Chancellor warns against wage inflation

2004

UK Chancellor Gordon Brown has thrown down the gauntlet to unions with a blunt message that the government will not agree to inflationary public sector pay awards.

In a speech to the British Chamber of Commerce annual conference, the Chancellor said that trade union militants would not be allowed to win high pay rises despite their threats of widespread strikes.

He called on both the public and private sectors to demonstrate discipline on salary deals and warned that irresponsible action would jeopardise Britain's hard-won platform of economic stability and put jobs at risk.

"There must be no return to the bad old days of pay irresponsibility in the private sector and we will tolerate no irresponsibility in the public sector," Mr Brown said.

The latest official data show that annual average earnings growth in the three months to February rose to 4.9 percent - its highest in nearly three years - as the UK economy gathers speed.

The chancellor also said that the 40,000 civil service job cuts announced earlier this year will not be reversed.

Mr Brown said: "I can tell everyone who depends on a wage or salary that under our new model of Bank of England independence, inflation is now less than two per cent and it is set to be just two per cent in the next and subsequent years."

But at the same conference, Conservative shadow Chancellor Oliver Letwin slammed the government's record on red tape, saying that the burden of regulation was damaging British business.

He said that the amount of time spent by the average employer dealing with government regulation has increased by 200 per cent since 1997.

A recent study by the British Chamber of Commerce found that red tape costs have increased by 46 per cent since Labour came to power, with companies paying an extra £9 billion in 2003.