Johnson: Backing move

Ministers are reported to be ready to announce a pledge to provide state pensions based on residency, rather than national insurance contributions.

The move towards a "citizen's pension" will particularly help parents, usually women, who take time out of work to care for children, who are losing out in retirement.

Reports on Sunday suggested that work and pensions secretary Alan Johnson is set to announce the change ahead of the general election, with firm backing from Number 10.

It is hoped the pledge will attract women to vote Labour and extend the party's commitment to allowing parents to take a break from work to bring up their children.

However it could conflict with chancellor Gordon Brown's plans to help the poorest pensioners by means testing benefits, rather than funding expensive universal payments.

The Sunday Times estimated that the move would cost the taxpayer more than £3 billion per year, but quoted a "Downing Street source" as saying it would be in the Labour election manifesto.

"This plan is high on the agenda as there is a sense of real grievance that women who give up work to look after children may get nothing in retirement," one Cabinet minister said.

"But there are practical issues to resolve with the Treasury so it's not yet a done deal."

Brown block

The Number 10 insider added that Brown's department has "long considered pensions to be part of their remit and have tried to block the plan but we are confident it will be in the manifesto".

Shadow secretary for work and pensions David Willetts called on Tony Blair and Brown to come to an agreement.

"Many women don't get a fair deal from state pensions and this needs to change," he said.

"But replacing national insurance pensions with just another state benefit is throwing the baby out with the bathwater.

"We have already put forward practical proposals for giving women a better deal from contributory pensions. Instead, Labour prefer to say that all you should have to do to qualify for a state pension is to have lived here for a few years.

"Every few weeks we hear fresh rumours about Mr Blair's thinking on pensions. When is he going to get Mr Brown to agree to something so people can see what Labour's proposals really are before a general election?"