PM warned of autumn of discontent as unions threaten strikes over wages

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Gordon Brown faces a damaging showdown with union leaders, who warned yesterday of an autumn of discontent over public sector pay and threatened to defy the Government and demand a referendum on European reform. The leaders of hundreds of thousands of public sector workers warned that ministers faced strike action over below inflation pay deals if they did not give ground on Mr Brown's 2 per cent ceiling on wage deals.

The Prime Minister also appears to be heading for a collision with the unions over Europe, with motions calling for a referendum on the EU reform treaty winning heavyweight backing from some of the largest Labour affiliates. Mr Brown will address congress for the first time as Prime Minister today amid strong warnings about discontent in public services.

Dave Prentis, leader of the public sector union Unison, said the Government was heading for three years of industrial strife because of below-inflation pay deals. Local government workers are being balloted on strike action, although NHS staff are likely to accept a pay deal thrashed out earlier this summer.

Mr Prentis said: "Our members have gone through massive change, and [then] we are told that for the next three years our members will be getting pay increases not just under inflation but half of inflation. There is no other reaction but to move towards industrial action. It is my strong belief that the public sector unions have to work together and come together to respond to these offers."

Meanwhile, civil servants are likely to vote on strike action by the end of the month. The Public and Commercial Services Union (PCS) will announce the result today of a ballot on a pay award for staff at the Department for Work and Pensions. Mark Serwotka, general secretary of the PCS warned that further industrial action was inevitable. He said: "Morale across our membership is at an all-time low. People believe whatever targets they meet, it doesn't count for anything."

Speaking of the Labour Government under Mr Brown, he said: "Their office is still closed, redundancy is still threatened and work is still touted to the private sector. The tone seems slightly different and the mood music seems slightly different but the lyrics are identical. We want the substance to change."

Brendan Barber, the TUC general secretary, warned of "real anger" in the public services. He said: "People have not been remotely persuaded that the Government has got a sound economic case.

"The consequence of this is real anger, demoralisation and discontent among millions of public sector workers who deliver our vital public services. Now, I think there are industrial consequences for that."

Mr Brown also faces a revolt from union leaders over Europe, with Unison, the second largest Labour affiliate, warning that it would back calls for a referendum on the EU reform treaty. The GMB general union, another major Labour backer, insisted that it was pressing ahead with a motion to be debated on Wednesday calling for a poll on the draft treaty.

The TUC general council will try and head off a vote on Europe this morning but GMB sources said the union would press ahead with the debate despite considerable "arm twisting".

Union leaders were, however, keen to praise the new tone of the Brown administration and welcomed action on affordable housing.

Officials dismissed comments from John Hutton, the Business and Enterprise Secretary, that Labour's relationship with the unions was not "set in concrete". Mr Prentis said: "He has dug out the same speech for the last four years – he is out on a limb."