---

Benefits Uprating

With permission, Mr. Speaker, I wish to make the annual social security uprating statement and a broader statement on pensions. I will place full details of the uprating in the Vote Office and arrange for the figures to be published in the Official Report. As in previous years, most national insurance benefits will rise by September's retail price index, which is up by 3.9 per cent. Most income-related benefits will rise by September's Rossi, which is RPI less housing costs, and is up by 2.3 per cent. As my right hon. Friend the Chancellor announced, from April 2008, the basic state pension will increase to £90.70, which is up by £3.40. For couples, the standard rate will rise to £145.05, which is up by £5.45. That is a real-terms rise of 10 per cent., or more than £47.30, since 1997. My right hon. Friend the Chancellor also announced that the standard minimum guarantee part for pension credit, which has risen with earnings since 2003, will from next April rise by £5 a week for single pensioners and £7.65 for couples. That means that from April next year, no single pensioner should live on less than £124.05 a week, and no couple on less than £189.35 a week. That is an increase of £57 for a single pensioner and £85 for couples since 1997. Since 1997, pensioner poverty has reduced by more than a third as a result of targeted support from pension credit and £11 billion of extra funding. That has lifted more than 1 million pensioners out of relative poverty. As a result, pensioner households are on average £1,500 a year, or £29 a week, better off in real terms. The poorest pensioner households are around £2,200 a year, or £42 a week, better off. That underlines our commitment to target resources where the need is greatest. That is a commitment that I can reinforce today. I can announce a package of changes for introduction in October 2008 to simplify further the state pension system. The package is cost-neutral over the long term and will be paid for by reducing the backdating of pension credit from 12 months to three months, as from next October. Twelve-month backdating was introduced in 2003 to ease the introduction of pension credit. The new changes will make better use of these resources and, I understand, will be broadly welcomed by Help the Aged and Age Concern. The changes that we intend to introduce will make the system less confusing, less intrusive and more transparent. We want the customer to be able to get their state pension entitlements with the minimum fuss, bureaucracy and form filling. In 2005, we made some improvements. Those applying for pension credit by telephone have been able to get council tax benefit and housing benefit together, using a shortened claim form completed by the Pension Service. The form is then sent out to the customer to sign and send to their local council. Many pensioners do not send the form on, however, and so lose out. We aim to improve on that by being more efficient and more joined up. We intend for council tax benefit and housing benefit claims to be made over the telephone in exactly the same way as those for state pension and pension credit. The claim will be taken by the Pension Service and automatically passed to the local council for assessment. No more action will be needed by the pensioner. They can access up to four benefits in one telephone call: pension credit, state pension, housing benefit and council tax benefit. About 50,000 pensioners will gain from the measure by 2010. We also plan to align the rules on backdating of pension credit, housing benefit and council tax benefit with those on the working age benefits. That will reduce complexity and make the application process less intrusive. These days, some pensioners spend longer periods abroad in warmer countries. They currently lose their pension credit after only four weeks. We intend to change the pension credit rules that relate to the length of time that pensioners can spend abroad before their benefit is affected. We will align pension credit with the rules on housing benefit and council tax benefit, so that benefit will continue for up to 13 weeks. That will mean that almost 90 per cent. of the pensioners who would currently have their pension credit stopped will in future retain their entitlement. Those changes will be taken with two further measures in the pensions Bill that, with your permission, Mr. Speaker, I hope to put before the House today. Those measures will simplify the rules relating to the additional state pension and remove the need for most pension credit customers aged 75 and over to tell us about changes in their retirement income. More than 1 million pensioners will benefit through not having to complete a review of their income and capital, because we believe that income and capital do not increase much for most people after 75. We will also uprate benefits and allowances for the working population. Child allowances linked to the income-related benefits will be increased in parallel with the child tax credits. This is intended to ensure that families receiving those benefits see the full value of increases in child tax credits. In particular, the allowance paid for a child dependant will increase by £5.14 a week from next April to £52.59, which is a rise of almost 11 per cent. As in previous years, the uprating provides an opportunity to deal with anomalies and make the system simpler. So from next April, the single person rate for income support and jobseeker's allowance will be the same for all 16 to 24-year-olds. For the small number of 16 and 17-year-olds who claim, this amounts to an increase of £12.30, uplifting their weekly benefit from £35.65 to £47.95. That will tackle a perverse incentive that exists in the current system to leave home to receive more benefits. The change will also provide extra help to some vulnerable teenagers, as well as simplifying the benefit structure. To return to pensions, our first priority was to tackle pensioner poverty and ensure that everyone shared in rising prosperity. Our next priority is to put in place a pensions system for the future. The good news is that on average we can expect to live longer, but that has consequences. Measures in the Pensions Act 2007, passed earlier in the year, will tackle gender inequality in the state system, providing a more generous basic state pension, restoring the earnings link and giving people a clear picture of what the state will provide and what they need to do for themselves. Measures to be introduced in Parliament later today will take the next step in the reforms by encouraging saving and extending for the first time the benefits of pension saving with minimum mandatory contributions from an employer across the working age population, and by giving everyone the opportunity to create a retirement income that helps them to meet their aspirations. In bringing forward these measures, we will continue to support existing final salary pension provision. I am pleased to announce that we are today publishing the Government's response to the deregulatory review consultation. The response summarises the comments that we received and outlines the further action that will be taken. We are grateful for all the responses received and for the detailed consideration that many have already given to the issues involved. We want to reduce burdens on employers who provide good workplace pension schemes, but we need to balance that against maintaining adequate protection for pension scheme members. That is not easy to achieve, but without action, the slide away from final salary schemes could turn into a rush. We intend to reduce the statutory cap on the revaluation of deferred pensions from 5 to 2.5 per cent. for pension rights that will build up from a future date. That change will not affect pension rights that are already earned. We will include the changes needed to achieve that in the pensions Bill that I hope to introduce this afternoon. In addition, we will take forward some issues through secondary legislation or guidance, and work with stakeholders to explore the scope to address concerns that have been raised in other areas. This includes a statutory override to enable employers and trustees to agree changes to pension schemes, which will enable them to benefit from statutory and regulatory changes. That has proved difficult for some schemes in the past. Copies of the detailed response will be placed in the Libraries of the House. The cost of uprating benefits for next year is nearly £4 billion, with more than £2.75 billion of that going to pensioners. The further simplification measures that I have announced today, together with those that, with your permission, Mr. Speaker, I am bringing forward in the pensions Bill, represent a substantial further investment in social justice, reducing poverty and helping those in need. I commend the statement to the House.