Social Security and Pensions (Statutory Instruments)

Sarah Newton Excerpts

Monday 9th February 2015 Commons Chamber

[Steve Webb]

I know that my hon. Friend listens to nothing other than podcasts of “More or Less”. When Tim Harford was interviewed on the “Today” programme recently, he was asked what his favourite statistic was. The nation waited, agog to hear his reply. He said it was the CPI. So when the BBC’s go-to guy for statistical rigour and reliability was asked to choose from a multiplicity of official statistics, he homed in on the CPI as the epitome of a good statistic. We therefore make no apology for using it.

The national statistician, Sir Andrew Dilnot, commissioned Paul Johnson, the director of the Institute for Fiscal Studies, to carry out a review of price indices. This year, we had four to choose from: RPI, RPIJ, CPIH and CPI. We have opted for CPI. The right hon. Gentleman is seeking to imply that we should use RPI, perhaps because it is bigger, but it is interesting to note what Paul Johnson said about RPI, to which the Opposition are still wedded—or at least they were, the last time I heard. Paul Johnson’s recommendation was:

“ONS and the UK Statistics Authority should re-state its position that the RPI is a flawed statistical measure of inflation which should not be used for new purposes”.

He went on to state:

“Government and regulators should work towards ending the use of the RPI as soon as practicable.”

He made it absolutely clear that RPI was flawed and that we should restate that fact, which I am happy to do. He thought that RPIJ should probably be discontinued and that CPIH needed some methodological work to get it right. So CPI is the only credible index available to us. If the right hon. Gentleman implies in his response that we should use something else, I would like to know his basis. We believe the price index should be chosen on the basis not of whether it is high or low, but whether it is accurate. That has been the policy of this Government.

[Sarah Newton (Truro and Falmouth) (Con)]

Does the Minister agree that through these tough times it is important that carers and people with disabilities are given the maximum—the CPI—increase to their benefits? Is that not the fair thing to do?

[Steve Webb]

My hon. Friend is right; when we made difficult decisions about the general level of uprating, we made sure that the benefits for people with disabilities—the disability living allowance, personal independence payment and so on—were excluded from the 1% cap, and they will get 1.2% next April. It is worth saying, although I have not referred to it yet, that we base our April uprating on the previous September’s index, which was 1.2%. She will know that since then inflation has tumbled, with it being 0.5% in the latest figures published. I do not have a crystal ball and I have not seen the figures that will be published next week, but some are speculating that inflation could be closer to zero or even negative. In that context, making sure that people on disability benefits get last year’s inflation rate will, we hope, given that petrol and food prices are now falling, improve their real standard of living. So I am grateful to my hon. Friend for her intervention.

At a time when the nation’s finances remain under pressure, this Government will be spending an extra £2.5 billion in 2015-16; continuing to help support those who are not currently in work by increasing the main rates of working age benefits by 1%, and ensuring that pensions, and benefits designed to help with the additional costs of disability, are protected against the cost of living. Let me give the breakdown: about £2 billion more on state pensions, including an above-inflation increase for the basic state pension; £300 million more on disabled people and their carers; and nearly £200 million more on people unable to work because of sickness or unemployment.

In these orders, we continue to maintain our commitment to the triple lock—I would like that to be written into the law of the land in the new Parliament—meaning the basic state pension will be at its highest level as a percentage of average earnings for two decades; we continue to protect our poorest pensioners with an over-indexation of the standard minimum guarantee, so they too will feel the benefit of the triple lock; and we continue to protect the benefits that reflect the additional costs that disabled people face. On that basis, I commend these orders to the House.