Ministers stand to gain pounds 4,000 bonus if they lose

If the Tories lose the election, ministers stand to gain a bonus of pounds 4,000 in their severance pay under a technicality which means they would continue in office for a few hours after polling day.

A group of nearly 50 Labour MPs yesterday called on the ministers voluntarily to forgo the bonus "golden handshake" to which they would be entitled.

The bonus will come as an embarrassment to ministers on the morning that the Cabinet is due to peg pay rises for 1.3 million public sector workers including nurses, doctors and teachers, to a rise of 2 per cent from 1 April, with another 1.2 to 1.4 per cent delayed until 1 December, in order to meet tight limits on spending.

Ministers in the next Parliament are due to receive rises of pounds 16,000 in their salaries as part of MPs' pay rises agreed by the Commons last year. Outgoing ministers would be entitled to severance payments of a quarter of their salaries. But, because they would not hand over their seals of office until after midnight on polling day, they could be entitled to a quarter of the new increases in their severance pay.

Gordon Brown, the shadow Chancellor, said Labour ministers would forgo the rise, if Labour formed the next government. It was also made clear last night that Mr Brown would not allow the increased severance payments to go through, although it could require retrospective legislation.

Alan Williams, one of the leading Labour MPs who signed a Commons motion, said: "The Government has to put forward an order before the election to give the annual increase to ministerial salaries.

"They could include a provision to deprive ministers of this bonus, if they lose the election. The ball is now firmly in the Prime Minister's court."

The Labour MPs said the public-sector workers would find it hard to understand why they should face pay restraint while ministers were helping themselves to an extra pounds 4,000 in their pay-off. "It's outrageous and should never have been allowed," said Jean Corston.

The motion, sponsored by Andrew Mackinlay, Labour MP for Thurrock, said: "We consider that this unwarranted and unjustified windfall would be deeply offensive to other public-sector workers, those on low pay and the unemployed, for whom severance pay entitlement was for many little more than a dream."

However, the Prime Minister dismissed Mr Brown's order to forgo the ministerial salary increases as "macho posturing" while Chancellor Kenneth Clarke accused the shadow Chancellor of making "populist gestures".

Mr Brown brushed off the attacks and called for senior public figures to "show leadership" at a time when public finances were under pressure from the burden of debt.

"Leaders must take a lead and they must be responsible for sending the signal that I want to send," he told BBC Radio. "What is fair is that you don't give 6 or 7 per cent rises to people who are on very high salaries."

He denied suggestions it was a prelude to dismantling the whole independent review body system for the public sector. "Of course they are going to continue and this is not a pay policy," he said.

Mr Clarke accused Mr Brown of buckling at the first signs of pressure over public pay. "He is now saying silly things that hark back to the days when populist gestures had to be made about generals and judges," Mr Clarke said.

Mr Brown's announcement was greeted with dismay by the general secretary designate of the First Division Association of top civil servants, Jonathan Baume. "I think the principle of this is wrong. The signal that comes from this is that if you work very hard, you are a very conscientious, dedicated senior public servant, then whatever your performance you should receive no increase," he said.

Public v private: what the top people earn

Sir Terry Burns

Permanent Secretary, HM Treasury

Current pay:

pounds 110,563

After increase:

pounds 114,322.14

Gillian Shephard (Cabinet minister):

Current pay:

pounds 86,991

After increase:

pounds 89,948.69

General Michael Rose:

Current pay:

pounds 101,233

After increase:

pounds 103,674.92

Sir Iain

Vallance:

Chairman of British Telecom

Current pay:

pounds 480,000 excluding benefits

Sir Richard Greenbury:

Chairman of Marks & Spencer

Current pay:

pounds 816,000 incl bonus/benefits