Gordon Brown slapped down the demands of union leaders for new strike rights in return for propping up Labour’s parlous finances.

Mr Brown’s declaration yesterday that there would be “no return to the Seventies, Eighties or even Nineties” paved the way for a bitter confrontation with unions and activists the day after this month’s crucial Glasgow East by-election. In remarks that will infuriate some of the biggest unions, the Prime Minister declared that there was no question of reintroducing any secondary picketing rights.

He did accept that the Government would listen to union pressure for more family-friendly flexible working policies. There have been calls for parents to be able to take time off to look after sick children or help them during their exam time up to the age of 16, rather than 6 as at present.

Mr Brown’s comments were made as he flew to Japan for the annual G8 summit of the world’s leading economic nations. He left behind him continuing doubts about his leadership as well as chaos in Glasgow, where the favoured internal candidate for a by-election on July 24 pulled out at the last moment this weekend, leaving Labour without a standard bearer until next week. Many ministers fear that a Labour defeat in the election will reopen the clamour for Mr Brown to go, although those close to him say that there is no chance of him even considering it.

In recent weeks union leaders have insisted that they will not allow Labour to go bankrupt, but they expect to be granted new rights in return. Some want a watering down of prestrike ballots and many are calling for secondary picketing rights to be reinstated.

Mr Brown’s strong words yesterday will please Blairite members of the Cabinet, such as John Hutton, the Business Secretary, who has told colleagues that he will not go along with any relaxation of constraints on union strike action. Ministers close to Mr Hutton say that he would resign rather than preside over anything that could be seen as caving in to the unions.

Mr Brown’s tough stance means that at a moment when he could be at his most vulnerable - if Labour should lose the rock-solid Glasgow seat - he will be directly in conflict with Labour’s paymasters. As he flew over Russia, Mr Brown said that successful governments “are those whose eyes are fixed on the future, not harking back to the past”.

He said: “The countries that prosper in the future will be those that combine realness with flexibility to achieve full employment.” He then added: “So there will be no return to the Seventies, Eighties or even the Nineties when it comes to union rights, no retreat from continued modernisation, and there can be no question of a reintroduction of secondary picketing rights.”

In his one gesture to the unions, he said: “While we will push ahead with our family-friendly agenda, we will do nothing that puts employment and future prosperity at risk.”

Mr Brown’s decision to speak out so strongly against union demands indicates that he knows that he must not do anything to revive fears of union power among the voters of Middle England if he is to have any chance of recovering.

Despite the distance Mr Brown has kept from the unions in public, he is in regular contact with the leaders of the biggest unions and the appointment of Joe Irvine, a former T&G official, as his new political secretary has pleased many senior union figures.

As part of attempts to keep the unions happy, Downing Street is preparing to host an event on July 15, before a key policy conference, where they will make a joint statement on a public services forum. The unions have provided a medium-term financial guarantee for the party, and according to Tribune magazine the party’s accounts were signed off by auditors last week.

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