MPs' Pay: Politicians To Get 11% Pay Rise

MPs are to get an 11% pay rise, taking annual salaries to £74,000, but will lose out on pensions.

In a move the parliamentary watchdog insists will not cost taxpayers "a penny more", MPs will get a "one-off" pay rise but see cuts to pensions, a tightening of business costs and expenses, and an end to golden goodbyes.

The pay increase will come into effect from May 2015, but from then on increases to annual salaries will be in line with average earnings.

The reforms contained in the Independent Parliamentary Standards Authority (Ipsa) report put the watchdog, which was set up in the wake of the expenses scandal, on a collision course with politicians.

Sir Ian Kennedy remains determined to carry through reforms

Ipsa's chairman, Sir Ian Kennedy, said: "For the first time, MPs' pay and pensions will be set independently, and away from political deals cooked up in Westminster.

"We are sweeping away the out-of-date and overly generous benefits, and introducing a one-off uplift in pay. Crucially, thereafter MPs' pay will be linked to everyone else's.

"We have designed these reforms so they do not cost the taxpayer a penny more. When taken with the tens of millions we have saved by reforming the business cost and expenses regime, we have saved the taxpayer over £35m with the changes we have introduced since 2010."

David Cameron threatened on Wednesday he was "ruling nothing out" if Ipsa did not rethink the hike, suggesting he could scrap the watchdog - or at least curtail its ability to set MPs' pay.

He said it was "unacceptable" for MPs to accept such a rise at a time when public sector pay rises are capped at 1%.

However, Sir Ian remained determined to proceed with reforms, telling Sky News: "I was not appointed to this job to be popular, I was appointed to chair an independent body and independent bodies have to sometimes say no to people even if they happen to be party leaders."

Both Ed Miliband, the Labour leader, and Nick Clegg, his Liberal Democrat counterpart, have said the rise cannot be justified amid a cost-of-living crisis. Mr Miliband called for cross-party talks to put an end to the planned increase.

David Cameron has called the pay rise 'unacceptable'

Speaking on his Call Clegg LBC radio station ahead of the release of the report, Mr Clegg said that any increase in MPs' pay must go with the "grain of public consent".

He said: "I think at a time when this Government is saying to millions in the public sector, 'you cannot have a pay rise more than 1%' I think it really would be very difficult - to put it mildly - to explain why MPs should be treated differently."

However, Sir Ian has stressed that 43% of the public supports the reform package, saying that Ipsa had carried out significant polling before making the recommendations. The polls also found that 45% felt the package was too generous.

The Ipsa changes will see:

:: A one-off 9.26% pay rise to come into effect in May 2015 - when added to the previously announced pay rise, MPs will get in 2014, it represents an 11% increase from today's salary of £66,396.

:: MPs' pay increases linked to average earnings from 2015-16.

:: End of final salary pension scheme and an increase in MPs' pensions contributions.

:: Scrapping golden goodbyes, where MPs can get a year's salary even if they lose their seat, in favour of a £14,850 payment.

:: Scrapping £15 after 7.30pm dinner allowance.

:: End of tea and biscuits allowance.

:: No payment for hotels if the House rises before 1am.

:: No payment for taxis if the House rises before 11pm.

:: End of expenses claims for TV licences and home contents insurance.

The watchdog was set up to stop MPs voting through their own pay increases.

Critics have said that while voting against the pay increase seemed to be good PR for MPs, they would effectively be endorsing the continuation of a pension and expenses system that the public has already found wanting.

The former Labour cabinet minister Jack Straw said at the weekend that there was never a good time to increase an MP's pay but that it was important to help attract "people from modest backgrounds" to politics.

There will be a statutory review of the proposals before they come into effect in 2015 and Mr Cameron has indicated that he is not willing to take any action before then.

Following the report's release he again encouraged Ipsa to "think again", saying the watchdog had not made a "final recommendation".

Mr Miliband said: "I want to be clear with the public, I don't think it's right that MPs should get this pay rise at a time when nurses, teachers, people in the private sector are going through a pay squeeze and facing incredibly difficult economic circumstances. I think it will just undermine trust in politics further.

"I'm determined that this pay rise does not go ahead if there's a Labour government."

:: Watch Sky News live on television, on Sky channel 501, Virgin Media channel 602 and Freeview channel 82.

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