HC Deb 07 April 2003 vol 403 cc88-91W
Mr. Willetts

To ask the Secretary of State for Work and Pensions pursuant to his answer to the hon. Member for Yeovil, of 13 February 2003,Official Report, column 967W, what his estimate is of the gross annual cost of increasing the basic state pension by average earnings growth for each of the next 10 years; what offsetting savings there would be on the benefits; and what the net cost would be. [106120]

Maria Eagle

The information requested is set out in the table.

Table 1: Estimated cost of increasing the basic State Pension by average earnings from April 2003
Gross cost Net cost Income related benefit savings
2003–04 £510 million £340 million £180 million
2004–05 £1.4 billion £900 million £500 million
2005–06 £2.2 billion £1.4 billion £800 million
2006–07 £2.9 billion £1.9 billion £1 billion
2007–08 £3.8 billion £2.5 billion £1.3 billion
2008–09 £4.7 billion £3.1 billion £1.6 billion
2009–10 £5.7 billion £3.7 billion £2 billion
2010–11 £6.7 billion £4.4 billion £2.3 billion
2011–12 £7.7 billion £5 billion £2.7 billion
2012–13 £8.8 billion £5.7 billion £3 billion


1. Figures are in 2002–03 price terms rounded to the nearest £100 million, except 2003–04 which is rounded to the nearest £10 million. The gross cost may not sum due to rounding.

2. Gross costs are estimated by the Government Actuary's Department.

3. Income related benefit offsets are calculated using the DWP policy simulation model.

Estimates are consistent with figures provided on 13 February 2003, Official Report, column 967W.

The difference between the gross and net costs represents estimated savings in income related benefits as a result of increasing the basic State Pension by average earnings.

Mr. Willetts

To ask the Secretary of State for Work and Pensions whether legislation arising from the consultation process on the recent Pensions Green Paper, Cm 5677, will include a commitment to protect the pension rights of people who worked in Australia before the termination of the Anglo-Australian Social Security Agreement. [106196]

Maria Eagle

I refer the hon. Member to the written answer given by the Minister for Pensions on 23 July 2002,Official Report, column 1031.

Dr. Iddon

To ask the Secretary of State for Work and Pensions how many pensioners aged 80 or over are in receipt of the 25p per week pension supplement; and what the cost is of administration of this scheme. [106252]

Malcolm Wicks

The latest available information is that there are around 2.6 million pensioners in receipt of the 25p age addition.

Information on the cost of administering the age addition is not currently available in the format requested. In accordance with the requirements of Resource Accounting and Budgeting, the Department now accounts for its administration and benefit expenditure by Strategic Objective, as set out in its Public Service Agreements, and by individual Requests for Resources, as set out in the Departmental Estimates and Accounts.


1. Information on recipients is based on September 2002 State Pension administration data.

2. This figure has been rounded to the nearest hundred thousand.

3. This figure includes all pensioners aged 80 or over living in the UK and overseas receiving a State Pension.

Mr. Webb

To ask the Secretary of State for Work and Pensions pursuant to his letter to hon. Members of 17 March on the Pension Service and the Pensions Credit, how many personal direct mail packs his Department is sending to pensioner households; and if he will place a copy of a pack in the Library. [106878]

Maria Eagle

The Pension Service will be writing to all pensioner households to explain Pension Credit and invite applications. Between April 2003 and June 2004, all 6.8 million pensioner households will be issued with a direct mail pack. This systematic approach will be supported by regional and national advertising.

Copies of the direct mail packs will be placed in the Library after the Easter recess.

Mr. Webb

To ask the Secretary of State for Work and Pensions for how many pensioner households he holds verified address information; and if he will make a statement. [106879]

Maria Eagle

There are about 8.1 million pensioner households in Great Britain. All customers are asked to give their address when they claim their pension. They are asked to let the Department know if they move to a different address.


The number of pensioner households is based on Winter Fuel Payment figures for 2001–02.

