Starmer warns unions he will not risk economic stability with bumper pay deals

Sir Keir Starmer will warn workers that decisions on pay will be shaped by the “tough decisions” needed to protect the economy.

The Prime Minister will say his goal of a pro-worker, pro-business partnership will “turn the page” after years of industrial unrest under the Tories and “rewrite the rules of the economy”.

But in a message aimed at curbing demands for inflation-busting pay rises in the public sector, Sir Keir will tell the Trades Union Congress the Government will not risk economic stability.

Since taking office the Government has offered above inflation rises to millions of public sector workers and struck deals aimed at ending long-running disputes involving train drivers and England’s junior doctors.

But Sir Keir, the first Prime Minister to address the TUC Congress since Gordon Brown 15 years ago, will warn unions that pay restraint may still be required.

He will tell the Brighton gathering: “I do have to make clear, from a place of respect, that this Government will not risk its mandate for economic stability, under any circumstances.

“And with tough decisions on the horizon, pay will inevitably be shaped by that. I owe you that candour because – as was so painfully exposed by the last government – when you lose control of the economy it’s working people who pay the price.”

His comments follow union calls for “pay restoration” to address years of below-inflation rises in the public sector.

He will hope his cautious message on pay will be balanced by his promise of a new package of workers’ rights and a new era of more positive industrial relations.

“I make no apologies to those, still stuck in the 1980s, who believe that unions and business can only stand at odds, leaving working people stuck in the middle,” he will say.

Setting out his vision for the “politics of partnership”, he will say: “With us in government, with business, and most importantly of all, with working people… the mood is for partnership. And not just on pay – on everything.

“To turn around our NHS, give our children the start in life they deserve, make our public services fit for the future, unlock the potential of clean energy.

“A new era of investment and reform. The common cause of national renewal.”

His speech comes as he battles a backlash from unions, campaigners and his own MPs over the scrapping of winter fuel payments for millions of pensioners by restricting the handout to those on pension credit or other benefits, with a potential Labour revolt in the Commons on Tuesday.

Sir Keir will claim the Conservatives “salted the earth”, forcing the new Labour administration to take difficult decisions on spending.

“The crisis we have inherited means we must go deep into the marrow of our institutions, rewrite the rules of our economy and fix the foundations so we can build a new home,” the Prime Minister will say.

“A country where growth not only comes from the enterprise of working people, but where growth serves the interests of working people.”

He will add: “So it is time to turn the page, business and unions, the private and public sector, united by a common cause to rebuild our public services and grow our economy in a new way.

“Higher growth, higher wages, higher productivity. The shared purpose of partnership as the path through the mess the Tories made, and onwards to national renewal.”

TUC general secretary Paul Nowak said: “We are delighted to welcome Keir Starmer to Congress – the first Labour prime minister to address delegates in 15 years.

“The PM’s commitment to making working pay, to boosting security at work and to scrapping toxic anti-union legislation is a stark contrast to the Conservatives’ race to the bottom on employment standards.

“The task of rebuilding Britain and delivering decent jobs is an urgent national mission.

“After 14 years of Tory misrule and chaos we understand there are tough challenges ahead.

“But we share the PM’s ambition for a high-wage economy and stand ready to work with business and Government to achieve this.”

Shadow business secretary Kevin Hollinrake said: “If Keir Starmer cared about working with businesses, or had even a basic understanding of how they operate, he would listen to the howls of opposition from business leaders about his plans to strengthen the unions and force unworkable proposals on employers that will cost jobs.

“Instead, he is just doing his union paymasters’ bidding, raising taxes and drowning businesses in a tidal wave of new French-style rules and red tape.

“Labour must change course now or they risk rewiring the economy back to a time where union bosses held the country to ransom.”