A peace deal between firefighters and their employers was scuppered this summer when ministers blocked a proposed 15 per cent pay rise.
The offer, planned by local authorities, could have averted the threat of Britain's first national fire strike since 1977. Negotiations between the Fire Brigades Union (FBU) and councils collapsed this week over the union's claim for a pay rise of almost 40 per cent, which would take firefighters' wages to £30,000 a year.
The Independent has learnt that the Joint National Council, the local authorities' negotiating body, wanted to table a much improved offer at a key meeting in July, but was overruled by Nick Raynsford, the minister responsible for the fire service.
He is understood to have told council leaders that the Treasury would not fund a 15 per cent rise because it would blow a hole in the policy of public sector pay restraint.
The authorities were told they would have to find the money for the proposed deal themselves, but none had enough funds and they are now offering 4 per cent.
Andy Gilchrist, the FBU's general secretary, said: "Such intervention by the Government proves that ministers, far from trying to encourage industrial peace, have been actively blocking attempts at progress. We heard that an offer was to be put on the table at a meeting but was withdrawn at the last minute."
The dispute intensified yesterday when the FBU dismissed an offer by the Government to set up an independent review of firefighters' pay. Mr Gilchrist said: "Our members are clear that they deserve the going rate for the job they do today, which is £30,000. We are therefore not going to get caught up in a so-called independent governmental review in the fire service."
Tony Blair warned that the FBU's claim would inflict "terrible damage" on the economy. He said: "The firefighters do a very good job, we can be proud of the job they do, but no government could agree a 40 per cent wage claim.
"The first thing that would happen is that the Bank of England would start putting people's mortgage rates up."
Bob Crow, leader of the Rail, Maritime and Transport Workers union, said his members could take industrial action on the Underground systems in London, Tyne and Wear and Merseyside over safety fears if firefighters walked out.
Councils rejected union claims that thousands of firefighters were on wages so low that they had to claim the working families tax credit. The employers revealed that out of 30,000 firefighting staff nationwide, 217 claimed the benefit for low-paid workers. In London, which has 6,000 staff, just five claimed the benefit. In Manchester, the figure was six, in Northern Ireland, one, in Strathclyde, seven. The highest number of claimants was 16, in Kent.
Brian Coleman, the Tory leader on the London Fire Authority and a member of the National Joint Council, said the figures showed how "empty" the rhetoric of the unions was. "It's about time they told the public the truth," he said.
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