Brown signals tough stance on pay rises

The Chancellor , Gordon Brown, will this week demand pay restraint across the board, warning that excessive wage rises will cost jobs, write Stephen Castle and Paul Routledge.

In his first clear statement on pay, Mr Brown will indicate his determination to resist big increases in the public sector, heralding a tough stance at the start of the pay-bargaining round.

Launching his pre-Budget statement outlining the framework for the real thing next spring, Mr Brown will call on all sectors to show restraint. Officials said: "The message will be: wage responsibility now is a price worth paying."

The Chancellor's plea comes amid mounting concern over wage inflation which has hit 4.25 per cent. The skills shortage and the upward pressure it places on wages were cited by the Bank of England monetary committee as justification for its latest interest-rate rise.

Meanwhile the Government is known to be anxious at the Ford motor company's offer of rises totalling 8.75 per cent over the next two years to its 30,000 UK workers. It fears this could set a new benchmark for union negotiators.

Mr Brown's aides argue that, while direct control of interest rates is now outside their control, higher wages will result in increased interest rates. Today the Chief Secretary to the Treasury, Alistair Darling, will echo the theme, calling for an "end to the unsustainable boom followed by bust".

The Government yesterday seized on the continuing turmoil over Europe among the Conservatives. Robin Cook, the Foreign Secretary, addressing Labour's conference in Europe, said that by expelling pro-European MP Peter Temple-Morris, the Tories had "left out in the cold all those people in Britain who share his sane approach to Europe".

He asked: "Is William Hague going to go on throwing overboard those who know he is wrong until he is left leader, not of a party, but of a sect?"