Benefits Uprating

Part of Business of the House – in the House of Commons at 12:13 pm on 10th December 2009.

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Photo of Angela Eagle Angela Eagle The Minister of State, Department for Work and Pensions, Member, Labour Party National Executive Committee 12:13 pm, 10th December 2009

With permission, Mr. Speaker, I should like to make a statement about benefits uprating and how that supports the action that the Government have taken to help people through the global recession. I shall place full details of the uprating in the Vote Office and arrange for the figures to be published in the Official Report at the earliest opportunity.

As the global recession, which had its origins in the US sub-prime market, began, we said that we would act to protect people in the UK. Since then, the Government have taken decisive action to support families, jobs and businesses. As the effects of the credit crunch spread to the real economy, we acted to protect people's deposits in banks and to stabilise the wider financial system. Then we acted by making available an additional £5 billion to help people in the labour market to remain in work or get back to work as quickly as possible. We ensured that the Jobcentre Plus network and our providers could not only maintain but increase our support to the increased numbers needing help.

We were determined not to lose a generation of young people to work, which is why we set up the future jobs fund and why we will now guarantee every 18 to 24 year-old who has been unemployed for six months a job, a training place or a volunteering opportunity. The action that we have taken has had an impact. My right hon. Friend the Secretary of State will lay out further measures in our "Back to Work" White Paper next week.

Let me turn to the statement. I wish to tell the House that we will act to provide real help for people when they need it most during the early stages of recovery. People of working age who are claiming income-related benefits will have their benefits uprated in line with the Rossi index, which is the retail prices index less housing costs. That means that people who receive benefits such as jobseeker's allowance, employment and support allowance, and incapacity benefit will receive an increase of 1.8 per cent from April 2010.

For those benefits that are traditionally uprated in line with the retail prices index, this year, as a consequence of the extraordinary global conditions, the RPI has moved into negative territory-it stood at minus 1.4 per cent in September. That means that those who rely on benefits being uprated by the retail prices index could have expected to see their benefits frozen in cash terms, which would have meant no increase at all next April. However, because the Government continue to demonstrate their commitment to helping the poorest and most vulnerable in society, my right hon. Friend the Chancellor has decided that those benefits should be increased by 1.5 per cent. from April 2010. That means that we will increase benefits for disabled people and carers, and statutory payments for parents and others who receive national insurance-linked benefits, by 1.5 per cent from next April. Recipients of attendance allowance, carer's allowance, disability living allowance, and maternity allowances will have those important benefits uprated to ensure that they do not fall behind.

The basic state pension is traditionally uprated in line with the retail prices index, but as my right hon. Friend the Chancellor confirmed in yesterday's pre-Budget statement, the basic state pension will be uprated by 2.5 per cent from April 2010. That means that, from April next year, the basic state pension for a single person will rise by £2.40 to £97.65 a week, while the standard rate based on spouse's or civil partner's contribution will increase to £58.50, giving a pensioner couple a total of £156.15 a week. That above-inflation increase, which is delivered as a result of a commitment by this Government, will ensure that more than 11 million pensioners receive a real-terms increase in the value of their basic state pension.

The uprating of state additional pension feeds directly through to public service pensions and to some aspects of occupational pension schemes. As a result, we are unable to uprate those benefits without creating unintended consequences for occupational pension schemes. In the circumstances, we plan to hold state additional pension flat in cash terms this year. However, the 2.5 per cent increase in the basic state pension will mean that, on average, pensioners in Great Britain will see an overall increase of 2 per cent in their state pension.

For the poorest pensioners, my right hon. Friend the Chancellor also confirmed that the standard minimum guarantee in pension credit will rise from next April by £2.60 a week for single pensioners and £3.95 for couples. That means that, from April next year, no single pensioner need live on less than £132.60 a week, and no couple on less than £202.40 a week. That represents a real-terms increase of more than a third for the poorest pensioners since 1997. The above-earnings increase in the pension credit guarantee underlines the Government's ongoing commitment to tackling pensioner poverty, which has already ensured that there are 900,000 fewer pensioners in relative poverty today than there were in 1998-99. In fact, the Government have spent around £100 billion more on pensioners since 1997 than we would have done if we had simply allowed the policies of the previous Government to continue.

We have taken action, and we will continue to take action to ensure that people do not have to face the recession alone-abandoned, as happened so often in the past. We have learned the lessons from the recessions of the 1980s and 1990s, which is why our upcoming White Paper will set out the next steps in our continuing determination to invest in people and give them the help they need because, for this Government, unemployment will never be a price worth paying.

The package of uprating proposals, which is worth around £2 billion for 2010-11, represents significant and worthwhile help for those who are among the poorest and most vulnerable in society. It provides real help in a challenging year, and I commend the statement to the House.

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Leah Fraser
Posted on 11 Dec 2009 11:09 am (Report this annotation)

Ms Eagle has not answered the question regarding the apparent absence of the £60 Christmas payment to pensioners. Has it been scrapped?