John Prescott is facing demands to plug a multi-billion pound black hole in council pension funds as the West Midlands revealed it is facing a £1.3 billion shortfall.

The shortfall, which affects more than 190,000 council workers, has come about after the council spent tens of millions of pounds on early retirement packages for senior staff.

Meanwhile the Office for National Statistics has warned that Britons are saving only half the amount in funded pensions that ministers estimated just two years ago.