Social Security

Queen's side or king's side? Traditionally, the basic state pension is uprated in line with the retail prices index. However, my right hon. Friend the Chancellor also used his pre-Budget report to reconfirm that the basic state pension will be uprated by 2.5 per cent. from April 2010, which amounts to an above-earnings increase. That means that from April the basic state pension for a single person will increase by £2.40, to £97.65 a week. It also means that the standard rate based on a spouse or civil partner's contribution will increase to £58.50, giving a pensioner couple a total of £156.15. The Government believe that the most effective way of helping pensioners is to increase the basic state pension. That increase, which is delivered as a result of a commitment first given by this Government in 2001, will ensure that more than 11 million pensioners receive an increase in the value of their basic state pension, over and above the level of earnings. That will mean that pensioners will have benefited from a long-term real increase to their basic state pension of 12 per cent. since 1997 worth more than £10 a week. Increasing the basic state pension means that help is provided to more pensioners, with a more even distribution of that help. When it comes to additional pensions, the uprating of which has always been linked to prices, we faced a number of challenges this year. The retail prices index was negative for the first time in around 50 years. Also, one cannot look at additional pensions in isolation, as any increase in additional pensions feeds directly through to public sector pensions. Nevertheless, we looked at whether it would be possible to uprate additional pensions by the 2.5 per cent. underpin used for the basic state pension, but that would have cost the taxpayer an additional £1.2 billion this year. We also considered whether it would be possible to uprate additional pensions by the 1.5 per cent. used this year to uprate key disability and carer's benefits, but, as I have said, the uprating of additional pensions feeds directly through to public service pensions and to some aspects of occupational pension schemes. As a result, we are unable to uprate such benefits without creating unintended consequences for occupational pension schemes, and significant extra cost.