Pensions

Work and Pensions written question – answered on 4th February 2004.

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Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

To ask the Secretary of State for Work and Pensions if he will estimate the cost to the Exchequer, net of savings in means-tested benefits and additional tax revenues, of paying a full basic state pension to each individual, regardless of contribution record, at the rate of the guarantee credit, from the age of (a) 65, (b) 70 and (c) 75 years; and if he will estimate in each case the cost in each of the following four years on the assumption that the pension was then indexed to earnings.

Photo of Malcolm Wicks Malcolm Wicks Minister for pensions, Department for Work and Pensions

The information requested is set out in the following table.

£ billion
2004–05 2005–06 2006–07 2007–08 2008–09
Over 65 9.9 10.2 10.7 11.3 12.1
Over 70 6.9 7.1 7.5 8.1 8.6
Over 75 4.4 4.6 4.9 5.3 5.6

Notes

1. Figures are in 2003–04 price terms rounded to the nearest £100 million. It is assumed the change comes into effect from April 2004 and only affects basic State Pensions.

2. Gross costs are estimated by the Government Actuary's Department and are consistent with Budget 2003 assumptions. Estimates are all based on the 2002 population projection and allow for recent revisions.

3. The costs take into account income related benefit offsets, which are calculated using the DWP policy simulation model and April 2004 benefit rates.

4. Additional income tax revenue is estimated by the Inland Revenue using 2004 tax rates.

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