Benefit Rates (Hansard, 29 November 1994)

§ Mr. Lilley

As usual, the annual uprating of social security benefits will take place in the first full week of the tax year—in 1995 this will be the week beginning on 10 April.

The increases announced today are fully in line with the Government's commitment to help those in greatest need and includes the second stage of extra help for the effect of VAT on domestic fuel. Expenditure on social security will be £86.5 billion in 1995–96, £90 billion in 1996–97 and £93.5 billion in 1997–98.

I have reviewed social security benefits in accordance with section 150 of the Administration Act 1992. My proposals, which are set out in the schedule, fully reflect the commitment to increase all major benefits in line with inflation. The statutory instruments to implement them will be laid before both Houses for debate. My right hon. and learned Friend the Secretary of State for Northern Ireland proposes to introduce similar changes for Northern Ireland.

All national insurance benefits, excluding some transitional amounts, will be uprated at least in line with 630W the annual increase in the retail price index up to September which this year is 2.2 per cent.

Income-related benefits will rise by around 1.9 per cent., slightly more than the Rossi index—RPI less certain housing costs—owing to the extra help for VAT on domestic fuel.

Fifteen million people gained from the extra help for VAT on domestic fuel which was announced last year. They include pensioners receiving retirement pension and those receiving income support, widow's benefit, invalidity benefit—to be replaced by long-term incapacity benefit—or severe disablement allowance. From April 1995, the total extra help will be up to £1 a week for a single person or £1.40 a week for a couple. This extra money is a permanent addition to benefit rates and will be subject to future upratings in the normal way.

Social fund cold weather payments have already increased by £1 this month. From 1 November 1995 they will rise by a further £1.50 to £8.50. This increase is higher than the amount announced last year and will give substantial extra help to income support recipients who are pensioners, disabled people or have young children.

Some key points of the 1995 increases are:

Retirement Pension

Retirement pension will rise by £1.55 to £59.15 per week for a single person and by £2.35 to £94.45 for a couple. In common with certain other benefits, these amounts include the extra help for the effect of VAT on fuel.

Incapacity Benefit

Incapacity benefit replaces sickness benefit and invalidity benefit from 13 April 1995, the initial basic rate of long-term incapacity benefit will be £59.15 per week. This represents a full increase in line with inflation compared with the previous rate of invalidity benefit, as well as including extra help for the effect of VAT on domestic fuel.

Unemployment Benefit

Unemployment benefit for a single person will rise from £45.45 to £46.45 per week.

Child Benefit

Child benefit will be fully uprated in line with prices; this means that the new rates will be £10.40 per week for the first or eldest eligible child and £8.45 for each subsequent child.

War Pensions

War pensions will, again, be uprated fully in line with prices. the 100 per cent. rate of basic war disablement pension will increase from £98.90 to £101.10 per week.

Disability Working Allowance

Disability working allowance will be uprated fully in line with the Rossi index. In addition, the allowance for couples/lone parents will rise from £63.75 to £73.70 per week and the threshold for single people will rise from £43 to £54.80 per week.

A schedule of the main proposed social security benefit rates to April 1995 will be placed in the Library.