Public won't have to pay more for MPs pensions

Plans by the Government to force the taxpayer to shell out extra money to fund MPs' pensions were abandoned last night amid warnings from opposition parties that the move could reopen the row over parliamentary perks.

The reforms, which were due to be put to the Commons today, would have seen the amount of public money placed into the pension pot increased from 26.8 per cent of an MP's pensionable salary to 28.7 per cent.

However, Gordon Brown signalled last night that he would back calls from both the Tories and the Liberal Democrats to freeze the contribution from taxpayers in the wake of public anger over the expenses scandal. Many workers also face losing their final salary pension agreements as companies struggle to fund them.

The new rules drawn up by the Leader of the House, Harriet Harman, place a cap on the amount of money provided from Treasury coffers that is poured into the MPs' pension pot. However, the original plan would have meant an extra £860,000 from the taxpayer each year for the Commons pension pot. MPs contributed around £4.3m to fund their retirements last year, while the public provided 12m, according to official figures.

"The world has moved on since the Government decided to do this," said Alan Duncan, the shadow Leader of the House. "Even if MPs contribute more themselves we just don't think it's remotely fair that the Government should be asking the taxpayer to pay anything extra."

Steve Webb, the Liberal Democrat work and pensions spokesman, has tabled a motion to freeze taxpayer contributions to MPs' pensions.

"We simply cannot ask the taxpayer to make an increased contribution this year," he said. "With millions of people facing economic hardship and worries about their own pensions, it is quite wrong to ask them to do more to contribute to MPs' already very generous pensions."

A Downing St source said the changes had been designed to "limit the exposure of taxpayers in the future" by plugging the growing pension deficit. A spokesman added that the Government would agree to the contribution freeze as it had always wanted to fulfil the will of the House.