Ministers act over fuel crisis

Officials from the Unite union will meet bosses from Ineos, which owns the Grangemouth site, at the London offices of Acas in an attempt to head off a planned two-day stoppage by up to 1,200 workers starting on Sunday.

Intense political pressure was put on both sides, following an "extraordinary and inflammatory" war of words that dimmed hopes of a settlement. Emergency plans to prevent disruption to fuel supplies were put into action by Westminster, while Holyrood sought to head off a strike by offering both sides the services of an independent pensions expert.

Ineos has started shutting down the refinery and has warned of fuel shortages from Friday if the strike goes ahead.

Motorists were urged not to panic-buy petrol and experts said there was enough to go round as long as drivers bought only what they needed. It is believed the Acas chairman, Ed Sweeney, invited both sides to hold fresh talks.

The dispute centres on plans to end the final-salary pension scheme for new workers.

Ineos said it had made a number of concessions to the union, which it said represented a "significant improvement" on its initial proposals.

But sources at Unite said there was nothing new in the company's statement, adding that the union continued to press for the proposals to be withdrawn before any fresh talks could be held.

Mark Lyon, Unite's Grangemouth organiser, yesterday accused Ineos of "economic terrorism" and said it was conducting "a despicable, outrageous and disgraceful smear campaign against our members and our organisation".

He attacked Ineos directors as "a billionaires' lunch club", and "the idle rich with obscene personal wealth".

Edmund King, the president of the AA motoring group, said drivers were caught in the middle: "The current problem is being played out in public, with the threat of fuel disruption being used by both sides as a negotiation tool."

He added: "The last thing we need is panic at the pumps. Problems can arise if every motorist with a half-full tank decides to fill up early. With 30 million cars on the road, this means, if half of those fill up when they don't need to, an extra 375 million litres of fuel would be required. That would lead to shortages."

It is understood that the next stages in the government's contingency plan involve rationing petrol by limiting purchases to a maximum amount per transaction, followed by the shutdown of "non-essential" forecourts. But most experts believe there is enough fuel available to avoid such measures, even if talks drag on towards Friday's shutdown.

Oil prices in London and New York last night hit fresh record highs, partly driven by fears that a shutdown of Grangemouth would push up prices from other sources. Traders were worried about the potential impact of a strike on North Sea supplies.

John Hutton, the business secretary at the Department for Business, Enterprise and Regulatory Reform, began the first phase of contingency plans, lifting restrictions that prevent rival suppliers discussing how much fuel they have in reserve.

He said: "If the strike does go ahead, we will do everything in our power to minimise disruption. We have contingency plans in place, and I have activated the first stage of those plans.

"Everyone can help by just buying fuel as normal – buying extra causes problems in the system, which would otherwise not exist."

John Swinney, the finance secretary, told the Scottish TUC's annual congress that he had listened "with horror" to earlier exchanges between the two sides. He proposed the services of Stewart Ritchie, the president of the Faculty of Actuaries and a leading pensions expert, to "clarify" the issues at stake.

Ray Holloway, of the Petrol Retailers Association, said he was "astonished" by the "extraordinary and inflammatory" language used in the dispute, and he had "everything crossed" in the hope of a successful resolution.

He said: "The ordinary driver at the centre of all this does not need the threat of disruption, and nor does the economy. Although fuel can be found from other sources, there will be considerable disruption in the short term if a strike goes ahead."

Tom Crotty, the Ineos chief executive, said: "We would urge the union to work with us to find a way of resolving this issue."

The company is writing to all Grangemouth workers asking them to accept a new set of revised pension proposals and urging the union to call off the strike. Ineos warned that it had started running the refinery down – that would become irreversible by Friday – and said the strike would effectively close the Grangemouth site for a month.

Mr Crotty said in his letter to workers that the company had made a number of concessions to try to reach a deal, adding: "Under the consultation timetable we had previously agreed, there is still ample time for discussions to take place and for the dispute to be resolved. The strike action is premature, and I would urge the union and the local members to call off the strike to allow for these discussions to take place."

He added: "The proposed new (pension] scheme for existing workers will continue to be among the most generous in the country."

Ineos said it was planning to delay the introduction of contributions from the workers to the pension scheme so these were phased in at 1 per cent a year over six years from April next year.

The initial proposal was 2 per cent a year for three years.

Delegates at the Scottish TUC congress in Inverness yesterday backed an emergency resolution supporting the Grangemouth workers.

The motion described the Ineos pension scheme as profitable, well-funded and affordable, and it attacked the "rank hypocrisy" of the company's management.

The brief debate heard savage attacks on the company and its management. Grahame Smith, the STUC general-secretary, said: "I can assure Unite and the workforce at Grangemouth that the STUC will stand four-square behind you. We offer you solidarity and, if called upon, will provide any practical assistance you require to ensure a successful resolution to this dispute."

Mr Smith added: "We do not believe, and will not be intimidated by, management scaremongering about health and safety or fuel shortages."

Mr Swinney told the conference: "The government believes fundamentally that this is an issue that has to be addressed by dialogue and discussion between Ineos and Unite. I listened to the (debate on the] radio with a mounting sense of horror at the tone and tenor of the discussion taking place.

"I use this platform to encourage everyone involved, Ineos and Unite, to get round the table to address these issues."

Q & A: HOW IT ALL BEGAN, WHAT IT MEANS FOR YOU

What is the dispute about?

Union leaders at Unite say Ineos, which owns the Grangemouth plant, plans to close the final-salary pension scheme to new entrants and cut benefits for existing members. They claim Ineos has stripped 40 million from the pension fund, which bosses deny. The main change is that staff will have to contribute to the scheme. Ineos points out most UK workers have to pay into their pension funds.

What happens if the talks don't work?

Ineos says the whole refinery will be shut down because workers at the site are required for safety. The next stages of a contingency plan are for the rationing of petrol, followed by the identification of key petrol forecourts, which would be kept open and well supplied, while other forecourts would be closed down. Those familiar with the current situation say neither action is yet required because there are at least several days' worth of fuel available from Grangemouth and that other refineries could supply the majority of Scotland's fuel requirements.

Why has this dispute escalated so rapidly?

Union leaders believe Ineos is creaming off excessive profits from Grangemouth and that the company can afford to keep pension arrangements as they are.

Management say the viability of the whole site is in jeopardy unless it can create a more sustainable pay and benefits structure. It wants to pump 750 million into Grangemouth to make it a "world-class" facility and that without the cash injection, the site will have to be scaled back with 650 jobs lost.

They admit the pension issue is part of securing the 750 million investment and they say union demands are "excessive and unsustainable".

Who are the two sides?

The dispute involves about 1,200 workers while Ineos is the third-biggest chemical company in the world, employing 16,000 people with 76 facilities in 20 countries.

Owner Jim Ratcliffe is the UK's 45th richest man with a 1.1billion fortune. Ineos and its sister firm Innovene, also owned by Ratcliffe, made profits of about 414 million in 2005.

Unite says Grangemouth makes 1 million a day, so keeping the pension scheme as it stands – with funding of 16 million a year – is easily affordable.

Will there be a shortage of fuel on the forecourt?

The Retail Motor Industry Federation, which represents fuel retailers, said there was at least 70 days' stock of fuel which would comfortably meet the demand of motorists, providing they did not start to panic-buy. Alex Wells of the organisation said: "Fuel comes into the UK from other areas so it does not mean there will be no fuel in the country."