Public sector pay may dominate Gordon Brown’s first TUC conference as Labour leader next month despite last-minute improved offers in health and local government.

Over the past month the lowest-paid workers in these sectors have been given raises in line with the highest increases. The offers have been viewed as an attempt to avert a coordinated strike involving millions of workers. Such an action has been threatened by four of the five biggest unions.

The Government improved its pay offer to the health service from a staged 2.5 per cent increase to an immediate increase of more than 2.5 per cent for the bottom four bands of employees, made in different stages, and 2.5 per cent plus a £38 contribution towards professional fee charges for the top four bands.

Last week an offer of 2 per cent for local government workers was increased to 3.4 per cent for the lowest ranks of workers and 2.475 per cent for the others.

Unison, the biggest health union, is balloting health workers over whether to accept the offer, with a result due on September 13 - the last day of the conference. The union told its members that the offer was the best it could achieve, but if the deal is rejected, there may be a ballot for industrial action.

The three main local government unions - Unison, Unite and the GMB - will meet next Tuesday to decide on their response to the revised offer. Although the offer is a marked improvement on the first one, it is not clear whether the unions will back it or sense that more could be achieved if they exert greater pressure.

The Royal Mail and the Communication Workers Union are still locked in a dispute over a 2.5 per cent pay offer. A recent spate of prolonged industrial action was halted to enable more talks, which are due to finish next Tuesday.

The Public and Commercial Services union, which represents the Civil Service, has said that it will submit a motion calling for coordinated action as part of its battle with Whitehall over pay, job cuts and what it sees as privatisation of some services.

PCS is consulting its membership over the next stage in its campaign, and is expected to make announcement on the eve of the conference. Two days later the union will announce the results of a ballot of staff at the Department for Work and Pensions over a three-year pay offer. The union says that the offer amounts to a below-inflation deal. A spokesman for PCS said: “Our members in the Civil Service are working against a background of job cuts and cuts in budgets. As a reward for that they are going to see a wage cut in real terms, which is unacceptable. The Government cannot use public-sector workers as an antiinflationary tool.”

Public-sector pay has long been a key battleground between the unions and the Government. For ministers it is one of the few areas in the economy where the Government can directly exert influence over inflation by controlling pay. For the unions it is one of the areas where they have strong industrial muscle. The public sector is far more unionised than the private sector and managers are unable to threaten striking workers that they will shift their business overseas.

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