Pensions and Social Security

I thank the hon. Gentleman for that clarification. As a public spending hawk, as he described himself, he would much prefer one of those figures to be used, although he indicated that pensioners should receive 4.4% and those out of work should receive 2.8%, which would lead to an overall saving of £1.7 billion, based on the figures he cites. I am sure that the Minister will be happy to deal with this matter. The hon. Gentleman also emphasises the overall issue of work incentives. If people are in work but seeing a real squeeze on their incomes and living standards, in his view there is an issue of work incentives. The hon. Member for Eastbourne (Stephen Lloyd), from the Back Benches of the second coalition party, described himself as hawkish, but not as hawkish at the hon. Member for Bury St Edmunds. He was particularly pleased that DLA, GSA and other out-of-work benefits are receiving the full uprating and described the pension increase as the highest ever—perhaps I can come back to that later. He praised the shadow Minister in particular for his work on pensions. Alas, I suspect that he was referring to my right hon. Friend the Member for East Ham, rather than me. My right hon. Friend is indeed an impressive parliamentarian, and I join the hon. Gentleman in his praise. The hon. Gentleman also said that he had sympathy with Labour's position on RPI but was prepared to reflect over the coming years on how CPI operates and is keen for the Minister to give a little more detail on how CPI will operate. The Minister set out the Government's position clearly: they are spending money via this uprating to protect some of the most vulnerable in society. There will be a CPI increase of 5.2% on the basic state pension and the additional state pension—SERPS—and a 5.2% increase in most out-of-work benefits. They will also raise the pension credit minimum income guarantee above earnings to 3.9%, rather than 2.8%, to be paid for, as was discussed earlier, by raising the threshold for those eligible for savings credit by 8.4% and reducing the maximum savings credit payable per week from £20.52 to £18.54. The Minister also set out his view that CPI is a better measure of pensioners' cost of living. That is contestable, as the debate so far has suggested. In particular, my right hon. Friend the Member for East Ham raised the issue of housing costs, among other things, and the Minister has undertaken to look at the work of the Consumer Prices Advisory Committee on integrating housing costs into the CPI index. The hon. Members for Banff and Buchan (Dr Whiteford) and for North Antrim (Ian Paisley) contributed to the debate in interventions. They noted that, if we are looking at the cost of living for pensioners, we must emphasise the cut in winter fuel allowance in the round and heating costs more widely. Those are things that the Minister will be aware of as he goes forward. The Minister and the hon. Member for Eastbourne emphasised that this was the largest real-terms increase in the pension for about 10 years. There was an interesting exchange between the Minister and my right hon. Friend the Member for East Ham on what exactly that amounted to. The Minister's explanation, as I understood it, was that by the time the increases work through the system to the recipients, inflation will have fallen. My right hon. Friend rightly suggested that the Government should perhaps not take too much credit for inflation being so high and then falling—perhaps that was a quirk of timing, rather than the result of Government policy. However, it is clear that, with a Backbench Business Committee debate on the switch from RPI to CPI scheduled for next week, this remains a live issue, and I am sure that it will be articulated in greater detail next week. As my right hon. Friend the Member for East Ham indicated, the official Opposition could have looked closely at a temporary switch to CPI, but we cannot support a permanent switch from RPI when there is so much doubt about CPI as an accurate measure of the cost of living. There is merit in an earnings underpinning, but it has been noted more than once that in the first year of its existence the Minister picked his own lock, so to speak, and there was a greater increase in the state pension than there would have been with the triple lock. Although there is merit in an earnings underpinning, the fact remains that if RPI had been used last year and this year the increase would have been greater. That said, and given that we cannot support a permanent switch from RPI, we support certain things in these uprating orders, but we cannot support the Government today.