HC Deb 07 July 2000 vol 353 cc339-40W
Mr. Webb

To ask the Secretary of State for Social Security, pursuant to his oral answer of 15 May 2000,Official Report, column 4, if he will set out the basis for his estimate that the Government are spending £2.5 billion more on pensioners than would have been spent by restoring the earnings link; and what the reasons are for the difference between this estimate and that given in his answer of 11 April, Official Report, column 144W. [129741]

Mr. Rooker

The assumptions underlying the estimate my right hon. Friend the Secretary of State gave in his written answer on 11 April 2000,Official Report, columns 143–44W, are given in my written answer to my hon. Friend the Member for Newport, West (Mr. Flynn) on 11 May 2000, Official Report, column 479W. The assumptions underlying the estimate given in my right hon. Friend's oral answer on 15 May 2000, Official Report, column 4, are the same.

The difference between the figures is due to the inclusion of estimated expenditure on free TV licences for those aged 75 and over in the latter estimate.

Mr. Webb

To ask the Secretary of State for Social Security, pursuant to his answer of 27 June 2000,Official Report, column 480–81W, on the state pension, if he will estimate the cost of Option (a), linking the basic pension to earnings and introducing an age addition of £5 for pensioners aged 75 to 79 years and £10 for pensioners aged 80 years and above, on the basis that real earnings grow in line with the Government Actuary's Department's central assumption for long-term growth rates of real earnings. [129516]

Mr. Rooker

The information is in the table.

£ billion
Gross Net of means-tested benefits and income tax
2001–02 2.3 1.5
2002–03 2.9 1.9
2003–04 3.5 2.2
2004–05 4.2 —
2005–06 4.8 —

Notes:

1. Annual real earnings growth of 1.5 per cent. is assumed throughout the period in line with the Government Actuary's central assumption for long-term growth of real earnings.

2. It is assumed that the age addition is paid in full to basic State pension recipients and is not uprated. Figures include the cost of benefits whose rates are linked to the rate of basic Retirement Pension.

3. Figures are rounded to the nearest £0.1 billion and are in 2000–01 price terms.

4. Gross costs estimated by the Government Actuary's Department. Costs net of income-related benefit savings are estimated using the Policy Simulation Model. Income tax revenues estimated by the Inland Revenue.

5. Estimates of income tax revenues not available beyond 2003–04