MPs Pay: Politicians To Get 11% Pay Rise

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

In a move the Independent Parliamentary Standards Authority (Ipsa) insists "will not cost the taxpayer a penny more", MPs will get a "one-off" pay rise, but see cuts to pensions, a tightening of business costs and expenses, and loss of other perks.

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

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

In a statement released with the report, 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"We are sweeping away the out-of-date and overly generous benefits, and introducing a one-off uplift in pay.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."

Yesterday David Cameron threatened 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%.

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.

The Ipsa changes will see:

:: A one-off 9.26% pay rise to come into effect in May 2015 MPs - 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

:: A new pension in line with other public sector workers and an increase in MPs' contributions

:: Scrapping of "out-of-touch" resettlement payments worth tens of thousands

:: Tightening of business costs and expenses, including the scrapping of dinner allowances.

Ipsa stresses that it carried out stringent public opinion polling before making the recommendations and say that when they put the details to the vote, 45% felt the package was too generous but 43% said it was right or not enough.

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 effectively they would simply be endorsing the continuation of a pension and expenses system that the public has already found wanting.

Sir Ian said: "The public is far more sophisticated than a lot of people think they are."

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