HC Deb 17 March 2003 vol 401 cc622-3
13. Mr. David Heath (Somerton and Frome)

What account is taken of the average level of council tax for the purposes of calculating pensions and benefit uprating. [102957]

The Parliamentary Under-Secretary of State for Work and Pensions (Malcolm Wicks)

The retail prices index, by which most non income-related benefits are uprated, takes account of rises in council tax. Other income-related benefits are uprated by the Rossi index, which excludes housing costs and local taxes. That is because those costs are met through separate benefits—for example, housing benefit for rent and council tax benefit.

Mr. Heath

Is the Minister aware that the average council tax increase for councils of all political persuasions across the country is likely to be about 14 per cent. this year, which is very hard indeed for people living on fixed incomes such as state pensions? The Office for National Statistics announced today that it is changing the basis on which inflation is calculated for pensions purposes—not to give a greater weighting to council tax, but to include takeaway latte coffee, kebabs and hair gel, none of which, I suspect, figure highly in a pensioner's average weekly budget. When will we get a price index that deals with the real expenditure of real pensioners?

Malcolm Wicks

It is not for my Department but for the ONS to alter or possibly kebab the index according to its own criteria. Council tax is set by individual councils of all political colours, not by central Government. Council funding has gone up by 25 per cent. in real terms in the past six years, whereas in the four years before 1997 it was cut by 7 per cent. Also, as a result of the interaction between pension credit and the applicable amounts for housing benefit and council tax benefit, we estimate that about 700,000 pensioner households who will not get pension credit itself in future will gain from the changes, which is welcome news.

Sir Sydney Chapman (Chipping Barnet)

While I understand the problems that would arise if pensions and benefits had to be adjusted simply on the basis of council tax, does the Minister nevertheless agree that it is unfair to have a national level of pensions and benefits in particularly high-cost areas? London weighting, however ham-fisted it is, is now evident in virtually every job in our capital city, so should not that principle be looked at and perhaps extended to pensions?

Malcolm Wicks

I do not know whether that is an announcement of a new policy, but the index is not a matter for us. It is based on precedent, and historians in the Opposition will remember Hugh Rossi, the ministerial author of the index. On the point made by the hon. Gentleman, council tax benefit goes to 4.6 million recipients, is worth on average £11 a week, and is a particularly important benefit at this time.