Hopes of resolving the bitter Birmingham bins dispute have been hit after Unite said lorry drivers’ pay is to be cut.

Members of the union have been on all-out strike since last month, leading to rubbish piling up on the streets.

Talks involving the conciliation service Acas are to be held on Thursday after Unite said a deal could be “within touching distance”.

The union said the council had decided to cut the pay of drivers, warning it was an escalation of the dispute.

Unite general secretary Sharon Graham said:“Today’s actions show clearly that Unite has been correct all along.

“Birmingham City Council is taking money off workers to pay off their debt to the Government.

“Workers are again paying the price for bad decision after bad decision.

Birmingham refuse workers strikeA rat runs towards rubbish bags in Poplar Road in Birmingham (Jacob King/PA)

“Unite will not stand by and allow the council and this Labour government to inflict these savage pay cuts on workers.

“It is completely unjustified and a clear escalation of the dispute.

“It will not be accepted.

“No worker should be expected to lose these eye-watering amounts of money from their pay packet.

“The Government has protected a Labour council that has been treating workers in this outrageous way.

“It is no wonder Labour is increasingly not seen as the party of workers.

“They should hang their heads in shame.”

Unite said that, under the council’s plans, the pay rate of drivers will reduce from £40,000 to £32,000, a pay cut of £8,000.