Gordon Brown is coming under pressure from the unions to remove John Hutton from his post as Business Secretary, The Times has learnt.

Union leaders say there has been a complete breakdown in relations with the leading Blairite minister and are demanding his scalp in an autumn reshuffle.

Mr Hutton's future is set to become a trial of strength for the Prime Minister after colleagues and business organisations made it clear that they would be unhappy at his removal in such circumstances.

However, one senior trade union official said: “Some of the trade unions can't sit in the same room as Hutton. There has been an absolute breakdown in relations.”

John Denham is the man preferred by some union figures. Mr Brown's room for manoeuvre is limited, however, because any reshuffle involving Mr Hutton would be seen as a massive concession to the unions and a sign of weakness.

It comes as Downing Street braces itself for a difficult weekend: Cabinet and party chiefs will gather at Warwick University to hear the unions set out a programme of more than 100 demands that many Cabinet ministers see as electoral suicide.

Key items on the wish list include a new agreement on public sector pay with the Treasury, internet balloting for strikes, changes to the way that the oil market works, tax deductions for union membership subscriptions and the extension of the full minimum wage to younger workers.

Ministers are hoping to confine concessions to areas such as flexible working arrangements, which are less politically contentious.

Some Labour insiders fear, however, that the Government will have less room to negotiate than during the last round of talks at Warwick in 2004. Then Tony Blair watered down union demands by putting forward his own agenda of ID cards, academies and NHS waiting times, and forcing a compromise. Critics say that Mr Brown has no equivalent agenda.

Despite providing about 90 per cent of Labour funding in the first quarter of this year, unions feel that they have not made enough headway and are stepping up their campaign to change the direction of the Labour Party.

They are furious with Mr Hutton after he said in May that the Labour Government had reached “the end of the era” on considering sweeping new regulations as the best way to improve standards.

They were also angered by a study by DeAnne Julius, a US economist and a founder member of the Monetary Policy Committee of the Bank of England, which recommended more outsourcing of public services to private companies. Unite, the biggest union, called it a thinly disguised case for privatisation.

Government sources said that the unions were wrong to single out Mr Hutton, who they claim is an articulate defender of policies introduced long before he entered office. They were unaware that a demand for his removal was officially on the table and they emphasised that it was inconceivable that Mr Brown would bow to such a brazen demand.

Business sees Mr Hutton as a key ally, however, and the CBI has made it clear that it is keen to see him stay in his post.

Mark Fox, of the Business Services Association, the trade body for outsourcing companies, said: “The UK business community recognises that it has a friend in John Hutton and whilst it's for the Prime Minister to appoint his ministers, he will be very mindful about the signal this sends to a business community under a good deal of pressure.”

A poll of BSA members found that 91 per cent thought the political climate was “not supportive” of business.

Yesterday Progress, the Blairite pressure group whose vice-chairmen include Andy Burnham, the Culture Secretary, and Ed Miliband, the Cabinet Office Minister, urged the Government not to agree to union demands that would benefit “sectional interests”. It said: “Last week's union wish list is an echo of the industrial relations of the 1970s and has little resonance with the public in their working lives today.

“Instead of rejecting new Labour, the party should use 11 years of solid achievements as a foundation to move forward with a clear bold programme of reforms to help people realise their aspirations for greater control in their lives.”

Yesterday it emerged that no senior union figures have visited Chequers since Mr Brown took over as Prime Minister 13 months ago.

WORKERS' WISH LIST

Employment rights enforcement to be improved

A maximum working temperature

Green workplace reps

Free school meals for primary school pupils

Leave for parents to cover times such as exam revision

Strike ballots by phone and e-mail, not only by post

Universal access to broadband

Travel concessions for disabled people

An end to oil speculation

Ofgem, the gas and electric regulator, to be abolished

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