By Maximilian Clarke

The country's biggest union, Unite, has today (Monday) warned the Labour party that its embrace of austerity leaves working people without a political alternative to coalition cuts - and could lead to electoral disaster.

Shadow chancellor Ed Balls’ announcement over the weekend that Labour accepts the government's public sector wage freeze puts the party into conflict with millions of poorly paid public sector workers who now face years of effective wage cuts.

“Ed Balls’ sudden weekend embrace of austerity and the government’s public sector pay squeeze represents a victory for discredited Blairism at the expense of the party’s core supporters,” wrote the union’s General Secretary in today’s Guardian. “It also challenges the whole course Ed Miliband has set for the party, and perhaps his leadership itself.

“Unions in the public sector are bound to unite to oppose the real pay cuts for public sector workers over the next year. When we do so, it seems we will now be fighting the Labour front bench as well as the government.

"The political elite which was united in promoting the City-first deregulation policies that led to the crash is now united in asserting that ordinary people must pick up the tab for it. It leaves the country with something like a ‘national government’ consensus where, as in 1931, the leaders of the three big parties agree on a common agenda of austerity to get capitalism — be it ‘good’ or ‘bad’ — back on its feet.

“Where does this leave the half a million people who joined the TUC’s march for an alternative last year, and the half of the country at least who are against the cuts? Disenfranchised.”

Mr McCluskey also rejects the argument that pay restraint will help create jobs and criticises the Labour party for its failure to consult with trade unions before making the shift: “Notwithstanding that it impacts on millions of our members, it is hard to imagine the City being treated in such a cavalier way in relation to a change in banking policy.

“This confronts those of us who have supported Ed Miliband’s bold attempt to move on from Blairism with a challenge. His leadership has been undermined as he is being dragged back into the swamp of bond market orthodoxy.

“Having won on the measures, ‘new Labour’ will likely come for the man sooner or later. And that way lies the destruction of the Labour party as constituted, as well as certain general election defeat."

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