HC Deb 12 June 1979 vol 968 cc252-3

The Government have decided to increase the standard rate of retirement pensions in November by £6.10 to £37.30 for a married couple and by £3.80 to £23.30 for a single person. These increases take full account of the underestimate which the last Government made of the actual rise in earnings between November 1977 and November 1978, and are well above the figures of £4 and £2.50 announced by the previous Government. Other social security benefits will also be increased, and my right hon. Friend the Secretary of State for Social Services will announce full details tomorrow.

This means that social security pensioners will be fully protected against the increase in prices. That is what is really important. But the extent to which we can afford to go further than that—to add improvements in real terms—must depend on the productive capacity of those in work.

Under the present rules, pensions are uprated on the basis of the movement in prices or earnings, whichever is the greater. The Government have decided, however, that for the future the requirement for the statutory uprating of pensions should be based on price movements, and we shall be introducing legislation to that end. That will be a minimum requirement and will fully protect the value of these pensions against price increases at all times, including those arising from indirect tax changes, such as I have just announced.

Mr. J. W. Rooker (Birmingham, Perry Barr)

That is treasonable.

Sir G. Howe

Of course we want, as much as the hon. Member for Birmingham, Perry Barr (Mr. Rooker), to be able to do more, but we realise that that depends on the strength of our economy. I am confident that in time, as our economy improves, it will be possible to do more and ensure that pensioners share in the increase in national prosperity. That is one more reason why my other proposals today are so important. They are intended to strengthen the productive capacity of the economy as a whole, for the benefit of pensioners as well as every other citizen in the community.

We also propose to improve certain other social security benefits. Child benefit went up by £1 per week only two months ago, and we do not propose a further increse this year. But single-parent families face particular problems, and we propose that the one-parent premium should go up from £2 to £2.50 next November. We also want to help the disabled. Mobility allowance will accordingly be increased from £10 to £12 in the autumn, and we shall, of course, honour our commitment to pay a Christmas bonus this year of £10.

These measures overall are worth about £1,100 million in 1979–80 and £2,700 million in a full year. They are largely covered by the existing social security programme, and the balance has been charged to the Contingency Reserve. As the House knows, our general policy is to make substantial reductions in public expenditure, but that must not be done in a way that bears unfairly on the more vulnerable members of society.

Our social security system has become far too complicated and it sometimes acts to reduce the incentive to work. The problem is widely recognised on both sides of this House. We are therefore studying a number of aspects of the social security system to see what can be done to simplify it. My right hon. Friend the Secretary of State is also putting in hand urgent measures to tighten up on abuse and fraud.