David Cameron to freeze ministers' pay until 2020

David Cameron will impose a five-year pay freeze on his government ministers this week while moving to cut taxes for 26 million working people, in the first Tory Queen’s Speech for 19 years.

As the Conservatives set out their programme for majority government, all ministers will be forced to bear their share of the austerity cuts that will be required to wipe-out the deficit and balance the Budget.

The pay freeze will save an estimated £4 million by the time of the next election in 2020 and will mean Cabinet ministers - currently paid £134,565 - have been denied a rise for a decade, after salaries were frozen in 2010.

However, Wednesday’s Speech will also include a promise of good news for the public, with a new law to cut income tax for millions of people. The plan will ensure that nobody earning the minimum wage is charged any income tax at all if they work up to 30 hours per week, a key manifesto commitment during the election campaign.

Senior Tories have warned, however, that any tax cuts are likely to be delayed until more progress has been made cutting the Budget deficit. George Osborne, the Chancellor, ordered his Cabinet colleagues last week to find another £13 billion of savings from government spending this year.

Mr Cameron said ministers themselves would also feel the squeeze in their pay, saving taxpayers £800,000 per year. “There are still difficult decisions to take as we complete the task of clearing the deficit,” he said.

“As we take those decisions, my approach is simple: we will do it in a ‘one nation’ way. We are all in this together so I am freezing ministerial pay for the next five years.”

The Tory leader’s promise to freeze his ministers’ salaries comes as MPs are due to receive a massive pay rise of 10 per cent this year, recommended by the Independent Parliamentary Standards Authority (IPSA), which the government cannot control.

^{MPs are due to receive a 10 per cent pay rise so their salaries can "catch up" with comparable professions}

With a public outcry likely to follow the confirmation of the MPs’ pay rise, expected in the autumn, Downing Street demanded that IPSA think again about the proposed increase, which would take an MP’s salary from £67,000 to £74,000 and would be backdated to this month.

However, the authority, which independently regulates MPs’ pay expenses, has repeatedly rejected calls to change tack, insisting that MPs’ salaries have fallen behind and should “catch up” with a one-of rise this year.

Downing Street said the proposed increase was “not right”. A Number 10 source added that IPSA must “think again about their plans - our decision to freeze ministerial sends very strong message about the approach we think needs to be taken”.

A Cabinet Minister who is also an MP will be paid £134,565 – the same level in 2010 – until IPSA’s pay rise for all MPs comes into force, raising it by another £7,000.

The last time the Queen delivered a speech written for her by a majority Conservative government was October 23, 1996, seven months before Tony Blair swept to office with a Labour landslide.

• John Major's Cabinet - where are they now?

^{Sir John Major's 1996 Cabinet}

The new tax cuts, which are expected to benefit 26 million people earning up to £100,000, will come in the form of an increase in the personal allowance, meaning that the starting point at which people begin to pay income tax will be earnings of £12,500.

The personal allowance threshold will rise in stages from £10,600 now to reach £12,500 by 2020, under Tory plans.

Although the Chancellor has insisted the first task of the new government will be to cut the deficit, government sources say that he has deliberately left himself room to move faster to cut taxes if possible.

The Conservatives have also promised to raise the higher rate income tax threshold, at which people begin paying 40p tax, from £42,000 to £50,000 by 2020.

Mr Osborne will give a special summer Budget in July, outlining the next phase of spending cuts and tax plans, potentially including more detail on tax cuts to come.

“We are not saying whether the tax cuts will be come in even steps, or be loaded towards the start of the parliament or back-loaded to the final years. We have left our options open,” a government source said.