London Underground (LU) has made a revised five-year pay offer to trade unions which would see staff get a four and half per cent pay increase this year, followed by a rise of inflation (RPI) plus 0.25 per cent in the four subsequent years.

A further guarantee has also been given that LU would not take into account negative RPI, should such a situation occur, so staff would be guaranteed a pay increase each year.

The five-year offer was made to all trade unions at this week's meeting of LU's Company Council (Thursday 12 May).

An initial offer was made last month, at which time LU asked the trades unions to take into account that the basic pay offer could be improved if their claims for changes to other terms and conditions could be limited to those which did not incur extra costs.

As before, LU has committed to examining further issues around statutory holiday working arrangements, flexible working and career breaks for train operators. 

Discussions also continue with trade unions on working arrangements over the period of the 2012 Games.

LU Director Richard Parry said: 'This very fair and affordable multi-year pay offer to the trade unions will enable our employees' salaries to keep pace with the cost of living and guarantees an increase in real terms over the life of the deal.

'At the same time it is realistic given the current economic situation and the pressure on TfL's finances.

'We have asked the unions to respond to our offer in writing and we look forward to working with the unions to reach an agreement as soon as possible.'

The proposed deal would cover the period from April 2011 to April 2016, which also includes the 2012 Games.

The previous agreed pay deal, which saw staff get a 1.5 per cent increase in year one and RPI plus 0.5 per cent in year two, expired in March.