DARLING'S PAY FREEZE TO HIT 6M; Unions warn of public sector strikes.

Byline: JAMES LYONS 

CHANCELLOR Alistair Darling yesterday refused to rule out slapping a pay freeze on six million public sector workers.

But the drastic move to help balance the Treasury's books put him on a collision course with the unions.

With inflation at about 2% it would mean real-term wage cuts for doctors, nurses and other government workers.

The Chancellor suggested that would be "fair" because the recession has seen many firms deny private sector workers pay rises. Mr Darling said: "Public sector pay obviously has got to reflect the prevailing conditions and, in particular, inflation has come way down. We also have to be fair with regard to people who work in the private sector, many of whom have seen their pay conditions tighten."

Mr Darling also admitted the economy was in an even worse state than he predicted at the Budget and cash would be "much tighter" as a result.

He was speaking after Audit Commission chief Steve Bundred urged him to freeze the Government's pounds 151billion pay bill Mr Bundred, who earns more than pounds 200,000 a year as head of the Government spending watchdog, claimed it was a "pain-free" way to save pounds 5billion of the pounds 50billion ministers need to find. But union leaders warned it was a recipe for strikes.

TUC general secretary Brendan Barber said: "This call to freeze the pay of all public sector staff - however low paid and however vital their job - is not just unfair, but would make the recession even worse. Businesses need customers ready to spend."

Brian Strutton, of the GMB, warned there would be strike ballots if the Chancellor tried to change existing deals and told him to stay out of pay talks currently going on between councils and their employees.

Mr Strutton said: "Any interference is bound to be disruptive and could lead to unnecessary calls for industrial action."

HOUSING CASH HIT

HARD-UP families will lose up to pounds 60 a month under controversial plans to claw back housing benefits, it was revealed yesterday.

About 300,000 tenants who rent privately will be hit by the Government's attempt to cut the welfare bill.

They can currently pocket up to pounds 15 a week if they find a home for less than their flat-rate housing benefit.

But that will stop from April under plans which could spark a 10p taxstyle revolt. The Lib Dems said the rules were being changed "mid game".

CAPTION(S):

MOVE Alistair Darlimg