THE Government and leading trade unions have agreed a pre-election deal which secures the Labour Party vital funding for the general election campaign.

In an extraordinary pact, ministers and union leaders agreed reforms to employment laws, including minimum holiday entitlement of almost six weeks, in exchange for a united front in the run-up to the general election.

The deal was secured at 4am yesterday as ministers wrangled with leaders of Britain’s biggest trade unions.

It came a day after Tony Blair gave warning that a third Labour term was at risk without a united front. The agreement is a significant boost for the Prime Minister who feared that some of Britain’s leading trade unions, which bankroll the party, would withdraw their support.

Trade unions and others on the Left had been expected to cause embarrassment for the Prime Minister at the weekend’s National Policy Forum by forcing Labour to commit to pledges such as an end to selection in schools. The forum decides the blueprint of the party manifesto.

But many believe that the party took to heart Mr Blair’s speech to the forum on Saturday, when he warned left-wingers to avoid a return to the infighting that dogged Labour governments in the 1960s and 70s.

Leading figures in the City and industry will want to study the commitments agreed during the summit, fearing Labour may have given away too much to the new generation of union leaders.

A senior Labour politician said yesterday: “Today is a significant moment as it shows we can avoid the pitfalls previous Labour prime ministers have fallen into. Gone are the days when the trade unions called for something and the Labour prime minister rolled over.”

Gerry Sutcliffe, the Employment Minister, Patricia Hewitt, the Trade and Industry Secretary, and Ian McCartney, the Labour Party chairman, conducted most of the negotiations and, according to one activist in the forum, were “immovable on the big stuff”.

One of the most significant changes that the unions did achieve was a pledge that employers will not be able to count bank holidays as part of the statutory four-weeks’ holiday. This means that thousands of employees, mostly working for small businesses, could get an extra eight days’ annual leave.

Other concessions included planned legislation on corporate manslaughter, extending European directive employment rights to temporary and agency workers, and the guarantee that there will be a debate on renationalising the railways at the party conference in September.

John Cridland, the deputy director-general of the Confederation of British Industry, also hailed the end of “old-fashioned trade unionism of the 1970s”. He said: “The Labour leaders did see off what they didn’t like, and it is much better from our point of view than it might have been. We’re relieved, although we do have a few concerns.”

Tony Woodley, the T&G general secretary, was delighted with the deal. “This is a fantastic achievement. Finally the Labour manifesto is treating the unions seriously,” he said.

The T&G will decide in September whether to give Labour cash for its election campaign and it had been suggested that the union would follow the GMB and snub a request for funds. But Mr Woodley said: “We will be helpful to Labour for the election.”

Jack Dromey, the T&G’s deputy general secretary, will become Labour’s next treasurer at the conference in September. Labour also averted a £1 million loss from the Communication Workers Union by promising to keep Royal Mail in public ownership.

Mrs Hewitt said: “This is a balanced package of commonsense measures.”

Explore UK News

• Crime News

• Education News

• Health News

• Scotland News

Times Recommends

• Fern Britton: 'I still can't see that I was wrong'
• Extreme cooking
• Easy French: Tarte Tatin