Michael Martin, the Speaker of the House of Commons, is fighting an attempt by Gordon Brown to scrap the “grace and favour” pension that comes with his job, The Times has learnt.

Mr Brown — already embroiled in a pension battle with Lord Falconer of Thoroton — has now opened a second front in his attempts to end generous pay-outs to the State’s most senior servants.

Outgoing Prime Ministers, Speakers and Lord Chancellors are paid an annuity equal to half their salary — currently between £64,000 and £94,000 — regardless of how long they have served. The money, which comes directly from the public purse, is justified on the ground that it helps to “protect the dignity of the ‘Three Great Offices of State’ ”.

Tony Blair became the latest to draw the grace and favour pension when he stood down in June this year. It is believed that the annuity will form the mainstay of his income until he can start drawing his parliamentary pension in about ten years’ time.

Mr Brown is keen to end what he regards as a politically embarrassing anachronism and wanted the scrapping of the pensions to be one of the centrepieces of constitutional changes to be announced soon.

However, officials fear that the reform may have to be quietly abandoned after having attracted fierce opposition. The Prime Minister is already engaged in a tussle with Lord Falconer over his pension. Mr Blair’s close ally believes that he is entitled to an additional lump sum on top of the annuity in lieu of a judicial pension. The former Lord Chancellor is said to be preparing to settle the matter in court after talks with Mr Brown broke down.

Although Mr Martin would be personally unaffected by the reform since it would come into effect after his retirement he is said to consider Mr Brown’s proposal an attack on the office of the Speaker and is staunchly resisting it. Friends of Mr Martin point out that, unlike outgoing Prime Ministers, former Speakers are unable to earn fortunes from their memoirs.

Mr Brown’s spokesman said that the issue was being handled by Jack Straw, the Justice Secretary. Mr Straw, who has retained the title Lord Chancellor and is therefore one of the three office-holders currently entitled to the grace and favour pension, is understood to share Mr Brown’s view that they should be scrapped.

Tom McPhail, a pensions expert at the stockbroker Hargreaves Lansdown, calculated that a British worker paying into a traditional company pension scheme would have to accumulate a pension pot worth about £1.25 million in order to qualify for such a generous payout.

“Gordon Brown only has to do one day as Prime Minister and he has already doubled his pension income.” He added: “There is widespread sentiment within the pensions industry that MPs shouldn’t be lecturing the rest of the country about improving savings for retirement while granting themselves such generous pensions paid for by the taxpayer.”

For the scrapheap

Michael Martin, Speaker of the House of Commons

Current salary £137,579
Grace and favour annuity on retirement £68,789.50
Parliamentary pension since 1979

Gordon Brown, Prime Minister

Current salary £188,849
Grace and favour annuity on retirement £94,424.50
Parliamentary pension since 1983

Jack Straw, Lord Chancellor and Justice Secretary

Current salary £137,579*
Grace and favour annuity on retirement £68,789.50
Parliamentary pension since 1979

*Mr Straw has waived his right to the additional salary payable to Lord Chancellors

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