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Thursday, June 18, 1998 Published at 16:36 GMT 17:36 UK

UK Politics

Cabinet rift over minimum wage

Gordon Brown (right) got his way on the minimum wage

By BBC News online's Nick Assinder.

It was probably the most difficult announcement Trade President Margaret Beckett has had to make from Labour's front bench.

Just one day after she lost a bitter battle with Chancellor Gordon Brown over the minimum wage, she was required to stand up in the Commons and announce the government's new policy.

She wanted to tell MPs that the government had accepted the recommendations of its own low pay commission and decided to give all adult workers a minimum 3.60 an hour rate - with a lower 3.20 rate for youngsters.

Instead she had to announce that the government had refused to accept the commission's findings and decided to phase-in a new, lower rate of 3.00 for 18 to 21-year-olds.

Her Commons statement came after one of the the most serious rifts yet between ministers in the government and it saw relations between the two political allies plummet to a new low.

Brown and Beckett - friends and allies

The two front benchers, both from the left of the party, are old friends and allies, so the dispute was particularly sharp.

In cabinet, Mrs Beckett had insisted that Labour had to stand by its manifesto pledge - which implied the government should impose a single minimum wage for everybody.

But the chancellor claimed that could be counter productive and demanded that the lower rate should be phased in over 15 months, starting at 3.00 and should be extended to include 21-year-olds.

Both sides dug their heels in, and it is thought Mrs Beckett had the support of Deputy Prime Minister John Prescott.

But the chancellor finally won the day after the prime minister weighed in on his side.

That left Mrs Beckett fuming and believing the government has reneged on a long-standing manifesto pledge that had - until now - united the entire cabinet.

Cabinet future

Labour insiders are now speculating over her future in cabinet with some suggesting she may be moved in Tony Blair's looming reshuffle.

But, while Mrs Beckett is a tough fighter and threw herself passionately behind her cause, she is not one to bear a grudge for long.

She also commands wide respect within both the parliamentary Labour party and with grass roots members.

Although she failed in her bid to become leader after John Smith's death, she won may admirers for the way she behaved as caretaker leader before Mr Blair was elected and it is unthinkable she could be demoted.

The chancellor is also unlikely to harbour ill feeling towards his former ally and most believe that the pair will eventually patch up their differences.

But a lot could depend on how backbenchers and the trade unions react to the policy.

If there is a significant backlash against the watering-down of the proposal, Mrs Beckett may find herself as the focus of attention for the dissidents.

It is far more likely, however, that MPs and the unions will express their frustrations at the policy in the immediate aftermath of the announcement but accept that the major fight to get the principle of a minimum wage accepted has been won.

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