§ Mr. Rosindell
To ask the Chancellor of the Exchequer what estimate he has made of the cost to the Government of increasing pensions in line with average wage increases. 
§ Ruth Kelly
The costs of uprating retirement pension in line with earnings and these costs as a percentage of GDP are as follows:
Gross Cost (£) Gross Cost as (percentage) 2005–06 1.8 0.15 2010–11 6.3 0.54 2020–21 18.1 1.21 2030–31 38.1 1.99
As my right hon. friend the Chancellor said in his pre-Budget statement, UK public finances are sustainable in the long term. The UK is in a strong position relative to other countries to face the challenges ahead. To revert to the pre-1980 position, an earnings link with pensions would—by 2050—raise deficits by 3 per cent. a year just to cover this one item with the long-term sustainability of public finances undermined. The Government will proceed on a sustainable basis.
1. Figures are in 2003–04 price terms. Costs are in billions rounded to the nearest £100 million. Percentages are to the nearest two decimal places.
2. GDP figures are from HM Treasury Economic Assumptions provided 28 November 2003.803W
3. Gross costs are estimated by the Government Actuary's Department and are consistent with Budget 2003 assumptions.
4. The net costs take into account income related benefit offsets, which are calculated using the DWP policy simulation model.
§ Ruth Kelly
The Government consulted widely on the proposals in last December's document "Simplifying the taxation of pensions: increasing choice and flexibility for all". The document elicited many responses, copies of which have been placed in the House of Commons Library. A summary of the responses can be found on the Inland Revenue website at www inlandrevenue.gov.uk/pensionschemes.