Pensions: Blair 'jam tomorrow' promise rejected

The Labour Party conference rejected Tony Blair's promises of "jam tomorrow" on pensions and demanded last night that the basic state pension be raised in line with earnings rather than prices.

The Labour Party conference rejected Tony Blair's promises of "jam tomorrow" on pensions and demanded last night that the basic state pension be raised in line with earnings rather than prices.

Bitter recriminations followed the decision of the Brighton conference to defy the party leadership despite frantic behind-the-scenes arm-twisting by Mr Blair and the Chancellor, Gordon Brown, and their pledges this week to boost the incomes of all Britain's 11 million pensioners.

Ministers accused trade union leaders of "posturing" after they refused to withdraw their demands, while the unions blamed Mr Brown for scuppering a compromise plan after he returned to Brighton from the IMF and World Bank meeting in Prague. They claimed Mr Blair was ready to reach a settlement but the Chancellor refused to budge. Ministers denied the two men were divided.

The conference voted by 60.2 per cent to 39.8 per cent for a rebel motion demanding "an immediate and substantial increase" in the £67.50-a-week state pension, and for it to be raised in future by "average earnings or inflation, whichever is greater".

Although Mr Blair's first significant party conference defeat since becoming Labour leader is damaging to the Government, the vote will not change its policy. Ministers said they would give priority to a policy statement passed unanimously by the conference which is in line with the Government's strategy. Mr Brown made clear immediately that he would ignore the conference's wishes when he issues his draft Budget, due in November. He said: "We will do best by Britain's pensioners and we will win the argument in the party and the country in the coming weeks."

Ministers took comfort from the fact that constituency parties voted by 63.7 per cent to 36.3 per cent to back the Government's strategy of targeting help on the poorest old people rather than bringing in an across-the-board rise.

Party bosses were furious that John Edmonds, leader of the GMB union, and Rodney Bickerstaffe, of Unison, refused to drop the motion in the interests of party unity.

But a GMB source said: "The reality is that the leadership defeated themselves. We opened the door to give them room for manoeuvre. For reasons we will never understand they decided not to walk through it."

Mr Edmonds rejected as "nonsense" claims by ministers that a flat-rate increase would help the rich, and called for it to be clawed back through higher taxes.

But Alistair Darling, the Secretary of State for Social Security, insisted the Government's policy would give more to the poorest pensioners than they would get if the state pension was linked to earnings, and also help millions of old people on modest incomes.