PARTY leaders have been warned not to stand in the way of an expected £10,000 pay rise for MPs because failing to deal with the issue would create a new expenses-style scandal.

Independent Parliamentary Standards Authority (Ipsa) chairman Sir Ian Kennedy admitted the austerity being endured by the country made its review of salaries and pensions tougher. But he insisted there was never a good time to deal with the controversial topic, and hit out at calls from David Cameron, Nick Clegg and Ed Miliband for restraint.

"External, independent regulation means what it says: that you don't tell the regulator what to do," Sir Ian said.

The comments, in a speech to the IPPR think-tank, come amid a growing row over the proposals due to be unveiled by Ipsa next week.

The watchdog is understood to be considering an increase to about £75,000, offset by curbs on pensions, which would take effect after the General Election in 2015. The prospect has been welcomed by many backbenchers who have long felt underpaid, but others reject the idea of a 15% hike when public-sector pay is falling in real terms.

Sir Ian said: "This is not a good time to be talking about the pay element of the package - but given that there has never been a good time, this is as good a time as ever."

A Downing Street spokesman said that, under the current process, Ipsa's forthcoming report will be followed by a period of consultation, after which the watchdog has the power to make the final decision on what MPs should be paid.