, Gordon Brown, one of the architects of the £100 compromise, will address the TUC conference the day before delegates are expected to deride his "measly" 75p-a-week increase for 11 million pensioners this year. They will also urge the Government to restore the link with average earnings, an important cause for trade unionists and the Labour grass roots.

Ministers will be disappointed at yesterday's decision by the public service union, Unison, but will hope to reach an accommodation in negotiations during the TUC conference and in the run-up to the party's assembly at Brighton, starting in two weeks' time.

Leaders of the union affiliates, which command half the vote at party conference, are confident of a majority if it comes to a vote.

Rodney Bickerstaffe, general secretary of Unison, who is expected to take over from Jack Jones as head of the National Pensioners Convention next year, said yesterday that any increase in pensions was welcome. "However, if it is just going to be a one-off, it will not go very far. What we need is the restoration of the earnings link and a much higher minimum basic pension."

Union officials said a refusal to climb down by the Government could have a significant impact on its electoral chances. "There are a huge number of votes in this issue," said a union source.

Mr Brown has resisted calls for the earnings link to be restored on the basis that this would do little to help the poorest. He is insisting that help should be directed at the most needy through the Minimum Income Guarantee (MIG) and the pensioners' credit announced in the Budget.

A single pensioner now receives £67.50 a week. This is topped up by the guarantee to £78.45 if the pensioner does not have a private pension or savings of more than £8,000.