Unions cave in on minimum wage

TRADES union leaders delivered a significant political boost to Tony Blair yesterday by agreeing not to put a figure on Labour's proposal for national minimum wage. On the eve of the Trades Union Congress in Brighton, they accepted that it would be up to an incoming Blair administration to set a statutory floor on pay - not the unions.

The decision marks not only an end to a two-year wrangle over wages, but an historic realignment in relations between Labour and the unions. The unions have accepted a substantial dilution in their "special relationship" with the party, and have effectively given up their right to determine policy.

A senior Blair aide said: "We think this is a very significant moment. We welcome the acceptance that a Labour government will set a national minimum wage and that unions will put their case.

"We think this opens the way to a much more mature relationship between Labour and the unions : that the unions have one role and the Labour government has another."

Harriet Harman, Labour's front-bench spokeswoman on employment affairs, added: "This is an important indication of the TUC preparing itself for when it will - together with the employers - have an important role working in partnership with a Labour government."

The down-grading of the unions' influence to parity with the employers effectively ends more than 90 years of their "special relationship". Next month, the unions will be reduced from 75 to 50 per cent of the vote at party conference and their role in sponsoring MPs will be drastically changed.

Yesterday's change was brought about by two of Labour's smallest affiliates - the Fire Brigades Union and the construction union Ucatt. At a meeting in Brighton, they conceded defeat to Blair-loyalist union chiefs, and dropped their insistence on writing in a figure for Labour's minimum wage.

Left-wing unions had been pressing for pounds 4.15 an hour. They will now go along with a TUC compromise that diminishes its minimum wage formula to the status of a "target".

A motion to conference certain to be approved on Wednesday - the day after Mr Blair addresses the unions - says: "Congress recognises that a Labour government will have the responsibility of fixing the level of the national minimum wage in the light of the economic circumstances prevailing at the time, following consultations with the social partners."

The unions' role will be confined to participation in a Low Pay Commission that recommends a figure for the minimum wage that a Blair administration will be free to confirm or reject.

The TUC retains its commitment to a statutory minimum based on 50 per cent of median male earnings, a formula that could produce a figure as low as pounds 3.60 an hour. But the new policy accepts that this is merely a "starting point" for discussions with government.

John Monks, TUC general secretary, said of the decision: "It is a very good start to Congress. All the unions are showing a powerful mood of unity."