The Taoiseach ruled out personally intervening in the talks on social partnership.

Mr Ahern was asked in the Dáil yesterday morning by the Fine Gael leader, Mr Enda Kenny, if he would personally intervene, given the Government's stated view that it wanted another partnership and because of the differences which had emerged between the employers and unions.

Mr Ahern replied that direct intervention was not necessary. "The process is in place and those involved are all aware of it. They are aware that the Government is in the background, ready to continue the process. The Tánaiste and I will remain ready in that position. Anything else would be unhelpful."

He added that while the Government wanted an agreement, both sides needed to want it as well. "I urge both sides to listen to what we and our officials are saying. We are anxious to try to conclude an agreement and we would very much like to conclude these issues. We continue to press ourselves as far as we can to deal with these issues, but we must be conscious of what is right for the economy, competitiveness and the future of the country. It is not good for the future of the country for these talks to break down."

Mr Ahern said his assessment on Tuesday morning was that the talks were going relatively well. "We had decided early yesterday morning to have an intensive and prolonged session yesterday. After 10 hours of discussion in the early hours of this morning, it became clear that progress was not being made and that a basis for agreement on a new pay deal had not been identified."

He added that he recognised that both sides had engaged in good faith and with considerable effort in the process. "The Government clearly wants agreement to be reached. I send that message to both sides again this morning, but last night's conclusion was difficult. I will leave it at that. Frankly, I am not very hopeful, but I use this reply to Deputy Kenny to urge both sides to think about this."

Mr Kenny said that the inflationary consequences of the Estimates and the Budget were making it more difficult to get agreement in the talks because of the increased pressure on consumers.

Mr Ahern said he would like the inflation figures to be lower, but that was not an insurmountable issue. "That aspect could be resolved." The social partnership process should not be allowed to collapse, he said.

The Labour leader, Mr Pat Rabbitte, said the Taoiseach acknowledged that social contracts since 1987 had been a cornerstone of economic and industrial management by successive governments. He was surprised, he added, to hear the Taoiseach saying that he had no intention of personally intervening in the talks.

"He has earned a reputation as one who intervenes and as a conciliator. The portents must be very bad if he has decided not to intervene."

Mr Ahern said Mr Rabbitte was well aware how the discussions operated, given that he had played a professional part in them over the years.