Below is the text of Mr Major’s written Parliamentary Answer on Pensions on 20th March 1987.
Mr. Meacher Asked the Secretary of State for Social Services if he has any plans to increase pensions in the light of the £6 million windfall in Government revenue.
Mr. Major My right hon. Friend announced on 22 October 1986 that pensions would be increased by 2.1 per cent. from 6 April 1987, in line with the rise in prices over the appropriate period.
Mrs. Beckett Asked the Secretary of State for Social Services what will have been the fall in the real value of the basic retirement pension rate to be paid from 6 April as a result of pensions and other long-term benefits, including the long-term rate of supplementary benefit, not having been increased in line with the percentage rise in average earnings since November 1978; and what would be the cost in 1987-88 of using the rise in average earnings as the yardstick for pension increases rather than the retail price index.
Mr. Major If the basic retirement pension and linked long-term benefits had been increased in line with the movement in average earnings (whole economy, seasonally adjusted) between November 1978 and September 1986, the end of the calculation period for the uprating taking place in April 1987, the pension at April would be £43.70 for a single person and £69.90 for a married couple. It is not possible to calculate changes in the real value at April until April retail price index figures are available. Prior to 1980, the long-term rate of supplementary benefit was not increased in relation to earnings, but by the same cash amount as the increase in retirement pension.
If pensions and linked long-term benefits were increased to these amounts in April 1987, and if supplementary pensions and the long-term rate of supplementary allowance for recipients of long-term contributory benefits were increased by the same cash amount, the additional cost in 1987-88 would be about £2 billion above that already provided for. No change in the level of housing benefit needs allowances has been assumed.