AS MINISTERS continued to urge pay restraint, it emerged that more than 50,000 firefighters are due to receive a pay rise of nearly 6 per cent - more than twice the 2.5 per cent underlying inflation rate announced yesterday.

Meanwhile, leaders of 1.3 million local authority workers, caught in the teeth of a government austerity package, confirmed they would be demanding pay rises of between 5 and 6 per cent.

The Chancellor of the Exchequer has announced a tough three-year plan to minimise public expenditure and has warned that all pay rises among state-employed workers will have to be paid for through efficiency measures.

While the rise in the Retail Price Index dipped from 2.6 per cent to 2.5 per cent - the Government's target - most observers believe the inflation rate is likely to accelerate again next year.

The firefighters' settlement will prove a serious embarrassment to ministers. But there is little they can do to change its level. The earnings of fire brigade employees are tied to the upper quartile of male manual earnings. There is limited scope for interpretation and bargaining, but officials at the Fire Brigades Union pointed out that the room for manoeuvre was strictly limited.

The pay increase will put even greater pressure on fire authorities, where cost-saving initiatives have led over the past few years to industrial action, particularly on Merseyside and in Essex. The enhanced wage rates are due to be paid from November and will ensure that newly qualified firefighters will earn in excess of pounds 20,000 a year.

The public service union Unison and the GMB general union were yesterday preparing for negotiations with local authority managers. Talks begin in January, with the settlement date in April, but employees' leaders are determined to close the growing gap between public and private sector workers.