Union anger at Brown's pledge to toe Tory line

Labour signalled it would enforce below-inflation pay awards which are expected to be agreed by the Cabinet next week, despite protests by trade unions representing some of the 1.3 million public-sector workers.

Gordon Brown, the shadow Chancellor, warned the unions there would be "no blank cheque" for public-sector workers under a Labour government as the Cabinet was poised to stage the payment of rises of 3.2 to 3.4 per cent recommended by the pay review bodies.

Senior government sources confirmed the Cabinet would hold down the pay increases to below the 2.5 per cent inflation rate in the first stage, delaying the second instalment of up to 1.4 per cent to later in the year for the groups covered by the pay review bodies, including doctors, dentists, groups allied to medicine, and teachers.

Rodney Bickerstaffe, the leader of Unison, said it was "totally unacceptable" to pay the awards in two stages, although he welcomed the higher-than- inflation recommendations for "deserving" low-paid workers.

Bob Abberley head of Unison's health workers' section, said that such a move would be "totally unfair", and Doug McAvoy, of the National Union of Teachers, declared: "I would expect Labour to honour these recommendations in full."

The comments of union leaders reflect growing frustration over their policy of minimising public criticism of Labour in the run-up to the election. That strategy was sorely tested by Mr Brown's comments that in government he would abide by the public expenditure limits laid down by the Chancellor of the Exchequer.

However, Mr Brown said: "We will wait and see what is recommended ... But I have got to be responsible and credible about what is going to happen in the future."

The shadow Chancellor told a conference for small businesses that Labour would take "a firm and fair approach" to public-sector pay within tough cash limits. "With Labour, all public-sector pay agreements must be financed from within the agreed departmental cash limits upon which departments must now plan ... So there can be no blank cheques."

Reaffirming his assurances to business that he would not increase spending or the upper and basic rates of income tax, the shadow Chancellor said a comprehensive spending review would be one of the first tasks of an incoming Labour government.

The objective of the review would be to investigate how a Labour government could reshape expenditure into the next century to encourage work, a fair society and investment.

Labour will publish for the first time a business manifesto next month, followed by a business summit headed by Tony Blair, Mr Brown and Margaret Beckett, Labour's trade spokeswoman.

Mr Brown believes the minimum wage is vital to the welfare-to-work strategy he will be laying out in the Crosland Memorial Lecture in two weeks' time, but small businesses would be consulted about the level before it was set.

Setting out five goals for a Labour government to encourage business, he said the guiding principles would be stability and low inflation; tough rules on public expenditure and borrowing; high levels and improved quality of investment; a new skills revolution to boost productivity; and "constructive engagement" in Europe.