Mr. Wray

To ask the Secretary of State for Work and Pensions what measures have been taken to reduce pensioner poverty since 1997; and what proposals he has to ensure that these measures are fully implemented. [106093]

Malcolm Wicks

We are taking action to tackle pensioner poverty and ensure that all pensioners share in the nation's prosperity. This is why our first priority has been to help the poorest pensioners and why it is right to target more money on them through the Minimum Income Guarantee (M1G): from April 2003 no pensioner will have to get by on less than £102.10 (£155.80 for couples). Rates will be linked to earnings throughout this Parliament.

We know that there is no single measure of pensioner poverty which is a complex, multi-dimensional issue, affecting many aspects of pensioners' lives. But providing a decent income is key. So we will be spending around £7½ billion extra on pensioners in 2003–04 as a result of the measures introduced since 1997. This includes around £3½ billion on the poorest third of pensioners—the very people who need help most, and is almost six times as much as an earnings link to the basic state pension since 1998 would have given them.

When Pension Credit replaces the MIG in October 2003, pensioners will, for the first time, be rewarded, not penalised, for saving. Pension Credit is radically different from MIG in that pound for pound deductions will be scrapped. Pension Credit will reward those with weekly incomes up to £139.08 for single pensioners, and £203.80 for couples. At the same time, further increases are proposed—above inflation—to the Pensioners' Tax Allowances.

Other measures have also been introduced to help tackle pensioner poverty. For example, in September 1997 the level of VAT on fuel was cut from 8 per cent. to 5 per cent., reducing a typical customer's fuel bill by around £16 a year, at a cost to the Government of £450 million a year. Winter Fuel Payments (WFP) will be £200 for each eligible household for the remainder of this Parliament—around 7.9 million households and 11.3 million individuals will benefit from WFPs in 2002–03.

We have introduced various measures to ensure that the initiatives we have introduced are fully implemented. For example, we have undertaken a take-up campaign to encourage those pensioners who are entitled to it to claim the MIG. This has put an average £20 a week extra in the pockets of 149,000 people who would not have received it otherwise. We have also reduced the MIG claim form from 40 pages to 10 and introduced a claim line for the MIG, which enables customers to contact the claim line by using a freephone number. The line has dealt with over one million inquiries.

Our commitment to encourage pensioners to claim Pension Credit can be seen in the fact that the Spending Review 2002 introduced a Public Service Agreement target to pay Pension Credit to at least three million pensioner households by 2006. We have introduced a comprehensive strategy to achieve this. Measures, include: Transferring existing MIG recipients to Pension Credit ready for payments to be made from October 2003 Running mass advertising (TV and Press) from September 2003 to launch Pension Credit and advise pensioners and their friends and family of how The Pension Service and partner organisations can support them to consider and take-up entitlement Writing to all pensioners not already receiving MIG over the take-on period (through to October 2004) to help them consider any entitlement to Pension Credit and encourage those likely to be eligible to apply Working with local partners to help support the communications to pensioners, and tailoring marketing and communications activity accordingly Reviewing the take-up position during autumn 2004 and taking any further action that may be necessary.

The Households Below Average Income (HBAI) figures published on 13 March 2003 suggest that our strategy is succeeding. The figures continue to show large falls in the number of pensioners on absolute low income (before and after housing costs) since 1997. The absolute low income figures numbers are down from 2.7 million (1996–07) to 1.1 million pensioners (2001–02), a decline of over 60 per cent. on the after housing costs measure.

Also, there has been a reduction of 0.4 million pensioners living in relative low-income households (after housing costs). This has been achieved even at a time of rapid growth in general prosperity that we've seen since 1997. Pensioners are therefore sharing in the country's rising prosperity. In fact on one measure, pensioners have more than kept pace with rising incomes overall—the number of pensioners below 60 per cent. of median income (after housing costs) is down by around 15 per cent. since 1996–97 (2.7 to 2.2 million pensioners).

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