MPs Pay: Watchdog Backs Hike To £74,000

MPs are set for an inflation-busting pay rise to £74,000 under recommendations from the Commons' expenses watchdog.

The Independent Parliamentary Standards Authority (Ipsa) called for a hike of more than £7,000, insisting the overall package was "fair".

The massive 11% rise will take effect after the general election in 2015 and will cost the taxpayer an extra £4.6m.

Ipsa insisted the overall cost will only rise by £500,000 once changes to MPs' pensions, "golden goodbyes" and expenses are enforced.

And chairman Sir Ian Kennedy insisted it was "wrong" to keep MPs' pay low, blaming the 2009 expenses scandal on too much restraint.

However, the move to increase salaries at a time when millions of ordinary Britons are battling to stay afloat left members of the public disgusted.

Ipsa boss Sir Ian Kennedy: Changes are "fair"

Callers to a radio show as Sir Ian justified the changes called it "obscene" and asked "what planet are you on?"

Unions immediately demanded a matching increase for their member and threatened strike action and MPs attacked Ipsa for exposing them to public vitriol.

Party leaders Ed Miliband and Nick Clegg vowed to shun the extra money if the rise goes ahead.

David Cameron did not commit himself but Downing Street insisted it would be wrong for politicians to receive more cash when the public sector faces pay curbs until beyond 2015.

A spokesman for Number 10 said: "The cost of politics should go down not up and MPs' pay shouldn't go up while public sector pay is, rightly, being constrained.

"Ipsa is consulting on its proposals, which it will review after the next election as it is obliged to do by statute. It is independent, but the Government will repeat our view on the need for restraint."

Mr Miliband said: "I don't think MPs should be getting a 10% pay rise when nurses and teachers are facing either pay freezes or very low increases and people in the private sector are facing similar circumstances."

Mr Clegg added that a time when millions of public sector workers were working hard despite pay restraint was "about the worst time to advocate that MPs should get a double digit pay increase".

Ipsa rejected claims the current salary was putting off candidates or failing to attract those of a high enough quality, insisting there was no "compelling evidence" to back this view.

And it said any dissatisfaction with the job is more likely to be down to other factors because most politicians regard their work as a vocation and were well aware of the pay packet.

But under the recommendations, MPs will see their pay increase from £66,396 to £74,000 in May 2015.

They will then rise annually in line with average UK earnings, in a move designed to ensure the issue is resolved for the long-term.

Ipsa wants politicians to publish an annual "MoT" explaining the work they have done for the money they receive.

Other changes would see the existing final salary pension scheme downgraded to career average, putting it in line with the rest of the public sector.

Benefits will build up at a rate of 1/51 of salary per year, instead of 1/40, but contributions will drop from 13.75% to 9.2%.

The retirement age will also be the same as for the state pension and death in service benefits will be slashed from 4.25 times salary to double.

Ipsa claims the pension changes will save £2.5m in the first year.

"Golden goodbyes", paid out when MPs lose an election, will still be paid in 2015 and be worth up to £33,000 per politician.

But by 2020 defeated MPs will only be entitled to two weeks' pay for every year of service if they are under 41 and three weeks if they are older.

Expenses face a further clampdown, which Ipsa says will save £178,000 in 2015 with a £15 dinner allowance axed and tighter rules on the use of taxis and hotels.

MPs will also no longer be able to claim for the cost of TV licences and contents insurance on their second homes.

Sir Ian said all MPs would be paid the higher salary, and it would be up to them whether they kept the money.

"We are not going to run 650 employment schemes, that would be daft," he said. "MPs can do what they want to do."

In a statement, he added: "The aim is to have as transparent a system as possible. The public will know what MPs get for their costs and expenses, their salaries and pensions, and what they have done.

"I recognise some will just concentrate on the salary, rather than the package as a whole, and say it's too high; others that it's too low.

"There is no easy way forward on this. We have put together a package of reform which we think is fair and which ends the anomalies of the past."

The watchdog claims changes already made to expenses have saved the taxpayer £35m and that its regime will be £7m-a-year cheaper than the one they inherited.

It is now putting its proposals out for consultation before they are finalised in the autumn. Party leaders cannot stop the watchdog without changing the law.

TaxPayers' Alliance chief executive Matthew Sinclair called the hike "totally unpalatable" and branded Ipsa an "unaccountable quango putting up two fingers to the British public".

"Ipsa is right to be reforming the gold-plated parliamentary pensions and cutting golden goodbyes for retiring or defeated MPs, but it beggars belief that they have come up with a plan that will increase the cost of our politicians when everyone's budgets are under such pressure," he said.

RMT general secretary Bob Crow warned: "Be in no doubt, RMT will be fighting for pay rise parity with MPs in all of our negotiations and will have no hesitation in striking to get for our members what the politicians have got for themselves.

"If inflation-busting pay increases are good enough for the political class then they are good enough for nurses, transport workers, firefighters and the rest of the working class."

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