Brown: "The process of reform has got to continue. We are not talking simply about value for money in the public services"

A "relentless" Gordon Brown will not allow cash for public sector reform to be swallowed up by pay demands.

As the government faces a round of steeply rising wage claims, the chancellor has used a Times interview to call for public sector pay restraint.

In a move that may herald a fight over forthcoming pay demands for troops, teachers and civil servants, he hinted that deals would remain tied to low rates of inflation.

"We must continue to have discipline in public sector pay. We will be looking at the reports of the review bodies over the next few weeks," Brown told the newspaper.

"We are doing this in an atmosphere of relatively low inflation, the lowest for 30 years or more. You will see this reflected in the settlements we make."

The shot across trade bows comes as official new figures show that nearly one in four UK employees works for the state.

Statistics from the Office for National Statistics show the number of public sector jobs have risen to over seven million - with an extra 142,000 people coming on to the government's payroll last year.

Praising a three year pay deal for Inland Revenue staff - averaging almost three per cent - Brown linked pay to productivity.

His comments will be seen by some union bosses as political code for job cuts.

"Discipline in public sector pay must continue," he warned.

"The additional money for departments is the means by which we secure greater resources and provide better services. It will not be eaten up in public sector pay."

"The process of reform has got to continue. We are not talking simply about value for money in the public services.

"It is all about productivity improvements, competition, enterprise and more innovation in the economy."

Chief of the UK's biggest union, Unison, Dave Prentis, believes pay restraint to be at odds with improved public services.

"You have got to pay decent rates of pay if you are going to get the nurses, if you are going to get the doctors, if you are going to get the support staff, if you are going to get classroom assistants," he told the BBC.

"All things that the government wants to do will only be achieved if you can attract people into the service."

"And people are leaving in droves because pay is so bad. The government can't have both. It can't have world class public services delivered on the cheap."

Brown also renewed the government's second term pledge to deliver on public service improvement.

"There will be a relentless emphasis on delivery," he vowed.

"You have got to make commitments over a period of time and we have said that by the time of the next election certain things would be done. We have delivered most of the targets set in 1998."

Following Treasury's takeover of the Downing Street delivery unit, Brown conceded that "a great deal more needs to be done".

"There have been improvements and much more is being done. We are never complacent. We always know that there is more that needs to be done," he said.

"We are increasingly meeting the targets that we have set, but you have to recognise that investment in the public services does not show an immediate result."

And he cautioned health ministers that they must use new cash to drive through reform.

"There has been an enormous backlog in investment and we have needed to improve the ratio of doctors and nurses per head of the population," he said. "A great deal more needs to be done."

As he becomes the longest-serving post-war chancellor since Nigel Lawson, Brown told the newspaper that he relished the challenges ahead.

"It actually feels quite a short time. It doesn't feel a long time. There are many challenges on the economic front. There are big questions for the future," he said.

"The Treasury has been a very exciting place to work. We have had large numbers of people applying to join the Treasury.

"The average age of civil servants in the Treasury is 36 and 40 per cent of senior staff are under 40. It is a very young organisation full of energy."