Mr. Alan WilliamsTo ask the Secretary of State for Social Security if he will estimate for 2000–01, the(a) gross and (b) net difference between the cost of the actual pension increase and (i) an increase of 2.5 per cent., (ii) an increase in line with earnings and (iii) the provision made in the Department's estimates. [131254]
§ Mr. RookerThe estimated extra cost for 2000–01 of a 2.5 per cent. increase in basic pension rates would be £530 million gross, £400 million net of means-tested benefits.
The extra cost of an increase in line with earnings would be £1,310 million gross, £1,000 million net. The estimates made in the Departments Report assume a 1.1 per cent. increase and as this was the level of increase there is no difference.
Notes:
1. Assumed average earnings growth is 4.6 per cent. The measure of earnings used is the annual change in the seasonally adjusted, three months to July average earnings index, which was used to uprate the Minimum Income Guarantee.
2. Estimates are rounded to the nearest £10 million.
3. Costs include benefits whose rates are linked by statute to the rate of basic Retirement Pension (principally Widow's Benefits and long-term Incapacity Benefit).
118W4. Gross costs have been estimated by the Government Actuary's Department. Offsetting means-tested benefit savings have been estimated using the Department's Policy Simulation Model.