Labour contenders challenged to forfeit pay-offs

At a joint news conference with the Liberal Democrat Energy Secretary Chris Huhne, Lady Warsi said former Labour Ministers must take responsibility for their part in creating the current economic crisis.

"At a time when people across the country are being asked to tighten their belts to deal with Labour's economic mess, it is unacceptable that the very people responsible for the mess are eligible to walk away with up to 20,000 each," she said.

"Forfeiting this pay would be the first step towards accepting their responsibility, and the first sign they had come to terms with the mistakes of the past."

Lady Warsi said she was writing to the four contenders who were members of the last government – David Miliband, Ed Miliband, Ed Balls and Andy Burnham – urging them, and any former Ministers supporting them, to give up their severance pay.

Under current legislation, former Ministers are entitled to a one-off, tax-free payment of a quarter of their annual Ministerial salary on losing office.

For former Cabinet Ministers - who were receiving 79,754 a year in Ministerial pay on top of their MP's salary of 64,766 – the payments are worth 19,938.

At the news conference both Lady Warsi and Mr Huhne accused the Labour contenders of being "in denial" about the economic crisis for the country.

Mr Huhne said it was "inexcusable" that Labour's next generation of leaders had failed to come up with any policies for tackling the record deficit they had left behind.

"In 1979, the winter of discontent saw Labour lose power for a generation because Labour would not face up to the need for change," he said.

"Unless Labour now face up to the challenge of fixing our nation's finances, they won't deserve power for another generation.

"Until they come up with a credible economic plan, they are irrelevant to the biggest debate in our country – the future of our shattered economy."

We will make tough choices with a heavy heart: Page 13.