Government talks tough, but compromise on firefighters closer

Talks aimed at ending the firefighters' pay dispute are due to resume tomorrow but pessimism was mounting yesterday about the prospect of an early settlement.

While the Government has indicated that it might be prepared to compromise over "transitional funding" to finance a new deal, repeated hard-line statements by ministers have cast a shadow over the proposed discussions. One senior source at Whitehall said last night: "I expect they will go ahead with another eight-day strike. I think they want to see the white of the Government's eyes.''

As the current eight-day strike entered its sixth day, fire authorities indicated privately that transitional funding could be available to finance a two-year pay deal if the Fire Brigades Union (FBU) would commit itself to a radical programme of modernisation.

While there are indications that the Government could make extra funds available to enable savings to be made in the longer term, the talks due to resume tomorrow could continue through the weekend and early next week, ahead of the next eight-day strike due to begin on Wednesday. The present stoppage is due to end at 9am on Saturday.

Tony Blair stepped up his campaign against the alleged restrictive practices of the FBU by announcing a report into the use of centralised emergency control rooms during the dispute. At a meeting of the Cabinet yesterday, Mr Blair and Gordon Brown, the Chancellor, underlined their determination to enforce pay restraint.In his pre-Budget report, Mr Brown said: "It is because we're determined both to have stability and value for money in reformed public services that, just as in the private sector, public-sector pay rises must be set at a sustainable rate and justified by productivity."

The Government played down a suggestion by John Prescott, the Deputy Prime Minister, that ministers wanted to streamline the fire service by cutting up to 11,000 jobs.

But firefighters are also certain to seize on reports in the past week that NHS staff are set to be offered a 10 per cent pay deal over the next three years, with further rises possible in return for reforms in working practices. Alan Milburn, the Secretary of State for Health, is expected to announce his Agenda for Change package following three years of negotiations with unions. The overall pay bill could rise by some £4bn a year but the Department of Health said last night that it did "not recognise" claims that some staff would be awarded rises of more than 40 per cent.

* Airline passengers face the closure of Britain's biggest airports on 23 December and 2 January after leaders of the Transport and General Workers Union and Amicus recommended rejection of a two-year pay offer to specialist firefighters, security personnel and other airport employees. Unions have cancelled four other 24-hour stoppages, the first of which was due to start today.